In situations where modernization has occurred during the life of a structure, the appraiser must estimate the RCN of each type of structure and compute the effective age and/or the weighted age.
Effective Age
The effective age is calculated by taking the percentage of the remodeling or modernization in relation to the whole. For example:
- 50% of the total structure of a house is 40 years old, 20% is 20 years old, and 30% of the structure is 5 years old.
- 0.50 X 40 = 20.0 years
- 0.20 X 20 = 4.0 years
- 0.30 X 5 = 1.5 years
- 20.0 + 4.0 + 1.5 = 25.5 years
- The effective age of the structure is 25.5 years
Weighted Age
The weighted age differs from the effective age in that it is used when an improvement has 2 or more "segments," each with a different construction date (as opposed to modernization or remodeling). The age is weighted according to the percentage attributable to each construction date.
This approach may be used when the quality of construction is the same for both the original building and the addition(s). For example:
- A 10,000 square foot building was constructed in 1977. An addition built in 1987 is of equal quality. The addition is 2,000 square feet. The total square footage is therefore 12,000.
- 10,000÷ 12,000 = 83.3% is original improvement
- 2,000 ÷ 12,000 = 16.7% is original improvement
- 0.833 X 1977 = 1646.84
- 0.167 X 1987 = 331.83
- 1646.84 + 331.83 = 1978.67
The weighted age of the building is 1978.67, rounded to 1979. If an improvement has both remodeling and additions of differing ages, the effective age of the modernized portions is calculated first, then a weighted age of the entire improvement is calculated.
As an experienced real estate appraiser with extensive knowledge in property valuation and assessment, I've conducted numerous appraisals and assessments for various properties across diverse market segments. I possess a deep understanding of the principles and methodologies involved in determining property values, especially when it comes to evaluating structures that have undergone modernization or renovations.
In situations where modernization occurs during the life of a structure, the appraiser's role is crucial in estimating the Reproduction Cost New (RCN) of each structure type and computing the effective age and/or weighted age. The effective age and weighted age are essential concepts used in property appraisal to ascertain the overall age of a structure, factoring in modifications, remodels, or additions.
Effective Age refers to the age calculated based on the percentage of remodeling or modernization concerning the entire structure. It involves assigning proportional ages to different segments of the property based on their respective percentages. For instance, if a house is composed of 50% that's 40 years old, 20% that's 20 years old, and 30% that's 5 years old, the effective age calculation involves multiplying each segment's percentage by its age and summing these products to determine the cumulative effective age.
Using the provided example:
- 0.50 X 40 = 20.0 years
- 0.20 X 20 = 4.0 years
- 0.30 X 5 = 1.5 years
- Total: 20.0 + 4.0 + 1.5 = 25.5 years Therefore, the effective age of the structure is 25.5 years.
Weighted Age, on the other hand, is utilized when improvements have multiple segments, each with different construction dates, while maintaining a consistent quality of construction. This method involves weighting the ages based on the percentage attributed to each construction date. It's especially applicable when assessing both the original building and any subsequent additions.
For instance, if a building was initially constructed in 1977 and an equal-quality addition was built in 1987, the weighted age calculation involves determining the percentage of the original improvement and the addition, then multiplying these percentages by their respective construction dates and summing these products to calculate the weighted age of the entire structure.
Using the provided example:
- Original improvement: 10,000 ÷ 12,000 = 83.3%
- Addition: 2,000 ÷ 12,000 = 16.7%
- Calculation: 0.833 X 1977 = 1646.84
- Calculation: 0.167 X 1987 = 331.83
- Total: 1646.84 + 331.83 = 1978.67 Therefore, the weighted age of the building is 1978.67, rounded to 1979.
In cases where an improvement has both remodeling and additions of differing ages, the process involves calculating the effective age of the modernized portions first. Then, a weighted age of the entire improvement is calculated by considering the percentages attributed to each segment's construction dates. This comprehensive assessment helps appraisers accurately evaluate the overall age of the structure, considering its various components and modifications.
