Property Valuation
In Florida real estate, 'functional obsolescence' is defined as a loss in value due to:
APhysical deterioration from age and use
BExternal factors outside the property's boundaries
COutdated design, poor layout, or features that are inadequate for current market needs✓ Correct
DEnvironmental contamination on the property
Explanation
Functional obsolescence is a loss in value caused by the property's own design flaws or outdated features — things that make the property less functional or desirable in today's market. Examples include too few bathrooms, low ceiling heights, outdated mechanical systems, or poor floor plan layout.
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Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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