What is functional obsolescence?
Functional obsolescence concerns a situation where the item loses its value and does not meet the need at a given time or does not fulfill the purpose that has led to its creation in the first place. This term can be used in many situations where such a conclusion can be drawn on the basis of an analysis of circumstances. For example, it is often associated with real estate due to its application towards determining the value of the property considered. It is also used in the link to the defect in the item.
The example of the application of functional obsolescence can be seen in the case of a wallet or a housing created by a telephone company for transporting a specific model of its phone. Assuming the company releases a new version of the phone a year later and the new version has a wider and more elegant configuration that makes it impossible to fit into the phone case, it can be said that the case is in a state of functional obsolescence. The reason for this assignment of functional obsolescence is due to the fact that the telephone case is not suitable for the purpose of carrying an updated phone model.
Other applications of functional obsolescence are in the area of real estate, where it is often used in conjunction with the evaluation of different types of real estate. It affects such assets due to the presence of some negative strokes against the structure of the building or another element owned by the property. For example, the number of rooms available in the home could be a source of functional obsolescence. Another problem that could be included in this type of defect is the style of the building itself and other problems such as floor plans. This consideration could affect the ability to obtain a mortgage from the creditor because the presence of functional obsolescence in ownership would reduce the value and most of the creditors would consider the property for a good investment.
A really good example of the term can be seen in the case of computer software. Continuous innovations in this area and frequency of introduction of new software programs often mean that old programs will soon cease inE reference to new real estate about increased expectations of consumers. Functional obsolescence can be attributed to such a case.