In the context of property appraisals, what does "wear and tear" refer to?

"Wear and tear" refers to the natural deterioration of a property over time, which directly leads to a reduction in its value. Factors contributing to wear and tear include exposure to the elements, lack of regular maintenance, and the aging process. This concept acknowledges that as a property is used, its physical condition declines, which can impact market value and appraisals.

Understanding wear and tear is essential for appraisers as it assists them in determining the current value of a property by factoring in necessary adjustments for depreciation. The concept emphasizes the importance of maintaining a property to sustain its value and highlights the financial implications of neglect over time.

In contrast, enhancements to property value or necessary repairs that increase market value are not considered wear and tear, as they imply improvements or upgrades that positively affect the property’s condition. Similarly, aesthetic changes aimed at upgrading a property do not fall under wear and tear since they are generally associated with enhancements rather than the natural decline of an asset.