Ace the Minnesota Real Estate Exam 2026 – Unleash Your Property Powerhouse!

Functional obsolescence is best described as property losing value due to outdated features. This term refers specifically to a reduction in value that occurs when a property's characteristics or qualities are no longer considered acceptable or desirable by current standards. Over time, changes in consumer preferences, technology, and design trends can render certain building features or layouts less functional, impacting the overall desirability and market value of the property.

For example, a home with a dated kitchen layout or inadequate bathroom facilities may suffer functional obsolescence because modern buyers often seek more efficient spaces and updated amenities. This form of obsolescence is not about physical deterioration, which relates to wear and tear, nor does it involve external factors or market conditions. Instead, it focuses on internal aspects of the property that can become obsolete as expectations and standards evolve over time.