What are the categories of accrued depreciation relevant to an appraiser?

The correct choice identifies three critical categories of accrued depreciation that appraisers examine: physical, functional, and economic.

Physical depreciation refers to the loss in value due to wear and tear or deterioration of the property over time. This can result from age, lack of maintenance, or severity of use, and it's a straightforward assessment of how much the physical state of the property has declined.

Functional depreciation addresses the loss in value due to changes in design or functional utility. This situation arises when a property has features that are no longer desirable or suitable for modern use. For example, outdated layouts, lack of updated amenities, or systems that don't meet current building codes can contribute to this type of depreciation.

Economic depreciation, sometimes referred to as external or locational depreciation, pertains to the loss in value from external factors that affect property value. This can include changes in market conditions, economic downturns, or neighborhood deterioration, which are beyond the control of the property owner.

Understanding these three types of depreciation is crucial for an appraiser, as they provide a comprehensive view of how various factors impact the overall value of a property. Each category helps to inform the final valuation and ensures that the appraisal accurately reflects all aspects contributing to a property’s worth.