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Joe from Prep Agent discusses the three types of depreciation: functional obsolescence, economic obsolescence, and physical deterioration. Physical deterioration refers to a property falling apart. Functional obsolescence occurs when a property loses value due to factors like poor design or conditions within the property owner's control. Economic obsolescence involves a loss in property value due to external factors, such as an airport or increased crime in the area. Joe encourages viewers to continue studying and to learn five new words every day.