What issue does an over-improved property suffer from?

• A. Economic obsolescence
• B. Physical deterioration
• C. Functional obsolescence
• D. Superadequacy

Answer: (C)

When a property has features that go beyond what buyers in the market value or are willing to pay for, its functionality no longer matches demand. This mismatch makes the home less attractive or efficient for typical buyers, so its value can drop relative to similar properties that better fit market preferences. That situation is functional obsolescence: the design or layout is outdated or more elaborate than what is wanted, reducing usefulness and appeal.

For example, a very luxurious, high-end addition in a neighborhood where buyers expect simpler, more cost-efficient homes can raise maintenance costs or not add enough resale value to justify the extra spend. It’s not about physical damage to the property, nor about external economic factors affecting value, but about the property's inability to functionally meet current market expectations. Superadequacy is sometimes used to describe this idea in some contexts, but the standard term tied to the market's disinterest in over-improvement is functional obsolescence.