You knew a foreclosure in the neighborhood could bring down property values or make it hard to sell a nearby home. But how about clotheslines, sex offenders, bad smells and bad test scores?
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.
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.
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.
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.
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.
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.
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.