A Discussion on External Obsolescence
Estimating depreciation has always been the thorniest problem in the application of the cost approach. The rise of the hybrid work environment and legislation around upzoning and affordable housing are a few examples of recent phenomena that have the potential to affect a structure’s surroundings and subject it to external obsolescence, which is often the hardest form of depreciation to analyze and explain to users of appraisals.
External obsolescence is “a loss in value caused by negative externalities, i.e., factors outside a property,” according to The Appraisal of Real Estate, 15th edition. “External obsolescence usually has a marketwide effect and influences a whole class of properties, rather than just a single property. However, external obsolescence may affect only one property when its cause is location—e.g., proximity to negative environmental factors or the absence of zoning and land use controls. In fact, the causes of external obsolescence can be broadly characterized as either economic obsolescence or locational obsolescence.”
Examining both economic and locational obsolescence in this hour-long webinar, our panelists aim to help you understand what to consider when determining the presence and significance of the two forms of external obsolescence. Then, they will provide tips for estimating the impact of the temporary or permanent depreciation on property value and justifying those conclusions in your appraisal report.
Webinar Speakers:
Robert Becker, MAI, SRA, AI-GRS, ASA
Owner/President
R.D. Becker Valuation LLC
Gary S. DeWeese, MAI
Principal
Real Estate Strategic Solutions, LLC
Related Resources:
Courses
- Advanced Concepts & Case Studies
- Advanced Market Analysis and Highest & Best Use
- General Appraiser Site Valuation and Cost Approach
- Residential Site Valuation and Cost Approach
Book