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Appraisals with “Adverse External” Influences; Big Deal Lately

We are having more issues lately with properties that have “adverse external influences.” Adverse external influences are structures or entities near a property that negatively affect its value.

Adverse influences include freeways, busy arterial through-streets, railroads, BART or mass transit trains, cemeteries, schools, and commercial buildings or establishments.

Realtors involved in transactions with external influences often under-estimate their effect and get frustrated when appraisers have difficulty supporting value.

Appraisers, of course, have to disclose all external influences b/c underwriters readily spot them with their reviews (using plat maps, photos, MLS, and other sources).  Appraisers are then required to find a comparable sale with a similar adverse influence that supports value, and this is often difficult to do.

Appraisers cannot simply correlate entirely to nearby comps that do not have adverse influences and make downward adjustments. This is what Realtors often want appraisers to do, but it is deemed too subjective by underwriters and appraisal guidelines preclude it.

Appraisers must include similar comps with similar adverse influences that support value.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646