Property ValuationIntermediateArizona Exam

External obsolescence affecting an Arizona property's value might be caused by:

AA worn-out roof on the subject property

BAn outdated floor plan that buyers do not prefer

CA new highway built adjacent to a residential neighborhoodCorrect

DDeferred maintenance on the property

Why A new highway built adjacent to a residential neighborhood Is Correct

Answer C: A new highway built adjacent to a residential neighborhood

External (economic) obsolescence results from factors outside the property boundaries — such as a nearby highway, industrial facility, or neighborhood decline — that negatively impact value. It is generally incurable by the property 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.