remaining ecomonic life

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Appraising: How to Calculate Remaining Economic Life

May 23, 2012By

There’s never any lack of confusion when it comes to the topic of estimating Remaining Economic Life (REL). For the most part, this confusion centers on the misunderstanding that REL is reflective of the number of years a physical structure is expected to last. Just think about it: From a mortgage perspective, this concern is reasonable. Who wants to make a 30-year mortgage on a residential property if the physical structure isn’t expected to last more than 20 years? From an appraiser’s perspective, the REL is part of a simple calculation used to estimate depreciation for the cost approach. The