Pat Starnes Snippets: Does Functional Obsolescence Affect The Value of My Home?

Does Functional Obsolescence Affect The Value of My Home?

Does Functional Obsolescence Affect The Value of My Home?

The reduction of value or usefulness of real estate due to poor design or defect is known as functional obsolescence. I first learned this phrase while studying for my real estate exam years ago and it stuck with me. It isn't a term you hear every day and I like how it sounds tripping off the tongue (func·tion·al ob·so·les·cence).

The example most frequently used to describe functional obsolescence is "going through one bedroom to get to another bedroom, without the benefit of a hallway". 

As a Realtor, I don't see a lot of functional obsolescence in today's homes. But I believe this is a viable candidate.

Split set of stairs

These stairs lead from the main level to the fourth bedroom on the second floor. The stairs split at the landing. The bonus (4th) bedroom is up one flight of stairs, while the bathroom and closet is back down and up the other side. 

This arrangement may be fine for a teenager or college student, but the floor plan is problematic for showering and getting dressed each day. An appraiser** would justifiably discount the value of the upstairs bedroom, bath, and closet because of the separation of the two spaces. 

If you are home shopping in the Brandon MS market and find a home with a similar floor plan, you may wonder if this design  flaw should affect your decision to purchase. If the home otherwise meets your family's needs, by all means buy it, but buy it at a discount! The design of this space is not practical. Realize when the time comes to SELL your property, the functional obsolescence could be a deterrent to the next buyer of the home, and would result in a lower sales price and possibly a longer time to sell.

** I'd like to hear from appraisers and home builders about this post. Does this fit the description of functional obsolescence, and how does it affect the value of the property?

 

Written and Published by Pat Starnes REALTOR

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Pat specializes in Residential and New Home Sales 

Primary Service Area:

Brandon, Pearl, Ridgeland, Flowood, Madison and the Ross Barnett Reservoir area

 Pat Starnes, Broker Associate

Front Gate Real Estate, 6700 Old Canton Rd., Suite C

Ridgeland, MS 39157

601-991-2900 - Office

601-278-4513 - Cell

 

Recent Blog Posts by Pat Starnes:

 

Greenfield Station in Brandon MS Continues to Grow

Six Easy Tips to Save Money on Your Home Inspection

Should You Consult a Realtor When Buying New Construction?

Homes for Sale in Scottish Hills ~ Brandon MS 39047

Homes for Sale in Hidden Hills Subdivision, Brandon, MS 39047

Homes for Sale in Castlewoods Subdivision, Brandon, MS 39047

Gardens of Manship Neighborhood Information - Brandon, MS 39047

 

Are you looking to buy or sell a home in the Brandon MS market? Call me!

Comment balloon 55 commentsPat Starnes-Front Gate Realty • September 13 2015 06:55PM

Comments

I love the term functional obsolesence too!  It absolutely affects the value of the property, but some buyers will not mind and may stay in the property "long term" and perhape fix down the road.

Posted by Christine OShea (Christine E O'Shea Real Estate Broker) over 3 years ago

Good advice, Pat.  And buyers need to remember that when it's time for them to move, thier buyers will also expect a discounted price.

Posted by Patricia Kennedy, Home in the Capital (RLAH Real Estate) over 3 years ago

There's a chair for every butt.  As you said Pat Starnes, funky floor plans may be available at a discount.  

There's a condo community in my area that has a floor plan that has three bedrooms and one and a half baths.  The half bath is downstairs.  All three bedrooms are up and share a single full bathroom.  No master suite.

That is functionally obsolete for some people, but not for others.  Those units sell all day long.

It's important to be mindful of Patricia Kennedy's point that if a buyer buys at a discount, they need to expect to sell at one as well.

Posted by Jill Murty, Realtor - Orange County, CA (PREA Realty) over 3 years ago

Buyers these days expect convenience and if not, discounts.

Posted by Olga Simoncelli, CONSULTANT, Real Estate Services & Risk Management (Veritas Prime, LLC dba Veritas Prime Real Estate) over 3 years ago

Pat, was this an added 2nd floor after the original one story home was originally built?  I've see a couple of additions like that.  Just wondering. 

