External Depreciation

External Depreciation Definition

External Depreciation means depreciation of a property caused by negative economic impacts of the surrounding area: conditions outside the property line boundaries and usually outside the control of the property owner or occupant.

Explanation

Your real property is valued on the land itself and the improvements upon the land: the structure(s). Your real property is also valued upon the immediate surrounding area. So, if you live in a neighborhood where all the nearby properties are in disrepair, this can bring down the overall value of your real property.

Other examples of factors causing external depreciation are including but not limited to: increase in crime rates and/or gang activity, an abundance of sale or use of illegal or controlled substances, poor economic conditions in the town or city, high rates of violence or theft and any other similar activity or condition that is generally considered undesirable, unsafe or nuisance by society at large.

 

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