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Valuation and Analysis, 14% of the examination

Functional obsolescence

Loss in value from a design or utility deficiency within the property, such as an outdated floor plan.

Functional obsolescence is curable when the cost to cure does not exceed the value the cure contributes. External obsolescence comes from outside the property and is often beyond an owner's ability to cure. Physical deterioration is wear and tear rather than a design or utility deficiency.

See also

External obsolescenceLoss in value caused by an influence outside the property.

Test the distinction

A relevant question from Valuation and Analysis, selected because its facts or explanation use this concept.

Valuation and Analysis ยท 14%Methods of Estimating Value

A house has an outdated floor plan that cannot be economically corrected. What kind of depreciation is this?

Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanor under B&P Code section 123.

Primary sources

Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.

Where this is tested

Property Valuation and Financial AnalysisAll three official DRE valuation topics in one practical guide: value principles, the sales comparison, cost and income approaches, and the financial analysis that turns property data into a defensible answer.14%Practice Valuation and Analysis28 questions on this area, every option explained.Practice

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