In a real estate appraisal, depreciation refers to any condition that adversely affects the value of an improvement. (Land is said to retain its value indefinitely, except in such rare instances as a misused farmland.) Depreciation for appraisal purposes is divided into three classes according to its cause.

1. Physical deterioration. This form of depreciation results from wear and tear due to everyday use and the action of natural elaments such as sun, wind, rain, heat and cold. Physical deterioration is within the property owner's control is most often curable. This means that necessary repairs are economically feasible, considerind the remaining years of life of the building. For example, a new roof would be justifiable expense, even on a 40-year old brick building that is otherwise in good condition. When necessary repairs would not contribute a comparable value to a building--for instance, near the end of a building's useful life--such deterioration would be considered incurable.
2. Functional obsolescence. This form of depreciation results from outmoded function or poor design. An example would be a four-bedroom, one-bath house, or a house with old-fashioned kitchen and bathroom fixtures and inadequate electrical system. As within physical deterioration, functional obsolescence exists witin the property, is within the property owner's control, and is often curable. This means that the features that are no longer considered desirable by property buyers could be replaced or redesigned at reasonable cost. For example, outmoded plumbing fixtures are usually easily replaced. Room function might be redefined at no cost if the basic room layout allows for it, as in the case of a bedroom adjacent to a kitchen that might easily be converted to a family room. When currentlu undesirable physical or design features cannot be easily remedied because of cost or other factors, such obsolescence would be considered incurable.
3. External (economic) obsolescence. This form of depriciation results from adverse factors outside the subject property and thus is beyond the property owner's control. Therefore, external obsolescence is always incurable. For example, proximaity to a nausaince like a polluting factory or a noisy airport would be unchangeable factor that could not be cured by the owner of the subject property.

Depreciation is diffcult to measure because much of functional obsolescence and all of location obsolescence can be evaluated only by considering the actions of buyers in the marketplace.