In real estate appraisal, the Breakdown Method is a comprehensive approach used to divide accrued depreciation into distinct categories: physical depreciation, functional obsolescence, and economic obsolescence. This method contrasts with the age-life method of depreciation.
Deferred maintenance refers to the practice of postponing necessary repairs and maintenance activities on real estate properties. This neglect typically results from budget constraints or prioritization of financial resources toward other projects, and it consequently leads to physical depreciation.
Normal wear and tear physical depreciation refers to the gradual loss of a property's value due to usage and aging, which includes minor damages, material degradation, and obsolescence occurring under normal usage conditions.
Physical depreciation or deterioration refers to the loss of value in real estate due to the wear and tear of structures over time. This can be caused by a variety of factors including breakage, deferred maintenance, the effects of aging materials, and normal wear and tear.
