What does estimating depreciation in property valuation help determine?

Estimating depreciation in property valuation is crucial as it helps to determine the decline in property value. Depreciation reflects the loss of value that a property experiences over time due to factors such as physical wear and tear, obsolescence, and changes in the surrounding environment. By assessing depreciation, appraisers can gauge how much value a property has lost since its original purchase or development. This is essential for an accurate valuation, as it provides insight into what a buyer might accurately pay for the property in its current state.

Depreciation analysis is vital when looking at investment potential and understanding the property's worth in the market, influencing decisions for both buyers and sellers.