Shopping for a Home? Beware These 17 Flaws

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Buying a home is likely to be the investment of your lifetime. To protect that investment, buy with an eye to finding a home that will hold its value or appreciate. When it’s time to sell, you’ll want a home that attracts buyers easily, not a white elephant you can’t dump.

That means avoiding these 17 flaws that damage a home’s value:

1. Problem location

It doesn’t matter how fabulous the home, a lousy location can doom it to sell for less than the same home in a better location.

Problem locations are easy to spot: If you wouldn’t want to live there, probably others won’t either. A noisy freeway nearby qualifies. So does a smelly sewage treatment plant down the block. Homes near freeways or railroads can sell for 10 to 15 percent less, says MSN Real Estate.

But “bad” also can be a question of community values. For instance, a home near a busy intersection in a small, quiet town may sell for less, but in a busy metropolis with high housing demand, other issues may matter more.

2. Swimming pool

In parts of the country where home swimming pools don’t get much use, a pool can be seen as an expensive maintenance headache. Also, a pool is a legal liability.

3. No garage

A home that lacks covered parking can lose about $5,000 in value for each missing space in a neighborhood where most homes have a garage or carport, says MSN Real Estate. A home that should be worth about $350,000 may sell for $340,000 with no covered parking in a neighborhood where most homes have two-car garages.

4. Bad reputation

A home associated in the public’s mind with a murder or suicide can get a stigma. Also, a history of drug-growing or producing, or other criminal enterprises can make a place difficult to sell and depress its sale price.

5. Mold

Finding mold in your home is a signal to open your wallet — wide. Under the right conditions, it doesn’t take mold long to do serious damage, and removing it often calls for expensive expert help.

MSN Real Estate explains:

Depending on the materials and the temperature, mold can begin in a day or two. Rot takes longer. Repairing or replacing rotten or moldy structural wood, engineered wood products, drywall and carpet will set you or your insurance company back a small fortune.

6. Clotheslines

It may sound silly, but clotheslines are banned as unsightly by many homeowners associations. Clotheslines in a neighborhood can bring home values down by as much as 10 to 15 percent, MSN Real Estate says.

7. Low school test scores

Real estate site Redfin researched the question and found that:

When accounting for size, on average, people pay $50 more per square foot for homes in top-ranked school zones compared with homes served by average-ranked schools. This means that the price differences for similar homes located near each other but served by different schools can range from tens to hundreds of thousands of dollars.

An additional $50 per square foot means an extra $125,000 in value for a 2,500-square-foot home in a great school district.

“In the age of Tiger Moms and raising the Smartest Kids in the World, getting the best education for their kids has become a borderline obsession for American parents,” Redfin says.

8. A nearby sex offender

Homes within a 10th of a mile of a registered sex offender lose about 9 percent of their value and take up to 10 percent longer to sell, found researchers at Longwood University in Farmville, Va. Online sex offender lists and phone apps are popular with homebuyers, despite the fact that the information may be outdated, inaccurate or misleading, says Inman News, which relates this story:

“I know of a young man who was 18 (and was) caught with a 15-year-old girl who he thought was his own age,” said Vickey Wachtel, owner of Katy, Texas-based Imagine Realty International. “He is in his 30s now and no threat to anyone but … his neighbors will be punished because he was a teenager who didn’t ask a girl her age.”

9. Neighbors from hell

Toxic neighbors degrade the value of surrounding homes by 5 to 10 percent or more, according to the Appraisal Institute, a professional and certification group for real estate appraisers. A bad neighbor “can include homeowners with annoying pets, unkempt yards, unpleasant odors, loud music, dangerous trees and limbs, or poorly maintained exteriors.”

The institute suggests home shoppers visit a street at different times over several days to get a good idea of what a neighborhood is really like.

10. A power plant

A power-generation plant can have a powerful downward pull on home prices, says Business Insider, quoting a study from the University of California, Berkeley. The research found that home values dropped 4 to 7 percent for homes within a 2-mile radius of a power plant.

11. HOA screw-ups

In a blog post at Zillow, Brendon DeSimone, author of “Next Generation Real Estate: New Rules for Smarter Home Buying & Faster Selling,” lists three ways a condo association can screw up the sale of one its units.

A sale can be held up or killed, he says, if:

  • Renters outnumber homeowners. (“All banks believe a condo complex or building occupied primarily by homeowners is less risky than one with a lot of rental units.”)
  • One owner owns several units. (If the owner defaults, the homeowners association’s finances could be seriously hurt.)
  • The association’s bank reserves are too low to cover the cost of maintaining the property.

