What term describes the decrease in property value due to negative external factors, such as a neighboring farm?

The term that describes the decrease in property value due to negative external factors is external obsolescence. This type of obsolescence occurs when the value of a property is affected by external factors that are beyond the property owner's control. These can include the proximity to undesirable land uses, such as a neighboring farm that may be perceived as a nuisance due to smells, noise, or pests. Other examples might include changes in the neighborhood, such as a decline in the local economy or the construction of a highway that alters the accessibility or ambiance of the area.

In contrast, market obsolescence refers broadly to overall market conditions affecting property values, functional obsolescence relates to deficiencies or inefficiencies within the property itself, such as outdated design or inadequate facilities, and physical obsolescence pertains to the deterioration of a property due to wear and tear or lack of maintenance. Understanding these distinctions is crucial for evaluating property values and real estate investments.