In part one of this blog, we covered the first 10 things that will drop your home's value, including floods, noisy neighbors, and subpar school systems. Here are the next 10 things that could sink your home's price like a stone. The scary thing is that many of them are completely out of your control (unless you sell in time and move on!)
Friday, March 11, 2016
20 Things That Will Drop Your Home's Value (Part 2)
11. Homes that are too big or too small
Do you have the smallest house on the block? Or did you buy the biggest house in the whole neighborhood? Maybe you only have two bedrooms or only one full bathroom when most other homes in your area have three bedrooms or two full baths? Even if you got a good deal when you purchased the under-sized abode or cavernous dwelling, buying a home that is out of character with the rest of your neighborhood can only be detrimental to your home’s value. Remember that homes sell at certain prices not just because someone is willing to pay a price, but also because an appraiser values it at that price. But if an appraiser has no comparable sold properties in the immediate area to compare it to (because there are no too-small or too-big homes), then your values will stagnate.
12. Outdated appliances or renovations
Maybe your house is a good size and in the right neighborhood, but when potential home buyers (or an appraiser) walk through and see cheap Formica countertops, archaic cabinets, and shag carpet from the 80s, the value of the home starts sinking drastically in their minds. It’s not that you need state-of-the-art upgrades and brand new upgrades in every room, but people usually expect to have at least some upgrades since the house was first built unless it is brand new. It’s not just a matter of aesthetics, as someone who might otherwise want to purchase your home is calculating what it will cost to modernize and upgrade everything themselves, and appraisers have to devalue your home a couple clicks compared to similar houses that are more up to date.
13. Weird or substandard additions
There’s nothing worse then when a homeowner converts their basement into living space or winterizes a sun porch and try to call it living space – going so far as adding the extra square footage to the original footprint on their listing data. Additions that are done with shoddy work and substandard materials, unpermitted work (a huge no-no), and additions that have low ceilings, inadequate heat and AC systems, or just look cheap and out of character from the rest of the house aren’t even worth the price of the nails and wood that built them. In most cases they don’t only NOT add value, they could actually decrease the price of the home.
14. Bad curb appeal
Logic dictates that there are so many essential factors we should weigh when pricing a home, including the square footage, layout, quality of construction, neighborhood, and amenities. But with houses, just like in life, bad first impressions are hard to overcome – especially when curb appeal is noticeably bad. If your front yard is overgrown, the paint chipping, the house and yard are too dark, and there is junk or “stuff” laying about everywhere, it’s going to be nearly impossible to retain top dollar for your house.
In fact, it’s estimated that hoarders knock down a property’s value by up to 5-10% (even if it’s a hoarding renter in one of your investment properties) and if an adjacent neighbor’s property is noticeably disheveled and in a state of disrepair, it could affect your value by up to 10%, too.
It’s one thing if there is a smattering of vandalism, graffiti and petty crime in a neighborhood, but when there are a rash of violent crimes, break-ins and robberies, or especially high-profile cases that make the evening news and the morning headlines, you can bet that potential home buyers will take note and shy away from your community – eroding prices quickly.
16. A pool or hot tub
Of course a brand new in-ground pool can add value to your home, but pools and hot tubs also quickly become outdated, require a ton of maintenance, and even pose insurance and liability issues for potential homeowners. There is no cheap and easy way to remove a pool once it becomes an eyesore or a maintenance money trap, so potential home buyers may be wary of taking the plunge (so to speak).
In recent years we’ve seen more and more sinkholes open up and swallow up streets, cars, and even houses, and even just the threat or fear of a sinkhole in the area could wallop home prices. In fact, home values could drop a colossal 30% if a sinkhole has appeared – and there’s no specific insurance coverage that will fill in the money drain.
18. Dumps and power plants
If your home is in close proximity (two miles or less) of a city dump, landfill, or a power plant, studies show that your property values could automatically fall by 4 – 7.3%.
19. Foreclosure graveyards
It was an all too familiar sight during the real estate crash and Great Recession – whole neighborhoods that used to be thriving top-dollar communities turned into row after row of vacant or unkempt foreclosures. If your neighborhood still has a particularly high level of foreclosure activity – or even if you’re unlucky enough to be in the middle of a distressed property “cluster” on your street, your value could fall by up to $7,200 for no other reasons. It’s estimated that for every foreclosure within 1/8th of a mile of your home, you can automatically drop your home’s value by .09%.
20. Fracking and water issues
As we’ve seen now with the terrible turn of events in Flint, Michigan, fracking, shale gas wells, and other resource mining that could compromise drinking water can almost instantly wreck community values. It’s now estimated that even the threat of fracking coming to town can drive home prices down by 24%, and homeowners who use local groundwater for drinking lose up to 24% of their property value if they live within 1.25 miles of a shale gas well.