What is the formula for the modified age-life method?

The modified age-life method is used in real estate appraisal to assess depreciation by considering the cost of a property and the extent to which it has depreciated over time. The correct formula involves calculating the cost new of the property, subtracting any curable items, and then applying the depreciation factor.

By starting with the cost new, which represents the cost to construct the property at current prices, and taking away the cost of curable items, the modified age-life method adjusts for the value that can be restored or improved. This adjusted cost is then multiplied by the percentage of depreciation to accurately reflect the property's current value.

This method is particularly useful because it recognizes that not all items that contribute to depreciation are beyond repair. By focusing on curable items and factoring that into the calculation, appraisers obtain a more precise estimate of the value of the property considering its current condition and future potential. This approach is foundational in helping appraisers come to a more informed decision about a property's market value.