What does Functional Obsolescence result from?

Functional obsolescence refers to a reduction in the utility or desirability of a property due to factors within the property itself, rather than external influences. It often arises from over-improvement, where features or design choices exceed what is considered practical or desirable for the current market. In some cases, it can also relate to deficiencies that make the property less functional or appealing, such as outdated layouts, lack of modern amenities, or inefficient designs that fail to meet the needs of contemporary buyers.

For instance, a home with too many bedrooms but only one bathroom may be seen as functionally obsolete because it does not meet the needs of families looking for a balanced ratio of bedrooms to bathrooms. Similarly, properties that include outdated features or that are difficult to maintain due to design choices may also suffer from functional obsolescence.

The other choices generally refer to external factors or physical condition issues unrelated to the inherent design or utility of the property itself. For example, physical damage pertains to deterioration or wear and tear, while market fluctuations reflect changes in the real estate market that impact value but are not directly tied to the functionality of the property. Changes in zoning laws may affect property usage but do not inherently relate to the functional aspects of the property itself.