Posted by Juli Vosmik, Scottsdale/Cave Creek, AZ real estate 480-710-0739 (Dominion Fine Properties) over 3 years ago

Split level floor plans of any kind have fallen out of favor to the point that I would think most variations of them were functionally obsolete. But I would consider the "split" you picture a plain old incurable defect because there is no way to fix that situation.  So, yes: it would have to be discounted. 

 

Posted by Teri Buchanan, Seniors Real Estate Specialist in Napa Valley (Level Up Realty) over 3 years ago

The younger generation might consider it "functionally obsolete" if it's not near a Starbucks.

Posted by Jill Watts, A Luxury Experience at Every Price Point! (Realty Pro, Inc.) over 3 years ago

depending on the market it may be a non issue

in certain hot markets the address is the value proposition...the configuration be damned...many will overlook flaws to get a certain zip code or a beach, or a school (or a starbucks...groan). 

for example in California beach towns like Leucadia, Encinitas and Cardiff that odd stair would have no real negative impact if enough other desirable factors were present

Posted by Michael Ford, California+Hawaii+Oregon over 3 years ago

Funnctional obsolence is also involved when the location is udesireable - poultry farm next door, industrial area joining the property, train track a few feet from the back  door, etc.

Posted by marvin shelley, Rural - that's all - NO subdivisions, HOAs, POAs. (Marvin Shelley, Broker) over 3 years ago

One of my customers from last week has this w/ the bathroom (it's a very old house.  It is driving her crazy, esp now as she is pregnant and on bed rest.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) over 3 years ago

Functional obsolesce can often impact the value of a home.  The buyers may need to pay for renovation (if that is even an option) and may expect a price reduction.  It may also be  feature better suited to a specific buyer (young, quirky, etc).  This is really no different that a home that backs up to a major freeway or has some other feature that is NOT high on most buyer's lists.  It may be an opportunity to show your best value marketing proposition!

Posted by Shirley Coomer, Realtor, Keller Williams Realty, Phoenix Az (Keller Williams Realty Sonoran Living) over 3 years ago

Some home layouts certainly go out of style. I think the split level and split foyer have, to some extent. People think there are too many steps. 

I am wondering if NO master on the main level will someday be an obsolescence thing.  

Posted by Sarah, John Rummage, Love Being Realtors® in the Nashville TN Area! (Benchmark Realty LLC, Nashville TN 615.516.5233) over 3 years ago

Pat, I don't see it often with newer homes, but regularly see functional obsolescence with some of the older homes I've shown.  And most often it's as you depicted, walking through one bedroom to get to another.

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) over 3 years ago

Christine OShea - Don't you love how it just rolls off the tongue? Usually the cost to replace is prohibitive, but if the owner lives in the home long term and loves the property, it really doesn't matter.

Patricia Kennedy - That's the situation the current owner is in. I'm not sure he realizes there is a functional obsolescence situation. He knew he needed the square footage and probably didn't pay that design element much attention.

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Jill Murty, Realtor - Orange County, CA - I once owned a split-level with no dedicated master bathroom. I bought it because the price was right. I didn't consider it to be F.O., but I suppose it was. Never even thought about it... Thanks for the "chair in the butt" comment. :)

Olga Simoncelli - usually DEEP discounts. Yes they do. Thanks for stopping by!

Juli Vosmik - it was an original design. I researched it through MLS to the builder. He apparently wanted to utilize every square inch of space and it didn't matter that the stairwell was in the way. It would have made more sense if it had been two separate bedroom SUITES instead on bed on one side, bath on the other side of the chasm.

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Thanks, Teri Buchanan . When I first saw the floor plan, I expected it to be two separate bedrooms, which would have been preferable. And for the record, the price is the lowest per square foot of others in the neighborhood. It is still going to take a special buyer.

Jill Watts - there's a coffee shop nearby, but it isn't Starbucks! :)

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Michael Ford - Thanks for stopping by and commenting on this post. I assure you, THIS market is not THAT market. How I wish it were so! Enjoy your California beach market.

marvin shelley - Really? I guess you're right, now that you mention it. Fortunately, I don't come across those scenarios very often. Except for the occasional RR track. Thank you for stopping by!

