Property Valuation
What is 'economic obsolescence' as a form of depreciation in real estate appraisal?
APhysical wear and tear on a building
BOutdated floor plans that cannot be corrected by renovation
CLoss in value due to factors external to the property, such as economic decline in the area✓ Correct
DDeterioration of mechanical systems such as HVAC
Explanation
Economic (or external) obsolescence is a loss in value caused by factors outside the property, such as neighborhood decline, proximity to nuisances, or broader economic downturns. It is typically incurable.
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