In April 2026, Maria lists a well-maintained house. Two months later, a six-lane highway opens directly behind the property and increases noise for the entire block. In the cost approach, this loss is best classified as what?
Correct Answer
B) External obsolescence caused by an outside adverse influence
A highway behind the property is an outside influence that reduces desirability without arising from wear to the structure itself. In the cost approach, that is classic external obsolescence, because the source of the loss is outside the property boundary.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
More Valuation Market Analysis Questions
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When appraising co-op apartments in New York, all of the following factors must be considered due to their unique ownership structure EXCEPT:
A first-time buyer in New York City asks their agent about the difference between owning a co-op versus a condo. What is the fundamental ownership difference the agent should explain?
An agent in Staten Island is explaining maintenance fees to a co-op buyer. The buyer asks what expenses are typically included in a co-op maintenance fee that differ from condo common charges. What should the agent explain?
- → An appraiser is using the income approach to value a 12-unit rental building in Brooklyn. The building generates $180,000 in annual gross rental income. Operating expenses total $54,000 annually. The appraiser determines that a 7.5% capitalization rate is appropriate for this type of property in this location. What is the indicated value using the income approach?
- → An example of functional obsolescence is:
- → The best method to determine fair market value is:
- → Who typically hires the appraiser in a real estate transaction?
- → A depth table is used to estimate property value for:
- → Under federal law, which type of loan typically does NOT require a property appraisal?
- → FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act) requires:
- → For appraising a vacant lot for single-family residence construction, which approach applies?
- → The final appraisal step of weighing different approaches is called:
- → For 1930s buildings, the cost approach is least accurate due to:
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Previous Question
On a June 2026 appraisal, Emma estimates a home's replacement cost new at $320,000 and site value at $90,000. Physical deterioration is $20,000 and functional obsolescence is $10,000, with no external obsolescence. What indicated value does the cost approach produce?
Next Question
During a July 2026 inspection, Appraiser Ben sees a dwelling where one bedroom can be reached only by walking through another bedroom. Which form of depreciation does that design problem most clearly illustrate?