I had an appraiser call me today and he asked about a property I sold a couple of weeks ago. He wanted to know if it suffered from any kind of economic obsolescence. What is economic obsolescence? This happens when a property is located in an area negatively impacted by some other kind of development. For example, if a home is located on a busy street, or adjacent to a freeway, or very close to an airport, high tension power lines, a sewage treatment plant, etc., – that property would be considered to be suffering from economic obsolescence. If you are looking to buy or sell a home that suffers from this, you need to understand how much that affects the property’s price – and it’s important to note that Zillow and all the other automated valuation sites rarely if ever properly account for economic obsolescence. To find out how much a home’s price is affected by this, an appraiser (or REALTOR) needs to very carefully analyze comparable sales data to determine how much the property is devalued by being “economically obsolete.” I have found that in many cases, the “penalty” for being economically obsolete is smaller than you’d think it would be – but it is often far greater than Zillow would lead you to believe. So before you buy (or sell) a home that has an “obsolete” location like that, do you homework and run the numbers! The result may surprise you.
Economic Obsolescence and its Impact on Home Prices
357 Moosehead Drive, Aptos, CA
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