What is the term used when property characteristics negatively affect its value?

The term that describes when property characteristics negatively affect its value is functional obsolescence. This concept refers to a decline in a property’s value due to outdated features, poor design, or lack of modern amenities, which make a property less desirable in the current market. Factors contributing to functional obsolescence may include outdated plumbing and electrical systems, inadequate room layouts, or the presence of environmental hazards.

In contrast, market segmentation refers to the process of dividing a market into distinct groups of buyers with different needs or characteristics, rather than indicating a decline in property value. Wear and tear describes the physical deterioration of a property from regular use over time, but does not inherently include design or functional issues that impact its marketability. Investment limitation usually pertains to restrictions that prevent the full utilization or investment potential of a property, but is not synonymous with characteristics that decrease its value.

Thus, functional obsolescence specifically captures the essence of how specific features can detract from a property’s worth in the eyes of potential buyers.