Massachusetts Real Estate License Practice Test

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Prepare for the Massachusetts Real Estate License Test with our comprehensive quiz. Gain confidence with flashcards and multiple choice questions, each with detailed explanations. Ace your exam with ease!

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Which term describes a decrease in property value due to physical deterioration or economic obsolescence?

Appreciation
Depreciation
Depreciation relief
Inflation

The correct answer is: Depreciation

Depreciation is the correct term used to describe a decrease in property value caused by factors such as physical deterioration or economic obsolescence. Physical deterioration refers to the wear and tear that a property experiences over time, which can result from inadequate maintenance, age, or environmental factors. Economic obsolescence, on the other hand, refers to a decline in property value due to external factors, such as changes in the neighborhood that might affect desirability, like increased crime rates or changes in zoning laws. Understanding the concept of depreciation is fundamental in real estate, especially when evaluating properties for investment or appraisals. Depreciation reflects the loss of value, and recognizing it can help investors make informed decisions about the potential of a property. It is essential to differentiate this from appreciation—where property values increase—and other terms that do not specifically relate to a decline in property value.