None of these on its own will necessarily stop a sale, DeSimone says. “On the other hand, for the first-time buyer with the minimum down payment and a low salary or minimal credit history, a bad HOA situation could be a deal-killer.”

12. Foreclosures next door

Your gut tells you that a foreclosure next door — or even in the neighborhood — would bring down property values for nearby homes. Your gut would be correct: Foreclosures lower the price of each nearby home an average of $7,200, Business Insider says, quoting research by the Center for Responsible Lending.

13. Smells

Smells you’re accustomed to may not trouble you, but you can bet homebuyers will notice and subtract points from your home when they weigh their options.

Pet smells and cigarettes are two of the worst offenders. They’re noxious to buyers and they’re difficult to get rid of. Realtor.com suggests washing the dog, keeping the trash emptied, banishing smokers from the house, and avoiding cooking certain foods (broccoli, fish, eggs, lamb and garlic) while your home is on the market.

Smells from sewage, gas or mold can be the tip-off to serious problems that are expensive to fix and are likely to bring down a home’s value.

14. Fracking

Fears about groundwater contamination can drive down home prices, according to this McClatchy article reporting that “property owners near shale gas wells are liable to suffer a major loss in value because of worries over water contamination.”

Researchers from Duke University and a nonprofit research organization, Resources for the Future, found that “Pennsylvania homeowners who used local groundwater for drinking lost up to 24 percent of their property value if they lived within 1.25 miles of a shale gas well.”

Homeowners whose water was piped in saw property values rise, probably because of lease payments from drillers and the absence of water contamination fears.

Shale gas wells use hydraulic fracturing, or fracking, which, according to the American Chemical Society, “involves injecting huge volumes of fluids underground to release gas and oil.” A recent ACS report says fracking “could potentially contribute more pollutants to groundwater than past research has suggested.”

15. The best house on the block

A home’s value is heavily influenced by the value of homes around it. Appraisers use “comps” — sale prices of comparable properties — to decide a home’s value.

“Home values in a neighborhood are intertwined because comps are so important in determining how to price — and what to pay for — a home. So the value of your McMansion will be limited if it’s surrounded by homes of considerably lesser value,” says DeSimone, in another Zillow post.

16. Wiring problems

Wells Fargo cautions homebuyers:

If the home you’re buying has aluminum wiring, it may likely need to be replaced. According to the U.S. Consumer Product Safety Commission, homes wired with aluminum wiring before 1972 are 55 times more likely to have fire hazard conditions than houses wired with copper.

17. Hoarders

A home near a hoarder’s lair takes a hit in value.

“A nearby property’s overgrown yard, peeling paint and clutter can easily knock 5 percent to 10 percent off the sale price of your home,” Joe Magdziarz, president of the Appraisal Institute, told MSN Money.

A place in worse shape, with a yard stuffed with junk and a rundown structure can bring down surrounding home values even further, he said.

Have your seen these or other flaws bring down property values? Post a comment below or at Money Talks News’ Facebook page.

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Comments & discussion

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  • Jason

    Clothesline restrictions are just silly. I don’t matter is some uptight homeowner association member thinks they are unsightly. This is simply one of many instances of HOA’s forgetting that their reason for existence is to maintain common areas and collect fees to cover that maintenance not create their own little fiefdoms.

  • Synthetic1

    There is a HOA near me that does not allow storage buildings, RVs, or exterior paint colors which fall outside a palette of white-to-medium beige. People move in knowing the restrictions and for the most part fully support them. To me, that neighborhood has a nice look and feel to it, so, if you don’t mind paying the monthly dues, it can be a nicer place to live.

    My own neighborhood does not have an HOA or covenants, does not look as homogeneous, has some storage structures and guest houses, but we prefer the mix. We face a little more risk in that if we have a crazy family move-in there is less control, but city ordinances and filed restrictions exist to bend arms if needed.

    I suppose there are loose-cannon HOAs popping up here and there but you just need to band together and oust the miscreants.

    • Jason

      People aren’t always aware of HOA rules before purchasing a home. We lived in our previous home for 7 years and in that time were not able to obtain a copy of our HOA rules. They were suppose to by filed with the city but the city didn’t have a copy.

      In our new location we are renting and our landlord does not have a copy of the HOA rules. The house next door sold the day it was put on the market. They had 5 offers and the house sold well above list price. I guarantee that the buyers did not get a copy of the HOA rules before making the winning offer.

