Texas Property Tax Consultant Practice Exam

What is a flaw in construction, materials, or design termed as?

1. Economic obsolescence

2. Depreciated value of the improvements

3. Functional obsolescence

4. External influences

The correct answer is: Functional obsolescence

A flaw in construction, materials, or design is termed functional obsolescence. This concept refers to a decrease in property value due to inefficiencies or inadequacies in the property itself that may not meet current standards or buyer expectations. It often arises when the features of a building become outdated or when construction defects hinder its proper use or functionality. Functional obsolescence is an important factor in real estate appraisals, as it helps determine the property’s current market value relative to similar properties without such flaws. Recognizing functional obsolescence allows property owners and consultants to assess potential improvements or repairs that could enhance the property's value and usability. Other concepts mentioned, such as economic obsolescence, relate to external factors affecting property values, while depreciated value refers to the financial impact of obsolescence rather than the condition itself. External influences usually pertain to factors outside the property, such as economic conditions or zoning changes, which do not directly address the internal flaws of construction or design.