What is an example of functional obsolescence in real estate?
For example, an old, two-bedroom house in an area with modern three bedrooms with a bathroom in each room can be considered functionally obsolete. Other items that are highly prone to functional obsolescence include electronics, such as smartphones.
What are the 3 types of obsolescence?
“Obsolescence” is the term used to refer to something that is either out of date, or no longer in line with market requirements. As it relates to a commercial real estate investment, there are three types of obsolescence: functional, economic, and physical.
What causes functional obsolescence?
Functional obsolescence occurs when an asset becomes less useful or desirable due to an outdated design that can’t easily be updated or changed. (Tweet this!) In recent decades, functional obsolescence is most often the result of new technology; a good example is VHS videotape.
Which of the following is an example of curable functional obsolescence?
If it does it is considered curable. An example of curable functional obsolescence would be if renovating a kitchen would result in an increase in the overall value of the house greater than the cost to renovate the kitchen. Most curable functional obsolescence are deficiencies.
Which of the following is considered functional obsolescence?
Which of the following is the best example of functional obsolescence? Old fashion architecture such as massive cornices, would be classified as functional obsolescence.
What is functional or physical obsolescence?
What Is Functional Obsolescence in Real Estate? Functional obsolescence in real estate describes a property that has decreased in desirability or functionality due to an outdated design feature, physical deterioration, or undesirable external factors.
What is the best example of functional obsolescence quizlet?
What is functional obsolescence quizlet?
Functional obsolescence is a property’s loss of value due to functional inadequacies that are usually caused by age or poor design, such as a poor floor plan, excessively high or low ceilings, or antiquated architecture.
What is an example of external obsolescence?
External Obsolescence is a form of depreciation caused by factors not on the property itself, such as environmental, social, or economic forces. An example would be a very nearby garbage dump. The homeowner cannot reverse this loss in value by spending money to fix something.
What is an economic obsolescence?
Economic obsolescence (EO) is the loss of value resulting from external economic factors to an asset or group of assets. EO is often encountered in valuation work performed for financial reporting purposes, bankruptcy emergence and in other practice areas when dealing with companies in capital-intensive industries.
What is the difference between functional and external obsolescence quizlet?
Functional obsolescence cannot be cured. External obsolescence is usually incurable.
Which of the following is an example of external obsolescence?