What constitutes an external obsolescence in property appraisal?

External obsolescence refers specifically to the loss in property value caused by negative influences that originate outside of the property itself. These factors can include a variety of environmental changes, economic shifts, or social factors that impact the desirability of the property. For example, if a factory moves into the neighborhood, it may lead to noise, pollution, or traffic issues that detract from the property's value. Similarly, a decline in the local economy or changes in zoning laws can result in decreased demand for properties in that area.

Recognizing external obsolescence is crucial for appraisers as it directly affects the valuation process, distinguishing it from internal factors that relate specifically to the property structure or management. Understanding this concept helps appraisers provide more accurate property assessments that reflect current market conditions and external influences.