Effective Age

The effective age of a building is the estimated age based on condition instead of actual age. A building in good maintenance will have a lower effective than chronological age. On the other hand, a building in disrepair will have a higher effective age than a chronological one. Effective age is important to consider when making a purchase offer on real estate. A building in good repair with a lower effective age can be a real bargain when compared to similar buildings with a higher effective age. The seller may know this and make the sale price reflect its good shape. But a building in bad repair with a high effective age can be a bad investment. Of course, the condition of the building can be used in the negotiations to bring down the price of the property.