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Land Slide Stigma?

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Ryan Riddle

Thread Starter
Freshman Member
Joined
Mar 17, 2006
Professional Status
Appraiser Trainee
State
Washington
We've been asked to do an appraisal of a property that recently had a moderate landslide. I'm trying to figure out what sort of stigma might be involved here, and I was hoping someone has had some experience with this.

The property is one lot back from the lake shore, and the slide was a slow slide on the downslope between the home and the shore. Damage to the home was relatively minor, with only a little foundation settling on the lake side. Although the city inspectors where initially concerned about safety and habitability, a geotech inspection showed no immanent hazards and the city ok'd it. Damage to the home was minor, less than 5% the value of the home. Fixing the slope will be significantly more expensive, but certainly worth doing. This home was in the $2 million ballpark before the slide, and is in a very desirable area which has had occasional slides, but is not generally known to buyers as a slide prone area.

Now, we're appraising it as of just after the slide, before repairs, but the question is how large the stigma associated with this would be. We have a very senior appraiser who has done a lot of damage appraisals who was initially thinking only around a 5% discount.

However, there is another neighborhood nearby, also very desirable and populated by high end homes, but well known as a slide hazard area. A very experienced agent who has sold a large proportion of the homes in this second neighborhood indicated to me that he has had many buyers walk when they find out that properties had a recent slide, and that it can take upwards of 7 years before the stigma fades completely as buyers become confident the slope isn't going anywhere. He suggested that a 30% price discount is typical. The complication is that this other neighborhood is much more prone to slides, and that these slides tend to be much worse (i.e. homes have been written off as worthless and demolished). I'm still working on finding specific sales to calculate a discount rate, but I'm not sure how useful these will be given how much worse slides tend to be in this other neighborhood, which would increase the stigma.

Anyway, if anyone has experience in this sort of thing, I'd love some input.
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
It'll be more than the cost to repair.
But that's all I got. :shrug:
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Read Bell's Detrimental influences book. Stigma is very individual. its quite difficult to 'pin the tail on the donkey'..
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I think I would require an engineer's report and estimate of what it would take to eliminate the possibility of further slides..........such as retaining walls, pilon reinforcement of the down hill side of the foundation, etc. Then take that estimate quote it and estimate market reaction and then use that as an adjustment.
 
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