Debbie Gartner - Bless her! This house is only 10-12 years old. It was just the by-product of the builder trying to squeeze out more sale-able square footage. 

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

I've never figured out why anyone needed a master bathroom. (Guess I'm showing my age.) Growing up, our bedrooms were on one floor and the one bathroom was on another - and it was no big deal. 

Remember that old TV show - Eight is Enough? They had one bathroom for the ten of them - now THAT might be a problem! 

Anyway, now I have to look up that term. When I think of obsolescence I think of "obsolete," and I can't reconcile that with "inconvenient." 

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) over 3 years ago

Shirley Coomer - I like your creative way of thinking about this problem. It isn't possible to renovate the current configuation, but the idea of marketing to a young, quirkly family is spot on. Even a large family with teenagers would be ideal owners for this home. Thank you for your comments. :)

Sarah, John Rummage - In this market (and I'm not THAT far from you), I'd guess 98% of all homes have a main level bedroom. With our aging population, a ground floor master is almost an essential, so now that I think about that statement, I think you're right. I have sold homes in other areas (coastal, for example) where all bedrooms were on upper levels. Isn't it funny how floor plans vary on geographic locations?

Liz and Bill Spear - that's usually the type of functional obsolescence I hear about, too. This situation was something I had never seen, with the stairwell separating the bedroom from the bath. Just not what I expected. 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Yes and No. Functional obsolescence of this sort is more of a personal preference. Something like a bath tub that must be filled with buckets of water, heated on the stove, and pumped up through the well in the backyard is far worse. Good question though!

Posted by Matt Mortensen, Real Estate Agent, Las Vegas (Berkshire Hathaway HomeServices) over 3 years ago

To me functionally obsolete is have 3 bedrooms upstairs and no bathroom.  And then many times that 2 story house will have the bathroom right off the kitchen. Yuck!  Nope!

Posted by Diana Dahlberg, Real Estate in Kenosha, WI since 1994 262-308-3563 (1 Month Realty) over 3 years ago

Pat Starnes you are right - this arrangement could be good for a teenager in family - and I may consider this as functional obsolescence.

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 3 years ago

Pat--good advice because it's true: "Realize when the time comes to SELL your property, the functional obsolescence could be a deterrent to the next buyer of the home..."  Yep.

Posted by Lloyd Binen, Silicon Valley Realtor since 1976; 408-373-4411 (Certified Realty Services) over 3 years ago

Great post, Pat.  I agree that this is a great example of functional obsolescence.  Hopefully, the sellers realized it as well.

Posted by Chris Lima, Local or Global-Allow me to open doors for you. (Atlantic Shores Realty Expertise) over 3 years ago

Absolutely does.  Unless there is a buyers that doesn't see it or it does not affect their lifestyle...

Posted by Sham Reddy, CRS (H E R Realty, Dayton, OH) over 3 years ago

Excellent post.....I think the stairway is a perfect example of functional obsolescence.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) over 3 years ago

I know that I wouldn't like having to run up and down stairs to get from the bedroom to the bathroom.  Especially in the middle of the night.  

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com) over 3 years ago

It's too bad that when we know we have a home with F.O. and price it accordingly, buyers seem to think they can get it at an even BIGGER discount, "because of....." (name your F.O.).

I live in a 3 story home that has a bath tub in the master bathroom on the 3rd floor, but the only shower in the house is on the first floor by the sauna.  I love stairs and I don't really consider that a F.O., but the last thing my husband wants to do when he first wakes up in the morning is walk down two flights of stairs.  He calls it a F.O. 

Posted by Brenda Mitchell over 3 years ago

Two things came to mind...beauty is or (?) is subjective and Feng Shui can throw a monkey wrench into any good intention...thank you Pat Starnes 

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 3 years ago

Pat Starnes Ken Jones nailed the answer. The key is whether it is curable or incurable and may or may not affect value.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 3 years ago

Ken Jones has provided a really excellent response to your question. Nothing one can add to this!

