Property Valuation
What is 'external obsolescence' caused by proximity to a lava flow zone in Hawaii?
AA. Physical deterioration of the building from volcanic gases
BB. A loss in value due to an external factor (lava zone location) outside the property that reduces demand and value regardless of the property's physical condition✓ Correct
CC. A zoning restriction reducing buildable area
DD. A physical defect in the building caused by seismic activity
Explanation
Being located in an active lava zone (such as Lava Zone 1 or 2 on Hawaii Island) is a classic example of external obsolescence. The location reduces the property's marketability and value due to the risk of lava inundation, which is an external factor beyond the property owner's control. This results in measurable value reduction.
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