A single-family residence has only one bathroom, bedrooms that can only be accessed through other bedrooms, and a kitchen with no counter space. These issues represent problems with:
Correct Answer
C) Functional obsolescence
These layout and design deficiencies represent functional obsolescence, which occurs when a property lacks utility or desirability due to outdated design, inadequate facilities, or poor layout that doesn't meet current market expectations.
Why This Is the Correct Answer
These layout and design deficiencies represent functional obsolescence, which occurs when a property lacks utility or desirability due to outdated design, inadequate facilities, or poor layout that doesn't meet current market expectations.
Why the Other Options Are Wrong
Option A: Physical deterioration
Physical deterioration refers to actual wear, tear, and decay of building components due to age, use, and exposure to elements. The issues described (poor layout, inadequate facilities) are design problems, not physical damage or deterioration of materials.
Option B: External obsolescence
External obsolescence involves factors outside the property boundaries that negatively impact value, such as nearby industrial facilities, traffic, or economic decline in the area. The problems listed are internal design issues within the property itself.
Option D: Economic obsolescence
Economic obsolescence is essentially the same as external obsolescence - it refers to value loss due to external economic factors beyond the property boundaries. The bathroom, bedroom access, and kitchen issues are internal functional problems, not external economic influences.
FEP Method
Function-External-Physical: Function = design/layout problems INSIDE the house; External = problems OUTSIDE the property boundaries; Physical = actual wear/damage you can SEE and TOUCH
How to use: When you see a question about property problems, ask: Is it a design/layout issue (Function)? Is it caused by something outside the property (External)? Is it physical wear you can touch (Physical)?
Exam Tip
Look for keywords like 'layout,' 'design,' 'inadequate facilities,' or 'outdated features' to identify functional obsolescence questions quickly
Common Mistakes to Avoid
- -Confusing functional obsolescence with physical deterioration when both involve the building itself
- -Thinking external obsolescence only refers to economic factors rather than any external negative influence
- -Assuming all problems in older homes are automatically physical deterioration rather than design obsolescence
Concept Deep Dive
Analysis
This question tests understanding of the three types of obsolescence in real estate appraisal: functional, external, and physical deterioration. Functional obsolescence specifically refers to a loss in value due to design deficiencies, outdated features, or layouts that don't meet current market standards and buyer expectations. The key is recognizing that these are inherent design flaws in the property's layout and functionality, not wear-and-tear or external factors. Understanding the distinction between these types of value loss is crucial for accurate property valuation and identifying appropriate adjustment methods.
Background Knowledge
Appraisers must distinguish between three main types of depreciation: physical deterioration (actual wear and damage), functional obsolescence (design deficiencies and outdated features), and external obsolescence (negative external influences). Each type requires different valuation approaches and potential remedies.
Real-World Application
In practice, appraisers encounter functional obsolescence when comparing older homes with poor layouts to newer homes with open floor plans, master suites, and modern kitchens. They must quantify the value loss and determine if renovations would be economically feasible to cure the functional issues.
More Property Description Questions
Property zoned as R-2 typically allows for:
In the rectangular survey system, a section contains how many acres?
Which property right includes the right to receive rental income from a tenant-occupied property?
A property is located in a 100-year flood zone. This means the property has what probability of flooding in any given year?
In a metes and bounds description, the term 'metes' refers to:
People Also Study
Valuation Principles & Procedures
25% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam
Report Writing & Compliance
10% of exam
Previous Question
An appraiser is valuing a tenant's interest in a property under a long-term lease where the tenant pays below-market rent. This property interest is called:
Next Question
A building's foundation shows minor settling cracks and requires tuckpointing of mortar joints. The HVAC system is original and 15 years old but well-maintained. The roof was replaced 5 years ago. If the building is 20 years old, what is the most appropriate effective age estimate?