Property ValuationIntermediateAlaska Exam

Obsolescence caused by a zoning change that allows an incompatible use adjacent to a residential property in Alaska is an example of:

APhysical deterioration
BExternal obsolescenceCorrect
CFunctional obsolescence
DCurable depreciation

Why External obsolescence Is Correct

Answer B: External obsolescence

External (economic) obsolescence results from conditions outside the property — a nearby incompatible land use, economic decline, or zoning change — that reduce the property's value. It is generally incurable by the owner.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

Key Property Valuation Terms in This Question

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