What does the term "external obsolescence" refer to?

The term "external obsolescence" refers to a loss in value of a property due to factors outside of the property itself. This can arise from various external influences such as changes in the neighborhood, economic downturns, or the presence of undesirable nearby developments (like factories or highways) that negatively impact the property’s desirability and market value.

In the context of the options provided, the first choice describes regular wear associated with aging, which is not external but rather internal to the property. The second and third choices relate to methods of property valuation and do not address the concept of obsolescence directly. Thus, the correct understanding is that "external obsolescence" does not fit within those definitions, leading to the conclusion that none of the provided options accurately describe the term in question.