What is Functional obsolescence in National Real Estate Exam?

Question

Accepted Answer

A loss in value caused by features within the property that are outdated, poorly designed, or no longer desired—a one-car garage, an awkward floor plan, antiquated systems. It may be curable or incurable depending on whether the cost to correct is justified by the added value. Functional obsolescence is when a house loses value not because it's falling apart, but because the way it's built is out of step with what people want today — like a one-car garage in a two-car world, a bedroom you can only reach by walking through another bedroom, or ancient plumbing. It's the real-estate version of a phone that still works but has no camera: nothing's broken, it's just behind the times. Sometimes it's 'curable' (worth fixing because the repair costs less than the value it adds) and sometimes 'incurable' (fixing it would cost more than it's worth, like moving load-bearing walls). The key idea: buyers pay less for a home that doesn't match modern tastes or needs.

Functional obsolescence

Definition

Functional obsolescence in plain English

Learn these first

Related National Real Estate Exam terms