Property Valuation

A Minnesota appraiser determines that the subject property has 'functional obsolescence' due to an outdated floor plan with only one bathroom for a 4-bedroom home. This type of obsolescence is:

AExternal obsolescence caused by neighborhood factors
BCurable if the cost to cure is less than the value added; otherwise incurable✓ Correct
CAlways curable through renovation
DPhysical deterioration requiring immediate repair

Explanation

Functional obsolescence due to an inadequate floor plan (too few bathrooms for the bedroom count) may be curable if the cost to add a bathroom is less than the value it would add. If the cost exceeds the value gain, it becomes incurable functional obsolescence. Minnesota appraisers analyze each case to determine if functional obsolescence is curable or incurable and estimate the appropriate depreciation.

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