Property Valuation
What is 'external obsolescence' in real estate appraisal?
AA. Loss in value due to the property's own physical deterioration
BB. Loss in value due to factors outside the property, such as noise, pollution, or declining neighborhood✓ Correct
CC. Loss in value due to outdated interior design
DD. Depreciation of exterior building materials
Explanation
External obsolescence (also called economic obsolescence) is a loss in value caused by factors outside the property's boundaries. Examples include a new freeway built nearby, industrial rezoning of a residential area, or neighborhood economic decline. It is generally incurable by the property owner.
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