What is external obsolescence?

External obsolescence refers specifically to the loss of value that a property experiences due to external factors that are outside of the property itself. These factors can include a variety of elements such as changes in the surrounding area, economic downturns, environmental issues, or shifts in community demographics. Unlike internal obsolescence, which arises from issues within the property, external obsolescence is linked to external conditions that negatively impact the desirability and therefore the market value of the property.

For instance, if a factory opens nearby and produces noise and pollution, properties in the vicinity may suffer from external obsolescence, as potential buyers may be deterred by the surrounding environment. This concept is crucial for real estate professionals to understand, as it impacts property valuation and investment decisions.

The other options refer to different types of obsolescence that occur for various reasons, but they do not capture the essence of external obsolescence, which specifically relates to outside influences impacting a property’s value.