3 Types of Obsolescence in Real Estate

What is obsolescence? What's the difference between economic, functional, and physical obsolescence in real estate? This videos explains everything about obsolescence.
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Physical obsolescence occurs when a property is no longer attractive or desirable due to wear and tear. For example, a roof that was never taken care of or repaired will deteriorate over time. So, as time goes on, the roof will suffer from physical obsolescence.

Functional obsolescence occurs when a property is no longer suitable for its intended use due to changes in technology, design, or functionality. For example, a property with outdated electrical wiring or plumbing may be functionally obsolete.

Economic obsolescence refers to factors outside of the property that can affect its value, such as changes in the surrounding neighborhood or the local economy. For example, a property located in an area with high crime rates or declining property values may be economically obsolete.

Understanding the types of obsolescence can help real estate investors and homeowners identify potential problems with a property and make informed decisions about its value and potential for renovation or improvement.

Chapters:
00:00 - What is obsolescence?
00:39 - What is physical obsolescence?
01:59 - What is functional obsolescence?
03:27 - What is economic obsolescence?
05:00 - What is equity and how does it work?

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