In appraisal, what does the term "effective age" refer to?

Effective age is a crucial concept in appraisal, representing the age of a property as determined by its condition and usefulness, rather than merely its chronological age. This means that effective age takes into consideration factors such as the level of maintenance, renovations, and updates that a property has undergone, which can enhance or diminish its perceived value in the market.

For instance, a property may be 30 years old chronologically, but if it has been extensively renovated and is in excellent condition, its effective age may be assessed as much younger, reflecting its current state and functionality. This measurement helps appraisers provide a more accurate valuation, as it captures the property’s real economic life and appeal rather than simply how long it has been standing.