What does "effective age" refer to in real estate?

Effective age in real estate is a concept that signifies the age of a property in relation to its current condition and functionality rather than its actual chronological age. This allows appraisers to evaluate properties not just based on how long they have existed, but also how well they have been maintained and any renovations or updates that have enhanced their usability.

For example, a house that is 30 years old but has been completely renovated may have an effective age of only 10 years, reflecting its current state. In contrast, a poorly maintained property of the same age may be viewed as having an effective age greater than its chronological age due to dilapidation or outdated features.

This focus on condition and functionality provides a more accurate appraisal value, as it affects how potential buyers perceive the property and its desirability in the market.