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (Coldwell Banker Residential Brokerage ) over 3 years ago

Pat, great post, and on occasion we do view homes that would fit into this category.   3 beds 1 bath would fit.   Or, when you have to go through a bedroom to get to a bedroom. 

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (House to Home, Inc. - Denver Real Estate - 720-231-6373) over 3 years ago

Great post, Pat!

We see very little functional absolescense in our Palm Coast market as the oldest homes were built in 1974 and the majority of homes were built during the boom.  I don't see functional absolescense causing values to drop in this neck of the woods but it could cause a property to stay on the market for a longer than average time because the "problem" might put the majority of buyers off in a market that has homes with better options and the seller may choose to drop the price just to attract the right buyer.

Posted by Noeleen Duffy (Claddagh Florida Properties) over 3 years ago

This is an interesting subject Pat Starnes .  I guess it's part of the evolution of society.  I like your advice:  " If the home otherwise meets your family's needs, by all means buy it, but buy it at a discount!".   The MUST buy it at a discount because they'll need to discount it when they sell.  You know the old saying "you make (or lose) money when you buy not sell".  

 Marte Cliff , I love your perspective...but don't you know "invconvenient" IS "obsolete" these days? We are all soooo spoiled.   Do you own a TV without a remote control.  I'm sure you could get one very cheap.   LOL !  

Posted by Carol Williams, Retired Agent / Broker / Property Manager (Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals.) over 3 years ago

I've seen a split stair plan like that before but each side has it's own bedrooms and bathrooms. Your example here seems extremely unfunctional. I'm not sure what the builder was thinking. 

Posted by Nicole Doty - Gilbert Real Estate Expert, Broker/Owner of Zion Realty ZionRealtyAZ.com (Zion Realty) over 3 years ago

Matt Mortensen - who would ever bathe if that were the case? Oh, yeah, that's why the old timers bathed once a week on Saturday night. :)

Diana Dahlberg - girl, I agree with you. If there is a bedroom on the upper level, there should also be a bathroom. Who wants to run up and down stairs during the middle of the night?

Thank you, Praful Thakkar for agreeing with me. You never know when you get an idea in your head if it means the same thing to you and is does to everyone else.

Lloyd Binen - True. Unless the owner has made major modifications to eliminate the F.O., then it still exists and buyers may be unwilling to pay for it.

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Chris Lima - I'm not sure the seller recognized this as a functional defect (it wasn't my listing), but the price per square footage was significantly reduced. There were other factors (cosmetic) that dated the property, as well. Thank you for stopping by my post!

Sham Reddy - To the trained eye, it was evident. To a buyer, not sure what they would think. I was previewing, not showing. I would have loved buyer feedback.

Roger D. Mucci - Thank you! Appreciate your kind words. :)

Kat Palmiotti - My thoughts exactly!!

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Functional obsolescence is subjective but if we were to generalize things like what you have cited as an example - yes that would be a deterrent and reduce the pool of interested buyers.   

Posted by Mihir Gandhi, Real Estate in Placentia - North O.C. CA (First Team Real Estate) over 3 years ago

Brenda Mitchell - At least there is a tub on the same floor as the master bedroom. And hopefully a toilet & sink? It wouldn't be terribly expensive to add a shower above your tub, so in that case, it's a fixable problem. When the cost to repair an FO is exhorbitant, that's when a price adjustment usually comes into play. And you're right, although the price may already be discounted, the buyer probably wants more.

Ken Jones - thank you very much for your input and detailed explanation. I appreciate your expert opinion!

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Ken Jones does provide a good explanation.  I think real estate consumers may or may not recognize functional obsolescence when they see it even when we as agents know it right away!

Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) over 3 years ago

Richie Alan Naggar - I had a discussion with a builder yesterday about Feng Shui. There is much to consider in the design plan of a home to appeal to the masses. :)

Michael Setunsky - Agreed. Ken Jones added a lot of value to the discussion. I particularly enjoyed the curable vs. incurable explanation. Nina Hollander - Agreed! Thank you for stopping by the post.

