Understanding Functional Obsolescence

There are many examples of homes having some form of objectionable features. In real estate this is referred to as having functional obsolescence. It is common for older homes to have functional obsolescence. If you have been looking at homes, you've probably come across some antiques that you have to walk through one bedroom to get to another.

Most people would find doing so objectionable, hence the term being functionally obsolete. Many many years ago this design would have been acceptable but it no longer is today. When selling a home that has a feature like this a significant percentage of buyers may pass on the property because of this design flaw. It can impact no only the salability but also the market value.

When a real estate appraiser puts together an appraisal they will discount the market value if they find any kinds of functional obsolescence with the home. What should be made clear is that functional obsolescence does just have to pertain to the home itself.

You can have functional obsolescence based upon a feature in a general area. For example, if the home backed up to a gas station quite a few people may find that unappealing. There could be a toxic waste dump in close proximity to a property. These things would have a bearing on the property value and therefore a real estate appraiser could drop the value of the subject property.

In the article reference at Maximum Real Estate Exposure, you will see a detailed overview of all the types of functional obsolescence. Some types are worse that others. In some properties you can have curable obsolescence, while in others it cannot be fixed. The value of a property would be reduced further if the issues cannot be fixed.

There is also the possibility of having economic obsolescence as well which is explained in the article. If you know someone who is going to be buying a home and they have found a property with unusual features, it is vital to make sure they understand how it will impact the value.

Will the home be a lemon that is hard to sell? Properties such as these can be troublesome, especially if you get transferred quite a bit. While a house is a home, it is also an investment. Before making the plunge into any purchase, you should have a grasp on whether there is an functional obsolescence.