Which method separates depreciation into curable and incurable factors?

The method that separates depreciation into curable and incurable factors is the Observed Condition method. This approach involves a thorough analysis of a property’s physical condition, allowing the appraiser to determine which aspects of depreciation can be effectively addressed through repairs or replacements (curable) and which cannot be alleviated by any reasonable means (incurable).

By observing the specific elements that contribute to depreciation, the appraiser categorizes them based on whether rectifying these issues would be financially feasible or beneficial. For instance, if a property has a roof that is nearing the end of its useful life, replacing it could be considered a curable depreciation expense. Conversely, if a property has structural flaws that cannot be cost-effectively repaired, these would be classified under incurable depreciation.

This detailed breakdown not only helps in assessing the property's current value but also aids investors and stakeholders in making informed decisions regarding potential improvements. Understanding the difference between curable and incurable depreciation is essential for accurate property valuation and investment strategy. Other methods, like Engineering Breakdown or Sales Comparison, focus more on overall valuation rather than specifically separating types of depreciation.