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External Obsolescence

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Charley Horse

Junior Member
Joined
Aug 28, 2004
Professional Status
Certified Residential Appraiser
State
Michigan
... I have a client (pvt party) that wants an appraisal done taking the following External Obsolescence into consideration... property's been listed 213 days in a neighborhood where sales are robust and the median DOM is 62 days... neighborhood is diverse with prices ranging from $150k - $275k.

I've spoken to a half dozen Realtors that have shown the property and listened to VM all reflecting the same feedback re: the situation next door... there's a large Swatiska painted on the front of the house with signage stating "kill Trump"... I've quantified External Obsolescence in the past and adjusted accordingly, but where should I begin with this assignment (besides declining the assignment)?

I've solicited help/guidance from several dozen other appraiser's in my state with no effective suggestions... any insights and/or references anyone on this forum can share with me to deal with this assignment would be greatly appreciated!
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
This is curable ext obs since all it takes to get rid of it is the neighbor removing the swastika from his door- I find it hard to believe the police dept or local zoning has not been called in to compel the neighbor to remove it.

That aside, clearly the situation next door is affecting marketability, assuming the list price is reasonable. I'd decline, because the neighbor is a nut, and the HO is trying to prove damages to his property value due to neighbor. It is not worth the fee to get involved in a personal dispute like that.
 

SpartanAG

Member
Joined
Feb 12, 2008
Professional Status
Certified General Appraiser
State
Arkansas
Is there an HOA, neighborhood or deed restrictions that could be enforced to remedy the situation?
 

SpartanAG

Member
Joined
Feb 12, 2008
Professional Status
Certified General Appraiser
State
Arkansas
You could interview real estate agents and local investors to see what they think the property might sell for and how long it might take to sell given the current situation. That would give you a starting point.
 

Charley Horse

Junior Member
Joined
Aug 28, 2004
Professional Status
Certified Residential Appraiser
State
Michigan
No HOA... platted subdivision in a rural Lakeside Village... owner is a ZA so I would speculate, she's dotted her i's/t's... politics aside, is there anyway to derive an adjustment?

Owner just wants to know how much of a hit she should expect to sell the property... she current lives there, and frankly, it's a nice neighborhood other than the situation next door.
 

SpartanAG

Member
Joined
Feb 12, 2008
Professional Status
Certified General Appraiser
State
Arkansas
Since this is a private deal you can provide a range of value. I would start by interviewing people like I stated in my previous post. That will give you a starting point. From there you could begin a wide search for other properties that have sold near curable EO's such as strip clubs, bars...etc. A search of the interwebs might even turn up some stories of other homeowners that have gone through similar situations.

Just go into this with the understanding that it won't be like a typical Fannie Mae form report and that is ok. Make sure you have an engagement letter between you and your client. If you are going to use a form, use a GP or Appraisal Institute form with an addendum explaining how you got the adjustment for the EO.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
No HOA... platted subdivision in a rural Lakeside Village... owner is a ZA so I would speculate, she's dotted her i's/t's... politics aside, is there anyway to derive an adjustment?

Owner just wants to know how much of a hit she should expect to sell the property... she current lives there, and frankly, it's a nice neighborhood other than the situation next door.

What is a ZA? I'm surprised if the message says "Kill Trump"that law enforcement can't compel removal. There are laws about making threats against a president and some communities have anti graffiti laws.

It sounds like the homeowner does not want to take steps to get this resolved with her neighbor and is looking for appraisal to get damages /relief.

Assuming her list price is reasonable, if other similar priced listed homes are selling and hers is not, what is the hit to marketability? Few people are willing to live next door to a nut case, no matter how cheap a price. Your best source is interviewing the listing agent and asking them about buyer reaction. Seeing what properties next to crummy neg influences sell for is an option as well. I'd decline the job because of the personalities and potential things that could go wrong how this appraisal can be used. jmo
 

Tom D

Senior Member
Gold Supporting Member
Joined
May 22, 2015
Professional Status
Certified Residential Appraiser
State
Pennsylvania
the 1st mistake she made was leaving it listed for that long. from my previous broker days, when a property was over listed, and went past the 'normal marketing period' it would literally disappear to other realtors. No matter what you did after that time it would sit there like a ghost listing. there now has to be a long rest time period. the 2nd mistake you will make it showing the state how you proved that 'external obsolescence'. if she decides to go to court, you will be pulled into that situation. if you didn't prove that depreciation in your work file, the state will turn you into a ghost appraiser.

i suppose most realtors could tell her the correct listing price. that would be my recommendation for such a lack of matched pairs adjustment. you would have to find sales with the same situation anywhere in the state, then do matched pairs to determine their percentage of depreciation attributed. hopefully, you would have a range to pick that percentage of depreciation. how much did you say you are charging for this amount of research. i'm not sure word of mouth by realtors is an acceptable proof for an adjustment.
 

Dublin ohio

Senior Member
Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
A
you would have to find sales with the same situation anywhere in the state

And the odds of that would more than likely be zero. You might find some kind of proxy situation (next door house is in bad shape, yard filled with junk). But those situations would probably not include the "nut" factor. Although there is an obvious visual factor. It would be obvious to most that there is also something very questionable about the person living in that house. That is the factor that would be most difficult to account for. IMHO. Walk away. Too many if, ands or buts. You probably would not want to get the next door neighbor upset with you. Might change the word Trump on the front of the house to appraiser.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Swatiska Flag--20%
Confederate Flag--10% (Michigan)
Al Franken Flag --5% (Minnesota)
 
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