      • Jim Wiggins

        I was sent a warning letter, prior to a $75 fine, from my HOA enforcement group because I had not submitted a written plan to the architectural committee. I responded that I had a written plan and would be happy to send it to the architectural committee if they would provide the contact information. Their response was that there wasn’t an architectural committee.

  • http://ecofrugality.blogspot.com/ Amy Livingston

    “It may sound silly, but clotheslines are banned as unsightly by many homeowners associations.”

    How in the world is that a “flaw”? If anything, it means that you may be able to get the house for less than it’s really worth because other buyers are put off by it. And if you, yourself, don’t like it, it’s very easy to take it down.

    • Michael Smiley Gawthrop

      I was thinking the same thing… buy the house with the clothes line and if it becomes an issue it takes less than an hour to take it down and put a tree or shrub in the hole that was left behind. And, if you are smart, you can actually turn that clothes line into a feature (it is very green after all, a solar powered clothes dryer, see, solar, you are reducing your carbon footprint and reducing your utility bills to boot).

  • marketfog

    It might prove useful to look at a Google map and satellite images to see whats around you. How close are schools, prisons, railroads, highways, dumps, etc?

  • Y2KJillian

    Jim Wiggins–that’s hilarious! These HOAs!

  • stacyharris

    “One owner owns several units. (If the owner defaults, the homeowners association’s finances could be seriously hurt.)”

    Excellent point, but it isn’t even necessary for the owner(s) to default if the owner(s) of several units seek dominate representation and thus controlling interest of the HOA and its Board. It’s even worse if said owner(s) in a building hardly considered “next generation real estate is/are litigious and don’t distinguish between the rights of owners versus renters.

    Google Windsor Tower Condominiums and Nashville, Tennessee. Reviews and posted photos tell the story of a property that in other hands stands a chance of competing with newer, downtown and “Gulch” area properties that attract a younger following rather than nursing home demographics.

    When trust-fund babies and otherwise idle rich buy multiple units of a 50-year-old apartment building converted to condominiums for the express purpose of exerting control over their neighbors, it’s a recipe for trouble.”‘

    As Bredon DeSimone suggests, statistics don’t lie.

    At this writing there are four Windsor Tower units for sale. (Source: MLS listings). Two of these units, Unit # 205 and Unit #206 are listed by the same owner (as part of an estate sale). The “two adjoining 3 bedroom units” that may “be purchased separately or together have been on the market for almost seven months.

    Unit #203 is being advertised as follows “Tons of potential here.” As Realtors will readily admit, such a description alone is the kiss of death. These buzz words speak not to the property as is but as a disclaimer of the obligations the buyer will have upon purchase. This includes not only fixing up the property so that it will conform to stringent HOA requirements (independent of city codes) but also the payment of a monthly maintenance fee, a monthly “13th month fee” (to replenish historically inadequate reserves) and sporadic, expensive special assessments.

    Small wonder several photos being used to sell the property are not of the unit itself but of the interiors and exteriors of the building and its commons areas without no clarification as to “what is what.”

    Purchased originally on July 27, 1999 for $180,000, the estate has not only failed to realize its original listing cost of $265,000, following two price reductions (Reduced to $264,900 circa March 3, 2014 and reduced again to $249,900 circa May 28, 2014) the Unit #205 has yet to sell.

    Unit #206 was purchased on January 12, 1982 for $148,500 and listed for $360,000 pm January 31, 2014. As early as February 17, 2014 the asking price of the unit was was reduced to $349,900. By March 11, 2014 the asking price was reduced again to $324,900 with a third reduction to $314,900 around by April 15, 2014. By May 28, 2014 the price was reduced a fourth time to and to $314,500 and by July 25, 2014 the asking plummeting price has been reduced a fifth time and is still not selling at its current reduced price of $299,900.

    Unit #212 purchased August 8, 2004 for $140,000 was listed on July 18, 2014 for $187,000.

    Unit #1105, purchased $325,000 on February 28, 2007 and listed for $345,000 was reduced to its original sales price of $325,000 circa March 11, 2014 where it remains nearly four months later still with no takers.

  • Ticobird

    I would take issue with the sex offender item. This is not a flaw with the home and the only way to avoid this is to live near a school or a childcare facility (usually between 1,000 feet or 2,000 feet). This problem could happen to any homeowner no matter where the house is located. Furthermore none of us can see into the future as far as this item is concerned. As abhorrent as a sex offender living close by is it should be struck from this list.