Thursday, January 17, 2008

External Obsolescence - a Bad Location

By definition "External Obsolescence" is a defect, usually incurable, caused by negative influences outside a site. In other words the property has a bad location.

In this example a Palatine home backs to railroad tracks and at the time Google took this photograph it captured a low flying aircraft. This is an example of a bad location. The noise from trains and aircraft negatively affect the appeal of this house.

Anything that negatively affects the appeal and marketability of a property is obsolescence. If it comes from outside the properties boundaries its external obsolescence and you cant do anything about it. Noise, odor's , busy streets, all contribute to a bad location, and once you have a bad location you are stuck with it. You may buy it cheaper, however, just say no to bad locations.

I have appraised homes backing to Burger King, the external was the odor of Flame Broiled Whoppers, Condo's backing to the CTA Elevated, a $2 million home right under the approach to O'Hare's busiest runway, homes adjacent to cemetery's, homes siding on alleys, homes next to landfills, and even one adjacent to the 24 hour drive up window for a fast food location.

In the past few years developers in Chicago were building on any available lot they could find, and due to the hot real estate market it seemed that purchasers were buying everything that was built. Unless you tear something down in Chicago all the good locations have been built on years ago. So what's left, lots of property with bad locations.

Yes, in the boom years purchasers overlooked a lot of things, but not anymore. Now that the market has cooled down and there are lots of choices available, what will happen to all those listings with bad external obsolescence? The likely scenario is that they will sit on the market a long time, have many price drops, before some fool buys it thinking he has a great deal.

Before you purchase a property, build a new home, or add a major addition to your home, its a good idea to have an appraisal by a certified professional. Complete appraisals of single family homes and condominiums start at $275.00. The real estate market is complex, give yourself peace of mind, contact Citywide Services 1-800-405-9718

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