Which of the following best describes accrued depreciation in real estate valuation?

Accrued depreciation in real estate valuation refers specifically to the decrease in property value that occurs due to physical deterioration, functional obsolescence, or economic obsolescence. This concept encompasses the loss in value that arises from normal wear and tear of the property and its components over time. Such deterioration might be due to factors like age, lack of maintenance, or changing market conditions that affect property desirability.

In real estate appraisals, accrued depreciation is an important aspect of determining the current value of a property, as it directly impacts the net worth of an asset. For instance, a well-maintained property may exhibit less accrued depreciation compared to a similar property that has not been well cared for, despite both being in the same location.

The other options do not accurately represent the definition of accrued depreciation. The total cost of land improvements pertains to expenses incurred to enhance the land but does not indicate value loss. The estimated cost to restore a property relates to potential expenses necessary to return a property to its original condition instead of its current depreciated status. Meanwhile, the increase in property value over time describes appreciation, which is the opposite of what accrued depreciation reflects.