Functional Obsolescence in Real Estate

Functional obsolescence in a home

Functional obsolescence in Real Estate can be defined as a few different things but more often than not it pertains to a property not complying with recognized utility. In other words there are features that are not practical or desirable.

There are numerous examples of functional obsolescence but one that hits close to home was a property I recently sold that had more than a few flaws. This particular property was very large in size – 4000 plus square feet. The home, however did not have a formal dining or living room. Many of the newer homes today are built without one of these formal spaces but rarely are both missing. Strike #1

Furthermore, this house featured an enormous two story great room that took up a large portion of the home. The end result was all the bedrooms being very small for a home of this caliber. Strike #2

In what I would consider one of the strangest design flaws, the laundry room was located in one of the kids bedrooms! Can you imagine waking up little Johny to do another load of laundry? Hearing that tumbling noise and the buzzer going off would get old quick:) Strike #3.

Lastly the home and lot design were such that the front door to the home was 15 feet off of the ground level. In order to enter the house you had to either go in through a basement door or climb a large flight of stairs. Never mind the fact you had to look at an ugly deck and set of stairs in the front of your home. Strike #4.

Thinking about functional obsolescence in homesIt is rare to ever see this degree of functional obsolescence in a home. You would probably not be surprised to hear that this home ended up in foreclosure.

I ended up selling the home for the bank that foreclosed on the builder. Ironically he had asked me to list the property before it was even built and I turned him down. In fact I pleaded with this man not to build the home. I told him he would lose his shirt and he would not listen.

To give you an idea of just how much the functional obsolescence affected this property, a typical home with the size and amenities of this property would be valued at around $800,000 in the town which it was located.

It ended up selling for $530,000!! I would call that serious obsolescence.

Another type of obsolescence could be more stylish in nature such as a Tudor being built in a neighborhood that has all contemporaries or colonials. In this situation a home could be sticking out like a sore thumb.

Lastly, economic obsolescence is when there is a drop in value because of external factors surrounding the property. An example could be when a residential zoning district blends into a commercial or business zone. A home located next to a gas station, jail, or other business establishment would be considered dysfunctional.

Some other examples of functional obsolescence in homes include:

  • All bedrooms on the 2nd floor and the only bath located on the 1st floor.
  • Walking through one bedroom to get to another.
  • Walking through a dining room or living room to get to a bedroom.
  • Walking through a formal space to enter the garage.
  • No entrance to the basement from a homes interior.

Sometimes as a Realtor, explaining these things to a seller can be difficult. There are times where people can incorrectly assume you don’t like their home because you are pointing out the flaws.

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About the author: The above Real Estate information on Functional obsolescence in Real Estate was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

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