Affiliate Broker Tennessee (TN PSI) National Practice Exam `

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Study for the Affiliate Broker Tennessee National Exam. Practice with flashcards and multiple choice questions, with hints and explanations. Prepare well for your licensing exam!

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A loss in value caused by an undesirable influence offsite is referred to as what type of depreciation?

Physical deterioration
Functional obsolescence
External depreciation
Market depreciation

The correct answer is: External depreciation

The correct term for a loss in value caused by undesirable influences occurring outside of a property is known as external depreciation. This type of depreciation reflects factors that are not related to the physical condition of the property itself or its functionality, but rather the external environment impacting its value. External depreciation can arise from various sources, such as an increase in crime rate in the area, the construction of a highway nearby that leads to noise pollution, or a decline in the local economy that affects property demand. These external factors can significantly affect property values, even if the property is well-maintained and in good condition. Understanding external depreciation is crucial for real estate professionals, as it helps them assess a property’s market value more accurately and make informed decisions regarding property investment or sale strategies.