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“External Influences” (Busy Streets, BART, Cemeteries, etc.) Can Significantly Impact Values

busy-streetReal estate agents involved in transactions with external influences sometimes under-estimate their effect and get frustrated when appraisers have difficulty supporting value.

The most common problem involves properties on busy through-streets. A loud or busy street near a property can shave as much as $50,000 to $100,000 off the appraised value, depending on the price range.

“Adverse external influences” are structures or entities near a property that negatively affect its value. Appraisers often use the phrase “External Obsolescence” when describing these influences.

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

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 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 at least one similar comp with similar adverse influences that supports value.

Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646