Which types of depreciation are considered in the Cost Approach?

In the context of the Cost Approach to appraising property, the correct choice encompasses the three main types of depreciation that appraisers evaluate: physical deterioration, functional obsolescence, and external obsolescence.

Physical deterioration refers to the wear and tear on a property resulting from age and use, impacting its value. This can include anything from roof aging to a crumbling foundation, all of which can be quantified to assess how much the property's value has decreased due to these physical issues.

Functional obsolescence accounts for a loss in value due to outdated features or designs that no longer meet market demands. This could entail aspects like an insufficient number of bathrooms in a residential home or obsolete heating systems. Such deficiencies make a property less desirable, thereby reducing its overall market value.

External obsolescence arises from factors outside the property that negatively influence its value. This may be due to aspects like neighborhood decline, industrial encroachment, or changes in zoning laws that lessen the attractiveness of the area. These external factors can lead to substantial decreases in property values and are essential for appraisers to consider when determining a property's worth.

The other choices, while containing terms that might relate to property valuation or market conditions, do not accurately represent the primary depreciation types recognized within