Example of Functional obsolescence

A 3 bedroom house with one bathroom and a single car garage is an example of:

  1.  economic obsolescence
  2.  functional obsolescence
  3.  curable depreciation
  4.  none of the above

The answer is b.

Functional obsolescence refers to a loss in value of a property caused by one of 3 possibilities:

  1. unpopular floor plan and layout – if you have a laundry room in the master bedroom, that won’t be too popular.  Imagine waking up to the noise of a washer dryer – not cool right?
  1.  Outdated appliances and equipment.
  1.  Poor architectural design.  As in the question above, a three-bedroom, one-bath home with a single-car garage is an example of depreciation caused by functional obsolescence. Why? Because most buyers of three- bedroom homes prefer one and one-half or two bathrooms and a two-car garage.  Therefore, all other things being equal, the three-bedroom, one-bath home usually sells at a lower price.