Could you buy a house for $800? In the 1920s you could, just call Sears for a free catalogue. Do you know any Sears homes?
External obsolescence is a factor that reduces the value of an improvement because of something external to the property itself. It refers to something outside of the home that is causing a lower property value.
Here are five examples of external obsolescence:
1. Busy Road: This is a very common example of external obsolescence because we can see it in virtually every community to some extent. Homes on busy corners, on main streets or near freeways suffer from extra noise and traffic, both of which impact property values.2. Commercial buildings: Residential and commercial uses tend to not mix well in suburban areas. It's usually a negative factor when houses are located next to restaurants, retail, gas stations, etc. 3. Construction of a landfill next to a neighborhood: This can impact the entire neighborhood (not just one house) due to the smell or even the noise of large garbage trucks moving in and out.4. Railroad tracks: Properties located near railroad tracks will suffer a hit when it comes to home values due to the noise factor. Same goes for properties close to an airport and airplanes' flight paths. 5. High-Voltage Towers: A view of nearby power towers usually results in a hit to property value.
Here Are Just a Few Examples:
Estate PlanningPlanning for the future of an estate or collection is important. An appraisal can provide a valuable tool so that owners can plan in advance for tax, distribution or donation. RefinancingMost home buyers know that they need to get a home appraisal when they apply for a loan to purchase a property. However, an appraisal will also be required when a home owner wants to refinance their loan at a lower mortgage rate. Banks will order another appraisal to ensure what the value of the property is.PrelistingSome homeowners order a home appraisal prior to putting their houses on the market to determine the best listing price. This is a great idea regardless of whether the homeowner is or isn't working with a real estate agent to sell his/her property.DivorceMost state courts require a recent appraisal to determine a home's fair market value. In a contested divorce, spouses often want their own separate appraisals therefore two appraisals will be done. If the two appraisers reach different values, a judge will look over both appraisals to make his/her final decision.
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