Joan Cox - the bedroom ingress/egress is the prime example usually given, but others have mentioned external functional obsolescence, too. Very interesting!

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Talk about tripping off the tongue . . . how about tripping off those stairs!  WOW, that's a rare design isn't it.  And YES, functional obsolescence can impact the value of the home.  

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 3 years ago

There is lots of this too as styles change and demands of living change.  I find it interesting as what people are doing with all those TV Alcoves now that flat screens are here.  Just a minor example.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 3 years ago

Carla Muss-Jacobs, Principal Broker/Owner - that's so accurate! and funny. Those were my thoughts too, about taking a tumble down those stairs trying to get to the bathroom in the middle of the night.

Noeleen Duffy - Coastal markets usually have more forgiving buyers, since location is key. Did you see Ken Jones reply? It's right beneath yours. If a house takes longer to sell due to a design defect or flaw, that is the definition of FO. (Did I get that right, Ken?) Thank you for stopping by and commenting. :)

 

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Carol Williams - let me digress and say how much I love your profile caricature. It's adorable! Now, regarding the FO, price is the ultimate equilizer, so when all else fails, they must reduce the price to compete with other properties. Thank you for visiting and for your comment to Marte Cliff. :)

Hey Nicole Doty - Gilbert Real Estate Expert - The builder was thinking more money in his pocket, don't you think? Ideally, that extra space could have been an extra bedroom like you mentioned, or just attic storage. But he was maximizing the return on his investment buy turning it into "usable" square footage and an extra bath.

Mihir Gandhi - thank you for stopping by and commenting about functional obsolescence. 

Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC - That's an accurate statement. I'm not sure the average consumer would recognize this as FO, but they may recognize it as impractical. :)

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Gene Riemenschneider - Normally I see a giant floral arrangement or a huge vase sitting in that space. The good thing I've learned through this discussion, though, it that FO is curable, i.e., wouldn't cost that much to fix or repair. Thanks for the visit!

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Pat I don't see many homes either that are "functional obsolescence", but I have to confess to having met people in the past that this term would apply to :)

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 3 years ago

Pat Starnes Great post and an issue that I would venture to say most, if not all of us, would like to avoid.

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (HomeSmart Realty West & Geneva Financial, Llc.) over 3 years ago

I recently took photos of a home that had had its garage and living room 'swapped'. It seemed the previous owner decided the garage was not big enough so he swapped the two rooms, just laying carpet onto the cold, wet, concrete and taking out the wall of the living room that faced the street. Long story short, the roof started sagging in the middle, the house was divided by the garage (kitchen and living room separated from the bedrooms and bathrooms) and the carpet grew mold and rotted away. And to top it all off it was a foreclosure... how is that for Functional Obsolescence?

Posted by Joshua Hess, Real estate marketing in Macon & Warner Robins. (One Dollar Genius) over 3 years ago

Joshua Hess - Yikes! That sounds like a very awkward, non-functioning floor plan, not to mention the structural concerns. Sad to say, that's probably why it became a foreclosure.

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

In todays world lots of things are designed to be functional obsolescenct. Most Tech Items. The stairwell picture looks like something that was added after the fact.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max Southern Realty) over 3 years ago

Bill Reddington - One might logically think this was an add-on, but from the original MLS listing (when the house was new), the bedroom and bath were listed as features. And don't even think about tech stuff. They go obsolete FAST!

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 3 years ago

Pat Starnes, Yes I think in this case the functional obsolescence definitely lowers the property value!

Posted by Sybil Campbell, REALTOR® ABR, SFR, SRES Williamsburg, Virginia (Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia) over 3 years ago

Hello Pat,  I agree with you regarding the staircase. Many homes have strange features. I also use the term to describe outdated kitchens and bathrooms. It may not be defective, just clearly not desirable in todays market.

Posted by Janice Zaltman Realtor, LEED AP (United Realty Group) over 3 years ago

I don't think it's F.O. at all. It's just a messed up floor plan! In my area we see 1 car garages when everyone needs 3, A galley kitchen in a 4BR house, 1.5BA's as better examples. What was cool in the 60's & 70's isn't the best now.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) over 3 years ago

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