Florida Real Estate Practice Exam

What type of depreciation is attributed to changes in the neighborhood that affect a home's value, like increased noise or traffic?

1. Physical depreciation

2. Functional obsolescence

3. Incurable depreciation

4. External depreciation

The correct answer is: External depreciation

External depreciation is the type of depreciation that is attributed to changes in the neighborhood that affect a home's value, like increased noise or traffic. This is because these changes are external factors that are beyond the control of the homeowner and can negatively impact the value of the property. Physical depreciation refers to the wear and tear on a building's structure and materials over time, while functional obsolescence is when a property's features no longer meet the needs or desires of potential buyers. Incurable depreciation is when a property's value is permanently decreased due to factors that cannot be fixed or improved. These types of depreciation do not involve changes in the neighborhood.