What does "effective age" refer to?

"Effective age" is a real estate concept that represents the age of a property as it appears based on its condition, maintenance, and functional utility, rather than its actual chronological age. This means that the effective age may be significantly more or less than the actual age depending on various factors such as renovations, upgrades, and the overall upkeep of the property.

For instance, a home that is 30 years old but has been extensively renovated might have an effective age of only 10 years because it functions and looks like a much newer property. Conversely, a newer property might have an effective age of 20 years if it has been poorly maintained.

This distinction is crucial for appraisals and property assessments, where the effective age can influence the property's market value. Investors and real estate professionals often consider effective age to better understand the true condition and worth of a property beyond just its physical age.