In the context of a real estate appraisal, what is an overimprovement (or superadequacy)?
Per the 14th edition of The Appraisal of Real Estate (p. 624) it is a “…type of functional obsolescence caused by something in the subject property that exceeds market requirements but does not contribute to value an amount equal to its cost…” (ibid; emphasis added).
A swimming pool is a prime example of an overimprovement. What a swimming pool contributes to value is likely far less than its cost new (even after deduction of age-life depreciation). Despite this relationship, it is rare to see a residential appraisal report in which there is a deduction for functional obsolescence because of the presence of a swimming pool.
Consider the issue of size. A 5,000 square foot house in a neighborhood of 2,500 square foot houses is likely a superadequacy. This superadequacy stems from the fact that the extra 2,500 square feet likely do not contribute to value at the same rate as the “necessary” 2,500 square feet.
The appraiser needs to explain any superadequate features of a property in sufficient breadth and depth so the client cannot accuse him/her of conducting a misleading appraisal, and then writing a misleading appraisal report.