Verified market and use information establishes that a home’s circulation, storage and room sizes adequately serve its intended use. Which description addresses that design performance?
Correct Answer
C) Good functional utility
Functional utility concerns how well design and layout serve the intended use and relevant market. Here the facts expressly establish appropriate circulation, storage and room sizes for that use. This does not certify physical condition, prove a premium or make every open plan universally desirable.
Why This Is the Correct Answer
Option C is correct because functional utility refers to the degree to which a building is suited for its intended use. Verified information that the home's circulation, storage and room sizes adequately serve that use describes good functional utility. It addresses design and layout, not physical condition or outside influences.
Why the Other Options Are Wrong
Option A: Physical deterioration
Option A is wrong because physical deterioration describes wear and tear or damage to the improvements. The facts describe how well the design serves its use, not the physical condition of materials.
Option B: Economic obsolescence
Option B is wrong because economic obsolescence is a loss in value from conditions outside the property, such as market or location influences. Adequate room sizes and circulation are internal design features, and the facts show no loss at all.
Option D: External obsolescence
Option D is wrong because external obsolescence is a loss in value caused by factors outside the property. The facts describe a positive internal design attribute, not an outside negative influence.
Function means how it works
Functional utility asks 'Does the layout work for the people who use it?' while physical asks about wear and external asks about outside forces.
How to use: Use this to sort a described feature into functional, physical or external categories.
Exam Tip
Layout, flow, room sizes and storage point to functional utility; condition and wear point to physical deterioration; outside influences point to external obsolescence.
Common Mistakes to Avoid
- -Confusing functional utility with physical condition
- -Treating economic and external obsolescence as describing interior layout
- -Assuming good functional utility automatically proves a value premium
Concept Deep Dive
Analysis
This question tests the concept of functional utility, meaning how well a building's design and layout serve its intended use. The facts describe adequate circulation, storage and room sizes, which are design-performance features, so the correct description is good functional utility rather than a form of depreciation.
Background Knowledge
Functional utility is the ability of a property to perform its intended use well given market standards for layout, room sizes, storage and flow. Because it is analyzed in relation to intended use, each use has its own functional criteria. A deficiency or superadequacy in design is called functional obsolescence, which is distinct from physical deterioration and external obsolescence.
Real-World Application
An appraiser inspects a home with a logical floor plan, adequate closets and bedroom sizes typical of competing homes. Market interviews confirm buyers find the layout suitable, so the appraiser rates functional utility as adequate and makes no functional obsolescence adjustment.
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