Glossary of Terms

Effective Age

In real estate appraisals, "effective age" refers to the perceived age of a property based on its condition, maintenance and renovations, rather than its actual chronological age. It is an important factor in property valuation because it can significantly impact the property's market value. A well-maintained and updated home may have a lower effective age than its actual age, while a poorly maintained property might have a higher effective age. For example, a house built 30 years ago but renovated extensively might have an effective age of 10 or 15 years, while a home of the same chronological age that has been neglected could have an effective age of 40 years.

Appraisers use effective age to adjust the depreciation in cost approach appraisal, determining how much value the home has lost due to aging and wear.