What is a common approach for valuing property impacted by economic obsolescence?

When valuing property affected by economic obsolescence, the most effective approach involves considering the cost to cure the obsolescence. This approach focuses on determining the necessary expenditures to rectify the adverse economic conditions impacting the property value.

Economic obsolescence refers to the depreciation in property value due to external factors, such as changes in the local economy, market conditions, or neighborhood decline. The cost to cure measures the expenditure required to eliminate or mitigate these external factors adversely affecting the property's value. For example, if a property is suffering from decreased demand due to nearby industrial development or increased traffic congestion, identifying and estimating the costs involved in improvements or adjustments that would make the property more attractive or valuable is crucial.

Using discounted cash flow analysis provides a method for determining value based on projected income streams, but it does not directly address how external economic factors impact value. Similarly, while adjusting comparables based on market trends can yield useful insights, it may not specifically account for the unique economic challenges facing the property. Adding a premium for the location, while beneficial in some scenarios, fails to address the actual loss in value caused by external economic forces.

In summary, focusing on the cost to cure provides a tailored approach specifically addressing the impact of economic obsolescence, thereby