Functional Utility

When looking to buy or sell a home an issue that can come into play is a home’s functional utility.  The functional utility is an appraisal term that refers to a home’s ability to adequately provide for its intended use.  The most common example is a home with a pass-through bedroom resulting in a less than ideal traffic pattern. For example, my wife and I recently showed a three-bedroom home to a buyer but the third bedroom had a door off the hallway and one off the kitchen there was a den, functioning as a shortcut to the kitchen and the den for the other two bedrooms.  Although this home had an alternate route to get to the kitchen and den (down the hall, through the living room and through the dining room to the kitchen and den), the quickest and most convenient route was through the third bedroom. Our buyer knew that if she were to buy this home, it would be more functionally convenient to cut through the third bedroom to get to the kitchen and den, especially while getting ready for work in the mornings or going to bed late at night.  If a child was sleeping in the third bedroom, it would be inconvenient to walk around this bedroom to go back and forth to the kitchen and den as needed. In short, the functional utility of this third bedroom did not suit her family’s everyday need of convenience. While other buyers could make this floorplan work for their need of having three bedrooms, it nevertheless has an adverse effect on the home’s marketability and overall value.

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.  

Gross Rent Multiplier
Functional Obsolescence

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