I took some audio a while back of the sound of a train while on an appraisal inspection. While standing in the backyard of a property, I made the recording below. Do you think this would be a big deal for buyers? Listen to the video HERE if you cannot see it in your RSS or email subscription.
In appraisal terminology, this sound would be categorized as “external obsolescence” because it’s something external to the property that imposes on the property. One ineresting thing to me about external obsolescence is that there is a different reaction in the marketplace to locational challenges depending upon the market. For example, in a market with high demand and low supply (with increasing property values), you’ll find that many buyers will tend to overlook certain location and/or condition issues, whether close proximity to an airport, train tracks, fire station, etc… But in a downward market with less demand and a greater supply, buyers will tend to be picky and pay less for properties with locational issues. So if you are selling your property, know your market well and then set the price accordingly.
I’d love to hear your thoughts or stories about homes with external issues like this. Have you ever purchased or sold a house with a locational challenge? What’s it like to live by such a location? Do you tune it out after a while or does it gnaw at you day after day?
One other thing to consider too is that often times properties with locational challenges are not assessed properly because the Assessor’s mass appraisal process may not really capture negative features of a property that might make it worth less (backing to commercial, next to a gas station, located on a busy street). If you have any appraisal questions or needs due to location, please contact me at 916-595-3735.
Very interesting video. The train sounded very close. Every now and then I appraise properties that back up to an an interstate. The sound of the cars is very loud. In my appraisal I include an arial photo that shows how close the property is to the interstate. Personally, the sound of a train or interstate would drive me crazy.
Yes, it was close. The house backs to the tracks basically. There is a very small portion of open land between the rear lot line and the tracks (maybe 30-50 feet at most). An aerial photo is a nice touch, Bryan.
I think your observation is right on regarding how important this is to a buyer. The type of market you are in does play a big role. Hope they don’t have to sell in a down cycle.
“The type of market you are in does play a big role” – Well said Tom. Thanks for the comment. It seems that a downward market is like a magnifying glass to issues that would normally be overlooked when a market is really hot.
Ryan, funny that you posted this scenario. I really enjoy your stuff.
I ran into a similar situation a couple of weeks ago. Upon pulling up at a residence I noticed a freight train passing by at the rear of the property, some 60 yards from the house. The homeowner explained that it was an infrequent occurrence, perhaps twice a week. Back at the office, we took a look at the property on googlemaps.com just to get a better feel for its proximity to the tracks. It just so happened that the googlemaps.com photo also happened to captured the same, “infrequent passing” of the train. After further research, we found that the train is on a 3 time a day schedule.
In this case, the presence of the train really put a crimp into the potential pool of buyers for this house. It was priced at the “first time home-buyer” and “young family” markets for our area. However, with the train being there it is unlikely that those buying-pools would consider this property. First-timers are concerned with making the right decision with no issues. Small families are concerned with child safety. The train was a big turn off to both of these potential sets of buyers.
External issues not only play a role in the value of a property but, which markets the property may or may not appeal to…
Mike, thanks for the great comment. Three times a day could get very old, but at the same time that would depend on what times it came by too. It’s funny how home owners will say things like that when it’s just not even true.
My wife and I considered buying a house once that backed to a railroad and I’m so glad we didn’t do it. That tiny house would’ve been shaking all over the place.
It’s cool that you used technology back at the office to look into the situation further and ultimately reinforce your suspicions.
By the way, from your website it looks like you appraise in the Boston area (if I read it correctly). My wife and I will be there in a couple of weeks. Who knows, maybe we’ll run into you during one of your inspections…. 🙂
We’re actually in Philly and New Jersey…
Opps, sorry to get your territory wrong. I clicked on your website and the interactive map had a few different states seemingly, so I figured you might cover them all.
Ryan, My grandparents used to live near the airport, and the planes used shake and rattle the house. Talking to grandpa was always a hoot, he would just raise his voice as the planes approached never missing a beat. They ended up taking most of the homes in the neighborhood.
Thanks for sharing Michael. What an example of the way we get used to sounds around us and/or have to adapt. I assume you mean eminent domain when you say “they” took most of the homes in the neighborhood? Do you know what the current use is for the neighborhood now?
I believe it’s still a field, I haven’t been in that area in a long time. “They” is the Metropolitan Airport Commission, Minneapolis/St. Paul Airport, and I believe the State and County had to get involved also.