Final answer:
External depreciation refers to factors outside of a property that cause its value to decrease over time. Examples of external depreciation include a leaking roof and poorly maintained properties in the neighborhood. Factors such as a poorly designed floor plan and convenient access to schools and recreational facilities do not fall under external depreciation.
Step-by-step explanation:
External depreciation refers to factors outside of a property that cause its value to decrease over time.
- A leaking roof that needs to be completely replaced would be classified as external depreciation. The roof is an external component of the house, and if it is not maintained properly, it can lead to structural damage and reduce the overall value of the property.
- Poorly maintained properties in the neighborhood can also be classified as external depreciation. If neighboring properties are in poor condition, it can negatively impact the desirability and value of the property in question.
- A poorly designed floor plan that could be modified may not necessarily be categorized as external depreciation. While it may affect the functionality of the property, it is an internal factor that can be modified or improved by the owner.
- Convenient access to schools and recreational facilities would not be classified as external depreciation. It may actually enhance the value of the property as it provides amenities and convenience for potential buyers or residents.