The deterioration of property value due to external factors is known as?

The deterioration of property value due to external factors is known as?

• A. Functional obsolescence
• B. External obsolescence
• C. Physical depreciation
• D. Market depreciation

Answer: (B)

The deterioration of property value due to external factors is referred to as external obsolescence. This term encompasses loss in value that arises from outside the property itself, such as changes in the surrounding neighborhood, negative economic impacts or decreased desirability due to environmental factors. For instance, if a major factory moves into a neighborhood, it might create noise and pollution that lower property values for homes nearby. Functional obsolescence, on the other hand, relates to a property's own design or layout flaws that make it less desirable or efficient. Physical depreciation refers to the wear and tear of the property over time, typically reflecting issues with maintenance or the aging of physical structures. Market depreciation is a broader term that can encompass various factors affecting the overall market conditions but does not specifically target external influences on property value. Thus, external obsolescence precisely captures the concept of value loss due to factors outside the property itself.

The deterioration of property value due to external factors is referred to as external obsolescence. This term encompasses loss in value that arises from outside the property itself, such as changes in the surrounding neighborhood, negative economic impacts or decreased desirability due to environmental factors. For instance, if a major factory moves into a neighborhood, it might create noise and pollution that lower property values for homes nearby.

Functional obsolescence, on the other hand, relates to a property's own design or layout flaws that make it less desirable or efficient. Physical depreciation refers to the wear and tear of the property over time, typically reflecting issues with maintenance or the aging of physical structures. Market depreciation is a broader term that can encompass various factors affecting the overall market conditions but does not specifically target external influences on property value. Thus, external obsolescence precisely captures the concept of value loss due to factors outside the property itself.