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External Obsolescence?

Discussion in 'Urgent - Help Needed' started by jskinny, Mar 18, 2008.

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  1. jskinny

    jskinny New Member

    0
    Mar 17, 2008
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    The subject backs to a major highway and has a 40' sound barrier wall between the back yard and the highway. I want to make a an adjustment reflecting this less than desirable feature. I believe this is considered exterior obsolescence and want to adjust the subjects site on the sales grid. Do I list the subject site as average and the comps that dont back to highway as supeior or do I list the subject site as inferior and the comps as average. I know this is a pretty basic question but there you have it. Thanks to all that reply.
     
  2. leelansford

    leelansford Elite Member

    45
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    Let me ask this: specific to a residential property that is rear-adjacent to a major highway, is such status "average" within the neighborhood?

    I suspect that such status is not "average".

    Therein is your answer.
     
  3. 444nutman

    444nutman Senior Member

    40
    Jun 20, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    The way I look at is no matter what section of the grid you put it on as long as you explain in your comments your good. I personally would put HIGHWAY on the view section of the grid and explain. Two things to remeber:1) Make sure you have at least another comp with similar external obsolescence. 2) This one is missed all the time; make sure you account for the obsol. in the cost approach. (if prepared). Make sure you can prove your adjustment.
     
  4. Riick

    Riick Elite Member

    49
    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Delaware
    SUBJECT: Inf: Hi-Traff
    Sale #x: Typical/Avg
     
  5. RSW

    RSW Elite Member

    98
    Feb 18, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    I agree with nutman. Make sure you have at least one comp. with the same obsolescence and account for it in the cost approach too.
     
  6. stefan olafson

    stefan olafson Senior Member

    0
    Apr 2, 2003
    Professional Status:
    Certified General Appraiser
    State:
    North Dakota
    One other thing, make sure there is external obsolescence in the property before you adjust for it.

    Find sales in similar locations and sales in more typical residential neighborhoods, you will find your obsol and your adjustment that way.
     
  7. KD247

    KD247 Senior Member

    0
    Jan 24, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    In the sales grid, along the Subject Column on the Location Line: "Adj Highway" (or similar, like "Traffic Noise")

    For the comparable sales, Superior, Similar, Inferior, then comment with detailed explanations regarding the differences. Make sure you bracket the subject's location, even if you need to use older or distant sales.

    In the comments, "Because of traffic noise and the unsightly 40' sound wall in the subject's back yard, the highway's proximity is a negative external influence, considered in the Sales Comparison Analysis as a Location attribute. In the Cost Approach, the influence is reflected entirely in the Site Value, with no additional External Obsolescence attributed to the Improvements."
     
  8. lizhorvath

    lizhorvath Member

    0
    Dec 11, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    If backing up to the highway ISN'T average, then I wouldn't mark my subject's site as Average. If all the comps are on average lots, then THEY are the average ones, and your subject is inferior.
    And I agree - you'll wanna find a comp with the same obsolescence.
     
  9. Howard Klahr

    Howard Klahr Senior Member

    117
    Oct 4, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Is this house located within a subdivision that has other homes with a similar influence? If so, I think you will find that the differential is not as great as you might precieve, at least this is often the result in the projects I have reviewed.

    Remember, part of the external obsolescense is attibutable to the land (should already be accounted for in your site value) and a portion toward the improvements. Don't double count this factor by not addressing the issue correctly.
     
  10. KD247

    KD247 Senior Member

    0
    Jan 24, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Great point. Many appraisers set out to find data supporting for their pre-conceived adjustments. Start with an open mind, and carefully analyze closely bracketing sales as well as prior sales of the subject versus contemporaneous sales of non-adjacent properties. Keep in mind that external influences have a much greater effect in weak markets than in strong markets.

    The Cost Approach is based on the site value as if vacant and current new materials cost, so 100% of the External Obsolescence will be reflected in the site value. (Search previous threads for debates on the logic.)
     
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