Property Valuation
What is 'functional obsolescence' in real estate appraisal?
APhysical wear and tear that reduces a building's useful life
BLoss in value due to outdated design, layout, or features that make the property less functional — such as only one bathroom in a large house or outdated electrical systems✓ Correct
CValue loss due to location in a declining neighborhood
DDepreciation calculated using the age-life method
Explanation
Functional obsolescence is a loss in value caused by outmoded design features, poor layout, or inadequate systems compared to current market standards. Examples: outdated kitchen, inadequate closet space, only one bathroom in a 5-bedroom home, or insufficient electrical capacity. It may be curable (fixable at reasonable cost) or incurable.
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