Texas Property Tax Consultant Practice Exam

What is the term for the loss in value due to external influences over which the property owner has no control?

1. Functional curable obsolescence

2. Physical curable obsolescence

3. Functional incurable obsolescence

4. Economic or external obsolescence

The correct answer is: Economic or external obsolescence

The term that refers to the loss in value of a property resulting from external influences, which are often beyond the control of the property owner, is known as economic or external obsolescence. This type of obsolescence occurs when factors outside of the property itself affect its market value. Common examples include changes in the economy, such as a declining neighborhood, new regulations, or environmental issues, all of which can diminish the attractiveness or functionality of the property. Understanding this concept is essential for property tax consultants, as it impacts property valuation, assessments, and potential appeals. The significance of recognizing external obsolescence lies in providing accurate assessments for property tax purposes, ensuring that property owners are not unfairly taxed on a value that does not reflect current market conditions.