Season 3, Episode 11: From the ValuVault – What Is Functional Obsolescence?

Big-picture takeaways

• What it is – Design, layout, or amenity flaws that make a house less livable by today’s standards (e.g., five bedrooms / one bath, bedroom-to-bedroom access, no garage in a commuter suburb).
• Why it matters in 2025 – Buyers are choosier as affordability tightens; homes with functional quirks linger longer and sell at a discount, typically 5 %-15 % versus “market-standard” layouts.
• Cost-to-cure math – Appraisers estimate what it would cost to remove the flaw (say, $10 K to add a second bath). If cure < market discount, pricing adjusts upward; if cure > discount, expect a bigger hit to value.

How appraisers spot it

• Scan recent MLS sales for similar quirks and measure the sale-price penalty.
• Apply paired-sales or cost-to-cure adjustments when comparing to conforming comps.
• Document market feedback (DOM, price cuts, buyer comments) to support the deduction.

Quick script for buyers / agents

• Buyer: “This five-bed, one-bath plan is rare in the neighborhood. I ran comps—homes with two baths are closing about 8 % higher. Let’s factor in a $10 K bath addition before we write.”
• Listing agent: “Yes, it’s a functional flaw. We priced 10 % under remodeled comps and can share contractor bids if buyers want to cure it.”

🔗  Episode audio: From the ValuVault – What Is Functional Obsolescence?
📚  Learn more: https://nationwideamc.com/contact —reach the Nationwide AMC team if you need a pre-offer BPO or cost-to-cure analysis.