Stairway to functional obsolescence

This is a nice looking house, right? It has upgrades galore and is over 4000 square feet. There are five bedrooms, four full bathrooms and a decent-sized lot. This house may be slightly overpriced, but on top of that, prospective buyers have not been making offers. Take a close look and see if you can guess why no offers have been made. What do you see?

Example of functional obsolescence

Why is this house sitting on the market? While this property has many appealing features, the stairs have been an issue for buyers according to the Listing Agent. Why? Because there are stairs to get to the front porch from the driveway, stairs inside from the first floor to the second floor and stairs from the garage to the first floor of the home. We expect stairs inside, but it can be very taxing for buyers to have to walk up stairs to get into the house from the driveway and through the garage. There is literally no other way to access the house besides going up stairs. This would of course be a great way to burn calories, but it would be a pain for grocery shopping, baby transport and many other everyday details of life.

What is functional obsolescence? It is ”a reduction in the usefulness or desirability of an object because of an outdated (or odd) design feature, usually one that cannot be easily changed” (from Investopedia). We see functional obsolescence when there is a feature of a house that is not useful to buyers for one reason or another. It may have been acceptable at some point in the past, but is now outdated, or it may simply be odd and less appealing. Other examples of functional obsolescence include having to walk through a bedroom to get to another bedroom, having no dishwasher in the kitchen, no laundry hook-ups, or having no bathrooms on the first floor of a house.

This is a very nice home that’ll sell eventually, but since all buyers have passed on this property so far, it’ll likely sell at a discount because of the stairs. While appraising a home in this neighborhood, I chose not to use this listing in my appraisal report because of the stairs. I explained in my report why this property was not a good indicator of value for the market.

Would stairs like this matter to you?

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  1. says

    Would it be valued more as an exercise course?

    As a college freshman, I was placed in the 3rd floor of the dorms. While elevators had been invented, this private university hadn’t funded them for mere students. A dozen+ daily up and down was all the exercise I needed.

    I’m pleased to know you didn’t use this type of home as a comp. My $800K buyers just viewed five 4,000 sf homes in Folsom this spring. One was a 3 level similar to this. Much of the footage was lost in the stairwells and the home felt and lived much smaller….similar to a 3,000-3,200 sf home. Two of the other homes were receiving multiple (10-12+) offers $100K+ more, while the 3 level home received none. That’s a lot of buyers expressing their opinion’s with their pocket book.

    As a builder, single level homes cost more per foot to build, but also generally sell easier. You’ll notice in new subdivisions that the smaller models are typically single level, and even though priced less in total, are often 15-20% more per foot than the larger 2 stories, reflecting differences in building cost as well as size efficiency.

    • says

      I bet you were in outstanding shape in college (not that you aren’t now). For the record, I was on both the 2nd floor and the first floor during college (though I only dormed one year).

      Great insight, Jeff. I appreciate hearing your 800K buyer story and the builder perspective too. You’re so right about price per square foot. That’s exactly why a broad price per square foot metric is dangerous to apply to an entire market. Price per square foot is more accurate when we break up the market into similar chunks instead.

      There is usually more to the story when a large home is not selling anywhere near where others are. How crazy to see a $100K difference. Layout and utility matters greatly though.

  2. says

    My house has a large set of stairs up to the front door, and inside has one easy split level 1/2 stairs to the next level. Once someone is in, its good, but I have been told by my folks in their 80’s and a neighbor that the entry stairs are a problem for them and that they are glad they dont have my set of stairs. I look at it like this, would be burglars would not like to carry a bunch of stuff down those stairs fast to make a get away either. Actually, my dog even hesitates sometimes wanting to go up or down those front stairs and long uphill driveway too.

  3. says

    Something like this is not uncommon in my market, however if it is not typical in the area it is located in I can see it as being a reason people would not want to buy it. I guess in this instance functional obsolescence would be relative to where you are at.

    • says

      Well said, Tom. I think you’re right about that. If every house had the stairs, it would be a non-issue because buyers would expect it. In this situation, all the other houses in the neighborhood did not have the stairs from what I could see. That’s why I think it was an issue.

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