Which of the following represents the three types of depreciation used in appraisal?

• A. Physical deterioration, functional obsolescence, and external obsolescence.
• B. Physical deterioration, economic obsolescence, and market obsolescence.
• C. Functional obsolescence, price obsolescence, and wear and tear.
• D. Physical deterioration, functional obsolescence, and external obsolescence.

Answer: (D)

The idea being tested is recognizing the three ways a property can lose value in appraisal. These depreciation types are physical deterioration (the building’s wear and tear), functional obsolescence (outdated design or features that reduce usefulness or desirability), and external obsolescence (loss of value due to factors outside the property, like nearby nuisances or economic decline).

This combination matches the standard framework used by appraisers, so it’s the best fit. Other options mix in terms not treated as separate depreciation types (for example, market or price obsolescence aren’t the recognized triad, and wear and tear is a colloquial way to describe physical deterioration rather than a distinct category).