How does external obsolescence typically affect property value?

External obsolescence refers to a reduction in property value caused by negative factors outside the property itself. This can include issues such as changes in the local economy, the presence of undesirable neighboring properties, or shifts in demographic trends that affect desirability. When these external factors are present, they can lead to a decreased demand for the property, ultimately pushing its market value down.

Understanding this concept is vital for appraisers, as recognizing and accurately assessing external obsolescence can significantly impact the valuation process. Unlike internal factors, such as the condition of the property or its features, external obsolescence stems from the environment surrounding the property, which is often beyond the owner's control.

This distinction is essential in property appraisal since it highlights that while certain conditions can enhance value or maintain stability, external obsolescence consistently exerts downward pressure on value due to external influences that detract from a property’s attractiveness.