• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

External Obsolescence ?

Status
Not open for further replies.

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I have been hired to do a consultation regarding the effects on value (within a .5 mile radius) of a gasoline tank farm (a gasoline distribution center). Traffic along the highway and the main entry road (no residences located on this road) is anticipated to increase by in excess of 100 trucks per day.
The question is, are residential values within one half mile of the tank farm adversely affected?
Any experience you have would be helpful.

Thanks in advance .... PE
 

Valuation75

Freshman Member
Joined
Feb 3, 2008
Professional Status
Appraiser Trainee
State
Virginia
Your best bet is to gather paired sales of similar situations. Try to stick with towns/cities that exhibit similar demographics and illustrate the impact that way. You can also survey developers regarding the discount they require for this situation. If it is a commercial property you could also capitalize the differences in NOI of properties affected/not affected by this existence of a tank. Good luck:) Contact your local assessor's office too and ask to speak to a "higher up" and schmooze them while you have them in person or on the phone and maybe they can provide some additional data.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
PE - Do you smoke?
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Your best bet is to gather paired sales of similar situations. Try to stick with towns/cities that exhibit similar demographics and illustrate the impact that way. You can also survey developers regarding the discount they require for this situation. If it is a commercial property you could also capitalize the differences in NOI of properties affected/not affected by this existence of a tank. Good luck:) Contact your local assessor's office too and ask to speak to a "higher up" and schmooze them while you have them in person or on the phone and maybe they can provide some additional data.


Valuation .... as noted in my original post the properties affected (if so) are residential properties. Assessment records are not public information in NM. Finally, these fuel terminal facilities are not very abundant, there is one within 100 miles of my subject and I am using matched pair analysis in relation to that facility. I was just curious what others may have found if they have researched this issue before.

Thanks
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
PE

I appraised four properties on a road that led to a very large Alcoa plant; that road was the only way the big trucks, about 100 per day could get to the factory. Other properties not on the road did not seem to be effected.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
PE

I appraised four properties on a road that led to a very large Alcoa plant; that road was the only way the big trucks, about 100 per day could get to the factory. Other properties not on the road did not seem to be effected.


Thanks Tim.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
It would seem that the first question you have to answer is whether or not the tank farm would be even noticeable. For a thing to have an effect on value, it will have to rise above the minimum level of perception of a significant number of buyers. Unless prospective buyers are saying "the tank farm is a PITA, I dont want live near there" seems like there would be no negative price effect.

It sounds like you've determined that the primary impact would be traffic related. Have you eliminated terrorist threat, blast radius damage, fire/smoke, environmental factors associated with leaks/spills to the air, surface water, or groundwater, visual impacts, etc etc? I've was told by an appraisers that works in the bay area, that around the refinery there's a difference in pricing between up-wind vs down-wind because of the occasional fires and releases they have. A tank farm is not a refinery, but a similar effect relating to the potential for danger might be at work.

If its just traffic that you're worried about you need to get a handle on what their work schedule would be.
100 trucks a day is 12.5/hour based on an 8 hour day.
6.25/hr on a 16 hour day.
4/hr on a 24 hour day.
Big difference. You also need to find out if 100/day is 100 drive in's and drive-out's (IOW 200 passess/day).

But for any of those numbers to have a negative impact they would need to represent a significant (noticeable) increase in traffic. 200 a day is noting on an interstate or major thoroughfare in an industrial area, but its a killer on a less traveled road. Presumably an environmental impact report exists for this project, that should discus traffic and might have some good resources for you in the bibliography. You might also check with the county to see if they've done a traffic survey on the roadway which would speak to the magnitude of the existing traffic. Worst come to worse, you might have to pop out there and count trucks for a 15 minutes at stretch at different times and days of the week to document what the baseline traffic is like. If you can document that the tank farm traffic is a small fraction of the total existing traffic it should make it pretty easy to substantiate a "no negative value influence" conclusion. If the additional traffic is significant you'll have a good basis saying there is an effect at which point you're only arguing about how much.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
It would seem that the first question you have to answer is whether or not the tank farm would be even noticeable. For a thing to have an effect on value, it will have to rise above the minimum level of perception of a significant number of buyers. Unless prospective buyers are saying "the tank farm is a PITA, I dont want live near there" seems like there would be no negative price effect.

It sounds like you've determined that the primary impact would be traffic related. Have you eliminated terrorist threat, blast radius damage, fire/smoke, environmental factors associated with leaks/spills to the air, surface water, or groundwater, visual impacts, etc etc? I've was told by an appraisers that works in the bay area, that around the refinery there's a difference in pricing between up-wind vs down-wind because of the occasional fires and releases they have. A tank farm is not a refinery, but a similar effect relating to the potential for danger might be at work.

If its just traffic that you're worried about you need to get a handle on what their work schedule would be.
100 trucks a day is 12.5/hour based on an 8 hour day.
6.25/hr on a 16 hour day.
4/hr on a 24 hour day.
Big difference. You also need to find out if 100/day is 100 drive in's and drive-out's (IOW 200 passess/day).

But for any of those numbers to have a negative impact they would need to represent a significant (noticeable) increase in traffic. 200 a day is noting on an interstate or major thoroughfare in an industrial area, but its a killer on a less traveled road. Presumably an environmental impact report exists for this project, that should discus traffic and might have some good resources for you in the bibliography. You might also check with the county to see if they've done a traffic survey on the roadway which would speak to the magnitude of the existing traffic. Worst come to worse, you might have to pop out there and count trucks for a 15 minutes at stretch at different times and days of the week to document what the baseline traffic is like. If you can document that the tank farm traffic is a small fraction of the total existing traffic it should make it pretty easy to substantiate a "no negative value influence" conclusion. If the additional traffic is significant you'll have a good basis saying there is an effect at which point you're only arguing about how much.


I do not see the traffic as an issue. Two roads lead to this facility, one a highway and one a public road on which only one property (zoned I3 but including a residence) is located. No residential streets will be impacted by increased traffic flows. Im not overly concerned about the traffic.
As far as terrorist attacks, everything is subject to a terrorist attack and it is most probably not a quantifiable issue.
As far as perception of the obsolescence, that was my exact question. Have others had any studies that have shown a change in value as a result of this type of facility.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
As far as perception of the obsolescence, that was my exact question.

You haven't really given us any idea about how buyers would perceive it at all. Its cant possibly have an effect on value if nobody knows its there. For it to present an obsolescence it must be objectionable at some level. What is that objectionable element in this case?
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks