A California appraiser is using the cost approach and must determine whether to classify a home's single-pane windows as physical deterioration or functional obsolescence. The windows are in good physical condition but do not meet California's current Title 24 energy efficiency standards. How should the appraiser classify this issue?
Correct Answer
C) Functional obsolescence — curable, because the windows are physically sound but do not meet current California energy standards
Single-pane windows in good physical condition that do not meet current California Title 24 energy efficiency standards represent functional obsolescence — curable. The windows are not physically worn (so it is not physical deterioration), but they are functionally inadequate by current standards. It is curable because replacing them with energy-efficient windows is economically feasible.
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Previous Question
A California appraiser must estimate the cost of curing functional obsolescence for a home in Palo Alto. The home has an outdated kitchen that does not meet current Silicon Valley market expectations. The cost to renovate the kitchen to current standards is $120,000. An appraiser's paired sales analysis shows that similar kitchen renovations in this California market add $160,000 to property values. A second functional issue is an oversized formal dining room (superadequacy) that cost $40,000 to build but only contributes $15,000 in market value. What is the total functional obsolescence?
Next Question
An appraiser is estimating external obsolescence for a residential property near a closed landfill using paired sales analysis. Pair 1: affected home sold for $340,000; unaffected comparable sold for $400,000. Pair 2: affected home sold for $380,000; unaffected comparable sold for $440,000. The subject property has a replacement cost new of $280,000 and a land value of $180,000. Using the percentage loss method, what is the dollar amount of external obsolescence attributable to the improvements only?