valuation
functional obsolescence
Functional obsolescence is a loss in value caused by features of a property that are outdated, poorly designed, or no longer meet market standards, such as a bedroom accessible only through another bedroom or a single bathroom in a large house. It occurs within the property. It may be curable, if the cost of correction is less than the value added, or incurable.
- Exam tip
- Functional obsolescence comes from inside the property and can be curable or incurable. External obsolescence comes from outside and is almost always incurable.
- Example
- A five-bedroom home with only one bathroom sells for $25,000 less than similar homes with two baths, reflecting functional obsolescence.
Related terms & state variants
Sources
Source verification pending. Confirm current requirements with your state regulator.
Last verified: 2026-10-23