Which of the following is an example of functional obsolescence?

• A. External obsolescence
• B. Physical deterioration
• C. Economic obsolescence
• D. Functional obsolescence

Answer: (D)

Functional obsolescence happens when a property's design features limit its usefulness or appeal relative to current market preferences, even if the building itself is in good repair. For example, an outdated floor plan, a kitchen that doesn’t suit modern living patterns, or cramped bathrooms can make a home feel less functional to buyers, reducing its value. This type of obsolescence is internal to the property’s design, not caused by wear and tear or by conditions outside the parcel.

External obsolescence involves factors outside the property, such as a noisy highway or nearby nuisance uses, which can depress value. Physical deterioration is actual damage or wear, like a leaky roof or crumbling siding. Economic obsolescence (often overlapping with external obsolescence) refers to value loss due to broader economic conditions or market forces beyond the property itself. If the functional shortcomings can be corrected through remodeling or reconfiguration, the obsolescence is curable; if not, it remains incurable.