Contents
What are the 3 types of obsolescence?
The real estate term for this type of risk is “obsolescence” and there are three types that CRE investors should be aware of.
- Functional Obsolescence.
- Economic Obsolescence.
- Physical Obsolescence.
- Summary and Conclusions.
What is an example of curable functional obsolescence?
Curable obsolescence As the name suggests, curable functional obsolescence refers to any deficiency that can be cured by the property owner. For example, if physical depreciation can be fixed by repairing and renovating the subject property, then the obsolescence would be considered curable.
Which is an example of a functional obsolescence quizlet?
deferred maintenance. Functional obsolescence is ? a loss in value due to functional inadequacies such as defects in design, outdated fixtures, or an inadequate floor plan. obsolete kitchen appliances, one-car garages, and too few bathrooms in relation to the number of bedrooms.
Which of the following would be the best example of functional obsolescence?
Which of the following is the best example of functional obsolescence? Old fashion architecture such as massive cornices, would be classified as functional obsolescence.
What causes obsolescence?
Obsolescence can come about suddenly, as the result of a change in technology or consumer demand, or more gradually over a longer period of time until the advantages of replacing the object outweigh the costs of doing so.
What makes a product obsolescence?
Product obsolescence refers to the time and state in which a piece of technology or product ceases to be useful, productive or compatible. Product obsolescence may occur when a company stops producing, marketing or supporting a sold or developed product.
What is called obsolescence?
: the process of becoming obsolete or the condition of being nearly obsolete the gradual obsolescence of machinery reduced to obsolescence the planned obsolescence of automobiles.
What are the factors affecting functional obsolescence?
This type of obsolescence can occur when factors external to the business change: There is a reduction in demand due to recession; there are increases in material, labor, or utility costs; passage of new regulations increases costs; there is increased competition; or other factors.
What is a functional obsolescence quizlet?
Functional obsolescence is a property’s loss of value due to functional inadequacies that are usually caused by age or poor design, such as a poor floor plan, excessively high or low ceilings, or antiquated architecture.
Which is an example of functional obsolescence in real estate?
The application of the term varies based on industry. 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.
How to mitigate the effect of functional obsolescence?
Consumers can mitigate losses caused by functional obsolescence by considering the long-term usefulness of purchased goods. While various efforts have been made over the years to objectively quantify the effect of functional obsolescence in real estate, assessment or appraisal of functional obsolescence is mostly subjective.
Why are consumer electronics known as functional obsolescence?
An item can be unattractive to consumers if its design prevents upgrades or connectivity with compatible devices. Many consumer electronics, such as smartphones, are known for their functional obsolescence due to the constant introduction of newer, refreshed versions.