Proximity to Multifamily Buildings

This nice Elmwood Park bungalow is located on a major arterial street, it faces commercial property and is flanked on both sides by apartment buildings.

Now this may be a great location for an apartment building, however, the proximity to all this external obsolescence makes it a bad location for a single family home.

The value of a single family home is maximized when it is surrounded by other similar residences.

Here is another example of a single family home flanked by apartments and located on an arterial street.

This prairie style home is located in Chicago's Austin neighborhood and was designed by architect Frank Lloyd Wright. One can only imagine the difference in value between this house in its bad location and a nice quiet residential location.

One thing that is sure about real estate is change. Another thing to keep in mind is that property on arterial streets will change faster than residential property back in the neighborhood.

107 years ago when Wright designed this property Central Avenue was still an arterial street. In 1903 the level of traffic & noise was nothing like it is today. This home may have been flanked by similar residences that were torn down and now the land is used for apartments. The level of external obsolescence has changed over time.

On Arteral Street & Faces Cemetery

Here is a bungalow currently listed for sale in Chicago's Dunning neighborhood with multiple forms of external obsolescence.


First off its located on an arterial street and then it faces a cemetery.

This poor location is having an affect on its appeal & marketability, the house has been listed several time and has spent about 450 days on the market.

Yes location, location, location that's what its all about. When this thing sells you can bet it will be at a discounted price

Backing to Railroad Tracks

They say Real Estate is all location, location & location, so why does someone build a nice custom built home on the worst lot they can find?

This custom buitl split level is in Chicago's Garfield Ridge neighborhood. As you can see it backs up to railroad tracks. In addition it sides on a four lane arterial street. Behind the tracks is commercial property, across the arterial street is commercial property and its close to the Midway Airport flight path.

Multiple forms of external obsolescence, nice house, real bad location.

Proximity to Low Flying Aircraft

Here is another example of homes with multiple forms of external obsolescence. In addition to being on the Flight Path from O'Hare International Airport some of those in this photo back to railroad tracks.

External obsolescence from being under the flight path of low flying aircraft is a big problem for people living in Park Ridge, Norridge, Harwood Heights, Des Plaines, Mount Prospect, Arlington Heights, Elk Grove Village, Bensenville, Itasca, Wooddale, Elmhurst, Addison, Franklin Park, Schiller Park and parts of Chicago.

If you live in close proximity to an airport there is no way to avoid airport noise, its just typical for the area, but if you can avoid it don't buy a home that is directly under the flight path.

Now its easy not to buy a home backing to railroad tracks, but how do you avoid buying one under a flight path. Now you can stand in front of a home you are interested in and watch the sky and look for aircraft. This would be ok except they use different runways depending on the winds. So one day no airplanes and its quiet, and three days later 100 flights per hour.

If you are planning to purchase a home in any of the communities in close proximity to the airport this is what I recommend. Most maps show the airport runways. If you extend a straight line out from the runways to the community you are interested it will give you the flight path of the aircraft. Most of the takeoffs and all of the landings will be on a straight line. If that line intersects with your potential purchase, its on a flight path.

A good web site to track aircraft is Flight Aware

Proximity to Rapid Transit

Not a good location for a residential property
These are some two flats in Chicago's Archer Heights neighborhood that were built along the tracks for the CTA Orange Line. When they built the tracks there was space left over so they sold the lots and built apartments. Who knows some of these may be condo's.

What a poor location this is. Think about the noise of passing trains 18 hours a day, no early to bed and definitely its early to rise.


With this type of external obsolescence rents will be lower, the landlord will have trouble keeping tenants for a long term and the apartment will stay vacant longer than a building with a normal location. When it comes to selling these turkeys, expect much longer marketing times & lower prices, all the effect of a bad location.

The Alley Influence

Minor but still has an affect on appeal & marketability

Here is a nice little split level located in Chicago's Forest Glen neighborhood.

From this MLS photo I did not see any external obsolescence. It was an active listing and I wanted to take a look at it. When I got there I found that it suffered from a minor form of external obsolescence known as "the alley influence"

As can be seen from my photograph this property sides on an alley. A little fact that the MLS photo left out, or tried to hide.

With a location like this there is increased traffic and the home is not as nice as it would be with a location in the middle of the block with no alley. Its minor, no real big deal, but this property is still for sale after 179 days on the market. Right now buyers have a lot of inventory to choose from and even minor obsolescence is given a hard look.

Arterial Street & Proximity to Commercial Property

Many properties don't just suffer from one form of external obsolescence. Here is a nice little bungalow in Chicago's Portage Park neighborhood. This thing is clobbered with bad external.

First off its located on Cicero Avenue, a major four lane arterial street.

Next its located in close proximity to commercial property. It's got a Taco Bell on one side and a IHOP on the other. The drive up window for the Taco Bell is adjacent to the property line.

This is a terrible location for a residential home. You have noise from car & truck traffic, safety is a concern, you would not let your child play in front of this house. In addition odors from cooking, noise & lights from commercial activity may go on 24 hours a day, can I have your order please!

External obsolescence - whats that?

The Dictionary of Real Estate Appraisal defines external obsolescence as: "An element of accrued depreciation; a defect, usually incurable, caused by negative influences outside a site."

External obsolescence causes a loss in value to your property caused by forces that you can not control like the current condition of the world economy. That's what it means when its says "usually incurable", you cant fix it and just have to live with it.

The type of external I will deal with in this blog is "Locational Obsolescence" in other words a bad location. This is another thing you can't fix, if you buy a bad location, you are stuck with a bad location.

Why do people buy a piece of real estate with a bad location? It beats me, as it appears there is some fool to buy every bad location out there.

It might be that they think they got a deal on the property. In this blog I will show that you never really get a deal on a bad location. You might think its a deal when you are buying, but wait till you try and sell.

And it just might be that the buyer does not think the location is bad. The location does not seem to bother them. Believe me it will bother prospective buyers when you want to sell.

When a property has a bad location an appraiser says that the property "Suffers" from external obsolescence. This can be from a location backing to railroad tracks, located on an arterial street, the proximity to commercial or industrial property, low flying aircraft, smells, odor's, crime, ..etc..

In the real estate boom years buyers were purchasing every piece of property offered for sale. That is not the case now, the MLS is loaded with listings for sale. No one is going to buy your bad location when they can get a better one for similar money.

As a real estate appraiser in the Chicago area I run across properties suffering from external all the time. In this blog I will point out different bad locations, for you to keep in mind when you are considering a residential real estate purchase.

My advice is "Just say No to a bad location.