How does depreciation primarily affect property value during appraisal?

Depreciation primarily affects property value by reducing the property's worth over time. This concept reflects the decrease in value due to various factors such as physical wear and tear, functional obsolescence, or economic obsolescence. For an appraiser, understanding depreciation is crucial because it directly impacts the valuation of a property.

When assessing a property's value, appraisers account for the loss in value that may come from aging, deterioration, or changes in the market that reduce demand for particular property types or locations. This reduction in value is one of the key principles of appraisal, as it helps to ensure that the property's valuation is accurate and reflective of its current condition and market dynamics. By calculating depreciation, appraisers can provide a realistic estimate of fair market value, which is essential for various purposes, such as financing, taxation, and sales transactions.