Florida Real Estate Broker ExaminationValuation and Market AnalysisEasy
A buyer is interested in a 15-year-old single-family home. During the inspection, it's noted that the home still has its original, outdated plumbing and electrical systems, which are functional but do not meet current aesthetic or efficiency standards. This condition would most likely be categorized as which type of depreciation?
- AFunctional Obsolescence
- BCurable Physical Deterioration
- CExternal Obsolescence
- DPhysical Deterioration
Show answer & explanationAnswer & explanation
Correct answer: A. Functional Obsolescence
Functional obsolescence refers to a loss in value due to outdated design, features, or systems within the property that are still functional but no longer desirable by modern standards.
Why the other options are wrong
- B. While it might be curable, the primary classification of the depreciation itself is functional obsolescence, not its curability.
- C. External obsolescence is caused by factors outside the property, like a nearby landfill or noisy highway.
- D. Physical deterioration refers to wear and tear from age or lack of maintenance, not outdated design.
Functional Obsolescence
A loss in property value due to an outdated design, style, or features that are no longer desirable or efficient by modern standards.
- Caused by factors within the property boundaries
- Results from poor design or outdated features
- Can be curable or incurable
Memory trick: Faded functions make homes feel old.