How much functional obsolescence is present if the cost to install a second bath today is $13,500 and the RCN would have been $11,500?

Functional obsolescence refers to a decrease in the value of a property due to outdated features or a lack of modern amenities that are now considered standard or desirable. In this context, the problem addresses the difference between the cost to install a second bathroom and the Replacement Cost New (RCN) that reflects what it would have cost at the time the home was built or remodeled.

To determine the amount of functional obsolescence presented, we compare the current installation cost with the RCN. In this case, the current cost to install a second bathroom is $13,500, while the RCN is $11,500. The difference between these two amounts represents the functional obsolescence.

Calculating this gives us:

[

Functional , Obsolescence = Current , Installation , Cost - RCN

]

[

Functional , Obsolescence = $13,500 - $11,500 = $2,000

]

Thus, the functional obsolescence is calculated to be $2,000. This reflects the added expense of modernizing the property compared to the original cost to install such a feature, indicating that there’s a level of depreciation associated with having an outdated bathroom configuration. Understanding this helps appraisers