External obsolescence prove it exists

[Fred]

Based on the definition of EO given in the The Appraisal of Real Estate, once the site is improved, the diminished utility transfers from the land to the improvements.

If the land comps are along RR tracks, then they already reflect the "loss." If the land sales are all away from the tracks, then they don't and would have to be adjusted. Either way, I don't see how the "loss" runs up out of the land into the building.

 

[Daystar]

Appraising 101.. Overimprovement is Functional not External.. all other posts are interesting, it looks like everyone has a lot of time on their hands.

 

[Brad Ellis]

Ben,

Sorry old man, but I totally disagree. Yu may feel fine with your body of knowledge but I'll tell you straight out that it contradicts- directly-the texts of both your and my organizations.

IMHO you just have this wrong.

You say you have one of those over built homes- fine. But, if you had, at that time, looked at all the selling prices of similar sized undeveloped sites, why would they differ in price (apart form perhaps minor locational factors).

Pretty much any of us could show you developments where you can go in and buy lot A of 9000 SF or lot B right next door of 9000 SF and for the same price. Say $100K.

Buyer of lot A builds a 2000 SF home for $300K that conforms to the area and it ends up being worth $400K. Buyer of lot B builds a 4000 SF home costing him $540K, but it ends up being worth only $600K.

That loss is directly attributable to the oversized improvements and is Functional due to its superadequacy. It has nothing at all to do with the land values.

That is the published theory. Don't bother arguing with me on this- argue with ALL the authors of appraisal texts.

Brad

 

[Brad Ellis]

Oh Ben,

Just saw your excerpt- and will grant you that you found one auther saying something different- so I retract my "all".

But that is the only one I've ever seen.

As to the concept that this is a NAIFA thing that is simply garbage. I had the courses from both organizations- they taught exactly the same thing- that it is functional. Period.

Brad

 

[incognito]

Well, Ben, I will have to commend you on that reference. I am astonished that such a concept exists. As for the NAIFA, I dont even know what that stands for. I'm an SRA, have been for over 20 years. Strictly AIREA trained. Though I can find no mention in any of my AIREA or AI texts regarding "environmental Obsolescence", (other than the dictionary), they are, as you state, synonymous. But I'm not willing to throw away everything I have ever learned, and everything I have ever read, for this one quip.

 

[Joyce Potts]

Functional Obsolescence - On Site
External Obsolescence - Off Site

The trick is to value the land, then figure out how these adversities affect the improvements. I take exception to the RR track example. It does carry over to the improvements.

 

[incognito]

I hate to find myself agreeing with Bill G. , but he is correct.

David, do you realize how bad it can be for your reputation to agree with me?

 

[Ben Vukicevich SRA]

Brad Ellis,

The statement is not garbage. I've had courses from NAIFA too and that's how they teach it and that's who I generally argue the concept with. It's not meant to put down NAIFA. It's just a statement of what I experienced and I was curious of where Bill G. was taught the concept.

I've only taken courses from SREA, AIREA, AI and NAIFA. NAIFA taught it opposite the way I learned it. Do I care? Nope. All that matters is how the adverse influence affects the final value. Call it what you wish but is not "Functional period" when you have conflicting theories floating around out there.

I'll find some more stuff on it tonight. I'm in the field all day today.

 

[incognito]

Ben, I know you are passionate about your opinion, and I must admit it is a view I have NEVER heard before, so it is interesting to discuss. But you seem to state your education is based in AIREA and AI classes, and I have searched all of my texts form both (back to mid '70's), and can find no reference that overimprovement in size is EO, yet I can find many which suggest it is FO. Do you think you may have hung just a little too much weight on that one paragraph, especially when it goes in the face of ALL AI and AIREA, and I presume NAIFA teachings and texts?

 

[Ben Vukicevich SRA]

Bill,

I'm not passionate about anything in appraising anymore. LOL. After 33 years, I'm tired and I really no longer care. I spend much of my time over on the History Channel's History of Christianity forum aggravating fellow Christians. LOL. Soon, I may spend all of my time there. It's much more fun.

Anyway, my main residential appraisal education is SREA. Do you remember the old R2 exam? Thats was a good one.

The book I took the photo from was published jointly in 1982 by the SREA and AIREA.