Property Valuation
Economic obsolescence in property valuation refers to a loss in value caused by:
APhysical wear and tear
BOutdated floor plans
CExternal factors outside the property✓ Correct
DDeferred maintenance
Explanation
Economic (or external) obsolescence is caused by factors outside the property, such as a plant closure nearby, declining neighborhood, or changes in zoning.
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- External (economic) obsolescence in property valuation refers to:Property Valuation
- External obsolescence (also called economic obsolescence) in a Kentucky property may be caused by:Property Valuation
- Functional obsolescence caused by a feature that the market no longer desires, such as small closets in a Louisville home, is an example of:Property Valuation
- Functional obsolescence is caused by:Property Valuation
Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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