External obsolescence differs from functional obsolescence in that external:
Correct Answer
D) Originates outside the property's boundaries
Why this is correct: External obsolescence is defined by its cause originating outside the subject property's boundaries (e.g., economic decline, nuisance). This distinguishes it from functional obsolescence, which arises from within the property. Why the other choices are wrong: Can be measured by cost to cure is wrong; external obsolescence is incurable by the owner. Is always curable by the owner is wrong; by definition, the owner cannot cure external factors. Applies only to the land component of the property is wrong; it affects the entire property, though it may be allocated between land and improvements. Exam tip: External = outside; Functional = inside.
Why This Is the Correct Answer
Why this is correct: External obsolescence is defined by its cause originating outside the subject property's boundaries (e.g., economic decline, nuisance). This distinguishes it from functional obsolescence, which arises from within the property. Why the other choices are wrong: Can be measured by cost to cure is wrong; external obsolescence is incurable by the owner. Is always curable by the owner is wrong; by definition, the owner cannot cure external factors. Applies only to the land component of the property is wrong; it affects the entire property, though it may be allocated between land and improvements. Exam tip: External = outside; Functional = inside.
More Cost Approach Questions
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Market extraction of depreciation is limited by the fact that it:
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A building with cost new of $600,000, effective age 20 and total economic life 50 has depreciated improvement value of:
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Homes beside a shuttered mall show 12% value loss in paired sales; the loss disappears in listings after redevelopment is announced. For an appraisal dated before the announcement, the obsolescence is: