Real Estate Math
The type of depreciation that is NOT curable because it is caused by factors outside the property is:
- aPhysical deterioration
- bFunctional obsolescence
- External (economic) obsolescence
- dDeferred maintenance
Answer: C · External (economic) obsolescence
External (economic) obsolescence is caused by factors outside the property — a noisy highway, a declining neighborhood — and is generally incurable. Physical and functional issues are often curable. Common trap: students think all depreciation can be fixed; external obsolescence cannot be cured by the owner.
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