Valuation and Financing Practice Question
Question
A seller is reviewing documents before accepting an offer involving depreciation. Which statement is the most accurate exam answer? (Item 87)
Answer choices
- A. It removes the need for written disclosure if the licensee believes the client already knows.
- B. It can be ignored if the transaction is expected to close quickly.
- C. Distinguish physical deterioration, functional obsolescence, and external obsolescence.
- D. It requires the licensee to favor the other party over the licensee’s own client.
Correct Answer
C. Distinguish physical deterioration, functional obsolescence, and external obsolescence.
Explanation
The correct answer is C because depreciation requires candidates to distinguish physical deterioration, functional obsolescence, and external obsolescence. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: medium
- Domain: Valuation and Financing
- Objective: depreciation