An Example of Functional Obsolescence

As appraisers, we see it all.  Functional Obsolescence comes in all kinds of different shapes and sizes.  Here is an example of a bathroom that is open to both sides.



13 thoughts on “An Example of Functional Obsolescence”

  1. Pingback: An Example of Functional Obsolescence - Appraisal Buzz

  2. Congratulations on being VA approved. Living in Southern CA with dozens of military bases there is a huge military presence, and thus, appraisal opportunities are many. With 1,000 appraisers in San Diego County, and 6,000 within a few hundred miles, combined with a VA policy of capping the work force, its nearly impossible to become regionally approved. On a local level within my group, I’m personally aware of 20 year veterans who have applied every year (as required) who have never been approved. The functional obsolescence IS THE VA APPRAISAL SYSTEM. If your reading this John, “So, you want to be a real estate appraiser”, its important to understand at times your opportunists for success will be controlled by others.

  3. Per calendar year 2015, the state of CA had total VA loan numbers of 70,413, or at $450 a pop (1004 $450 / 1073 $475) , there was firm competition to split the $31,685,580 in appraisal fees. If VA caps the total approval rate at say 10% of all licensed appraises (11,000 = 1,100 appraisers), then the piece of the pie for each is $28,805 a year. In order to judge the health of this industry, one must be open to the realities of the many.

  4. Coach of the appraiser coach

    It is in IDAHO – no surprise there.
    Learn how to you the camera – HORIZONTAL – you “appraiser coach”.

  5. If this were in my market, there would be no comps with a similar bath. Obviously any adjustment would be across the board, & this combined with having to describe the bath is probably going to promote extra communication with the client. I would not make an adjustment unless something from the subject’s listing history or a prior sale would provide support.

  6. At about the 2:30 mark, you pause and think. I love to see that. This is something that is sometimes lacking in our profession. Considering how the market would perceive this is the whole key and I think commonly missed when I see adjustments in the grid that are not supported or not relevant to the price range/typical buyer of the home. Sometimes I wonder if some folks have ever purchased a house or seen from the buyers perspective. Anyway, I will give you another functional that I do not think a lot of people consider, but maybe I am wrong. A new home constructed in a 100-year-old neighborhood or in a run down neighborhood (Habitat for Humanity is good at this) is commonly perceived as external obsolescence when actually it is functional obsolescence. If the problem is within the property boundaries it is always functional. In this case, the lot has been over improved by the new dwelling resulting in functional obsolescence (site value comes from within the property boundaries). In our market Habitat typically puts a $130,000 dwelling on a $2000 lot which two years later resells for $50,000. When completing the cost approach the difference between the market value of the property and the depreciated cost (having yet to consider functional depreciation) is the functional adjustment. Just thought I would throw this in.

  7. I’m thinking that cost to cure would be useful in this sort of situation. Without putting too much thought into, I could see at least building a soffit on both sides of the shower so that the overhead open space gets filled in. It’s then a matter of dealing with what’s left of the design, or possibly thinking about getting rid of the shower access from one side. Now you have a more typical bathroom setup and would deal with the lack of access to a shower from the one side. But the cost to cure would mostly consist of some studs and drywall and could be a rather modest amount.

  8. Thanks for the video, Dustin. I’ve seen this in VA in the second home market, specifically in an new, high end riverfront home of the “small home” type. Designed by an architect- home owner, interestingly. Header above the shower in this case, I considered it 1.1 baths-

  9. The house was 1 full bath with a tub only, and a half bath off the hall. They removed one drywall, and put the second shower door on the full tub bath side to allow walk thru from both sides.

    The design could have put a big recessed fan above with a light inside the shower and closed off each upper side for a semi privacy. The real cost to cure is to simply remove 1 shower door and drywall to restore. About $1500 and comment in text addendum. I enjoyed the video so much I showed it to my husband.

    Thanks so much for a great treat to watch.

  10. Had to scratch me head a second. Not sure if this qualifies as FO or just funky. You aint never gonna find a comp. Are you sure that it wouldn’t be a positive feature? It certainly is nice the master bath has a shower too no? Maybe buyers would appreciate the open concept! Whoever built it that way certainly thought so. The point is, where are you ever going to pull market evidence one way or the other? An appraiser judgment call is in order here, which of course is never desired (how dare we). I think I would call for the door leading to the master bath to be walled up. This would provide privacy and keep the 2 full bath status. Market adjustment equal to cost of cure.

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