Davis' house is perceived negatively due to a nearby chicken farm's odor—this is an example of?

The situation described with Davis' house being perceived negatively due to the odor from a nearby chicken farm is an example of external obsolescence. This concept refers to a decrease in the value of a property caused by external factors that are often beyond the control of the property owner.

In this case, the unpleasant smell from the chicken farm is an external influence that adversely impacts the desirability of Davis' property. External obsolescence can result from various factors such as environmental elements, changes in the neighborhood, or economic shifts. It is important to note that these external influences do not stem from the property itself, differentiating it from other forms of depreciation, such as economic or functional obsolescence.

Understanding external obsolescence is crucial for real estate professionals because it can significantly affect property valuation and marketability. Investors and homeowners should be aware of how surrounding conditions can impact their property investments, as those factors can lead to decreased property values over time.