What are the different types of obsolescence?
Separate from physical deterioration, the five primary type of obsolescence are identified as follows:
- Technological Obsolescence.
- Functional Obsolescence.
- Legal Obsolescence.
- Style/Aesthetic Obsolescence.
- Economic Obsolescence.
What is a type of functional obsolescence in real estate?
What Is Functional Obsolescence? … For example, in real estate, it refers to the loss of property value due to an obsolete feature, such as an old house with one bathroom in a neighborhood filled with new homes that have at least three bathrooms.
What is real estate obsolescence?
Functional obsolescence in real estate describes a property that has decreased in desirability or functionality due to an outdated design feature, physical deterioration, or undesirable external factors.
What were the two types of obsolete?
The two main types of functional obsolescence are:
- Curable obsolescence. …
- Incurable obsolescence.
What is external obsolescence in real estate?
External Obsolescence is a form of depreciation caused by factors not on the property itself, such as environmental, social, or economic forces. An example would be a very nearby garbage dump. The homeowner cannot reverse this loss in value by spending money to fix something.
What does incurable mean in real estate?
Dictionary of Real Estate Terms for: incurable depreciation or obsolescence. incurable depreciation or obsolescence. a defect that cannot be cured or that is not financially practical to cure; a defect in the “bone structure” of a building. Compare curable depreciation.
What is highest and best use in real estate?
Highest and Best Use, Defined
The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value.
What is called obsolescence?
Obsolescence is the state of being which occurs when an object, service, or practice is no longer maintained, required, or degraded even though it may still be in good working order. … Obsolete also refers to something that is already disused or discarded, or antiquated.
What is technological obsolescence?
When a technical product or service is no longer needed or wanted even though it could still be in working order. Technological obsolescence generally occurs when a new product has been created to replace an older version. +1 -1.
What are the 3 types of obsolescence?
There are three types of obsolescence or flaws that cause properties to lose value:
- Functional Obsolescence: …
- Economic Obsolescence: …
- Physical obsolescence:
What is NOI in real estate terms?
Net operating income (NOI) is a calculation used to analyze the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses.
What is regression in real estate?
The principle of regression is a term used by real estate appraisers stating that the value of high-end real estate may be diminished by having lower-end properties in the same vicinity. This principle is used frequently in writing zoning laws, which strive to keep business and residential areas separate.
What is a Superadequacy in real estate?
Per The Dictionary of Real Estate Appraisal, 6th Ed., superadequacy is defined as “an excess in the capacity or quality of a structure or structural component; determined by market standards.” Superadequacy is a type of functional obsolescence, as the structure or one of its components is at a greater capacity or …
What is incurable obsolescence?
As you might guess, incurable functional obsolescence occurs when the deficiency causing the obsolescence is too costly or impractical to cure. In this case, the deficiency is often an external factor that the property owner has no control over, as was the case with the busy road example above.
What is the difference between functional obsolescence and economic obsolescence?
Functional obsolescence refers to a reduction in the usefulness of a property due to factors within it, except those due to physical deterioration. … Unlike functional obsolescence, which occurs within a property, economic obsolescence occurs outside the property and is beyond the control of the property owner.