Suppose that an appraiser has come to the following conclusions in evaluating th

Question

Suppose that an appraiser has come to the following conclusions in evaluating the subject property. Due to the dramatic shift in the perceived safety of the neighborhood, values of any residential properties in the area of the subject property have fallen by $10,000, on average. Due to the subject property’s age, physical deterioration to the building accounts for an estimate of $50,000 in lost value. An evaluation of the floor plan reveals that it is quite obsolete relative to current homebuyer preferences. This has a detrimental effect on the value of the property that is estimated to be approximately $15,000. Based on your understanding of adjustments related to accrued depreciation, which of the following pertains to the adjustment for external obsolescence

Explanation / Answer

In this case, external factor which is out of the builder's authority will be the neighbourhood because he can not make decisions for that.

So external obsolescence will come from the neighbourhood which is=10000

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