A home was built several years ago and was actually constructed without a functioning heat or air conditioning system.
If an appraiser were to use the cost depreciation approach he would refer to this exclusion of heat and air in the buildiong construction as external obsolescence.
Is this fact true or false ?
Take your time. The solution is posted below the royalty free wildlife photo.
The absence of heat and air is considered functional obsolescence whicch would result in loss of value because of outdated construction or design.
External obsolescence is a loss of value which occurs as a result of factors which occur outside of property, such as a property located adjacent to an abandoned factory building.
External obsolescence may also be referred to as 'external inadequacy' or economic obsolescence'.