New York Real Estate Salesperson ExaminationValuation and Market AnalysisEasy
Which of the following factors is an example of external obsolescence affecting property value?
- AAn outdated kitchen and bathrooms within the property.
- BIncreased traffic noise from a newly constructed highway nearby.
- CA poorly designed floor plan that makes rooms less functional.
- DA leaky roof requiring immediate repair.
Show answer & explanationAnswer & explanation
Correct answer: B. Increased traffic noise from a newly constructed highway nearby.
External obsolescence is a loss in value due to factors outside the property boundaries, such as environmental, social, or economic forces. Increased traffic noise from a new highway is a perfect example.
Why the other options are wrong
- A. This is functional obsolescence, as it relates to the property's design or features.
- C. This is functional obsolescence, as it relates to the property's design or utility.
- D. This is physical deterioration, a form of physical depreciation.
External Obsolescence
A loss in property value due to factors outside the property itself, often incurable.
- Caused by external, environmental, or economic factors.
- Often incurable.
- Examples: proximity to undesirable facilities, economic downturns.
Memory trick: Depreciation: 'PFE' for Physical, Functional, External.