External Obsolescence?

[jskinny]

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.

 

[Lee Lansford]

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.

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.

 

[444nutman]

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.

 

[Riick]

SUBJECT: Inf: Hi-Traff
Sale #x: Typical/Avg

 

[RSW]

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.

 

[stefan olafson]

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.

 

[KD247]

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."

 

[lizhorvath]

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.

 

[Howard Klahr]

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.

This one is missed all the time; make sure you account for the obsol. in the cost approach.

account for it in the cost approach too.

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.

 

[KD247]

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...

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.

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. ...

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.)