Which term describes something outside property that makes it less desirable?

• A. External Obsolescence
• B. Balance
• C. Capitalization
• D. Comparable

Answer: (A)

External obsolescence is the depreciation in a property's value caused by factors outside the property's boundaries. Things like nearby highways, undesirable neighboring land uses, pollution, crime, or zoning changes can make a property less desirable and reduce what buyers are willing to pay. Because these issues come from outside the property and often cannot be cured by the owner, external obsolescence is typically considered incurable. This distinguishes it from functional obsolescence, which comes from inside the property (layout, features, or design) and can sometimes be addressed. The other terms don’t describe outside conditions affecting desirability: balance relates to finances, capitalization is converting income to value, and comparable refers to similar properties used for valuation.