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  • Writer's pictureRaphael Collazo

What is Functional Obsolescence?

Functional obsolescence is a type of real estate appraisal term used to describe the reduction in value of a property due to its design, layout, or other features that are no longer suitable for the current market. It can occur when a property becomes outdated or lacks modern amenities or features that are in demand by buyers or tenants.


For example, a property with a floor plan that is no longer popular, or with outdated electrical or plumbing systems, may be considered functionally obsolete. In such cases, the property may be less valuable or desirable to potential buyers or tenants, and may therefore be worth less than similar properties that are more up-to-date or have more desirable features.


Functional obsolescence can also be caused by external factors, such as changes in land use or zoning regulations that make a property less suitable for its intended use. It is an important factor that real estate appraisers consider when determining the value of a property.

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