When buying or selling a home, one of the most important factors to consider is the property value. The property value determines how much a home is worth and can impact the buying and selling price. There are many factors that can negatively impact property value and hurt resale value. Understanding what these factors are can help homeowners avoid decreasing their home’s worth.
Location
Location is one of the main drivers of property value. Certain neighborhoods and areas inherently have higher or lower property values. An undesirable location can significantly hurt a home’s value. Factors about the location that may detract buyers and lower value include:
- High crime rate
- Proximity to loud airports, railroads, highways, or industrial areas
- Minimal amenities, restaurants, and attractions nearby
- School district with poor reputation or low ratings
- Isolation from main roads and highways
- Proximity to environmental hazards or contaminants
Even if a home itself is nice, an unattractive or inconvenient location can still diminish the property value. When buying a home, carefully consider the location and surrounding neighborhoods. For sellers, being in a less ideal location may mean having to price the home lower.
Overlooking Eyesores
While location encompasses the general neighborhood, more specific eyesores in proximity to a home can also reduce property value. Eyesores may include:
- Junkyards, dumps, or landfills
- Factories or industrial warehouses
- Power plants
- Sewage treatment facilities
- Prisons
- Cemeteries
- Foreclosed, vacant, or run-down homes
- Unsightly commercial buildings
Living near any of these eyesores can detract from a home’s curb appeal and make the property less desirable. Proximity to eyesores can decrease value by 10-25%.
External Home Condition
The external condition and aesthetics of the home itself are very important for property value. Any issues on the exterior of the home that detract from curb appeal can lower perceived home value. Some things that may diminish curb appeal include:
- Peeling paint or faded exterior
- Cracked foundations or crumbling brick/siding
- Broken windows and doors
- Damaged or missing roof shingles
- Overgrown landscaping covering up home exterior
- Mold or mildew visible on outside of home
- Leaning fence or fence in disrepair
- Broken or cracked driveway/walkways
- Excess clutter or junk in yard
Potential home buyers will make instant judgments about a home as soon as they drive up. A home with pristine curb appeal has a better chance of appraising for full value versus a home with external issues.
Outdated Interior
Along with the external home condition, an outdated or damaged interior can also bring down property value. Interior factors that may detract buyers and appraisers include:
- Old, dated kitchens and bathrooms
- Shag carpet or laminate flooring
- Outdated color schemes
- Appliances and fixtures from past decades
- Water damage inside home
- Stains on carpets and surfaces
- Peeling wallpaper
- Plumbing or electrical issues
- No neutral paint colors
Many home buyers are looking for move-in ready homes or at least homes with more updated interiors. An outdated, damaged interior can decrease value by 10% or more unless renovation budget is priced in.
No Curb Appeal
Good curb appeal can increase a home’s value while poor curb appeal can decrease it. Specific issues that detract from a home’s curb appeal include:
- Overgrown landscaping covering up or touching home
- Dead plants, trees, and grass
- Cracked or uneven walkways
- Chipped paint on home exterior
- Peeling exterior surfaces
- Dingy exterior surfaces covered in dirt or mildew
- Unsightly lawn decorations
- Abundance of driveway oil stains
- Trash cans visible from street
Improving a home’s curb appeal goes a long way. Things like fresh paint, trimmed trees, new welcome mats, and flowers can significantly boost appeal.
Major Structural Issues
Major structural or mechanical issues with the home can greatly diminish property value. These problems can be expensive to repair and make the home difficult to sell. Major issues may include:
- Foundation cracks wider than 1/4 inch
- Basement water leakage or flooding
- Extensive roof damage or leaks
- Faulty electrical wiring or knob and tube wiring
- Asbestos or lead present
- Faulty HVAC systems
- Damage from pests, termites, or mold
- Sewage system issues
- Old damaged plumbing pipes
Depending on severity, these large issues can decrease home value by 25% or more. Home inspectors may miss these issues so buyers may want to bring in multiple specialized inspectors.
Noisy Neighbors
Having noisy, bothersome neighbors can make a property less desirable and hurt its value. Types of noisy neighbors that are red flags for buyers include:
- Neighbors with barking dogs left outside
- Neighbors frequently host loud parties
- Neighbors with multiple cars and crowded street parking
- Neighbors often work on loud home improvement projects
- Neighbors constantly outside with loud music
- Neighbors with multiple young children who run and scream outside
Living next to noisy neighbors makes the home less peaceful and serene. It also signals potential headaches and frustrations. Visiting the home multiple times at different hours before buying can help identify noisy areas.
Busy Streets
Homes located on or near busy main streets tend to have lower property values. Constant traffic noise, safety concerns, and lack of privacy bring the value down. Signs of a busy street include:
- Road with more than 10,000 vehicles per day
- 4+ lanes of traffic
- Speed limit above 35 mph
- Frequent audible traffic noise
- Excessive traffic and honking throughout the day
- Difficulty exiting the property due to traffic
Homes not directly on the busy street but within .25 miles can still see value drop 10% or more due to the negative impacts.
Renovations Without Permits
Doing major home renovations or additions without proper permits can come back to bite sellers. Illegal renovations make the home less valuable to buyers and create headaches. Buyers will be wary of non-permitted work such as:
- Room additions
- Kitchen expansions
- Bathroom additions
- Finished basements
- Sunrooms
- Deck additions
The potential costs and risks associated with non-permitted work overshadow the value. A sale can fall through if permits aren’t in place. Always do renovations above board.
Moisture & Mold Issues
Excess moisture and mold issues in a home can greatly diminish the property value. Moisture sources that can lead to mold include:
- Leaky roofs
- Basement water leakage
- Faulty plumbing pipes
- Condensation buildup
- Humid climate
- Lawn sprinklers hitting home
- Poor home ventilation
Musty odors, moisture on windows, and visible mold signal a problem. Moisture damage can decrease home value by 15% or more.
Septic System Issues
For homes with septic systems, septic issues can really hurt property value. Signs of a faulty septic system include:
- Sewage odors in house or yard
- Backed up drains and toilets
- Bright green grass over the septic drain field
- Pooling water around drain field
- Slow drains throughout home
Septic issues are a major headache for buyers involving expensive repairs. Value can decrease by 10-20% if septic system is faulty.
No Rental Demand
For investment properties, lack of rental demand in the area diminishes the property value significantly. Signs that an investment property will have poor rental interest include:
- High rental vacancy rates in the area
- Many comparable rentals sitting vacant
- Declining population and household sizes
- Very low rents for the area
- Economic slowdown or downturn
With poor rental demand, the property will generate little rental income for investors. This dramatically lowers the appeal and purchase offers.
Sex Offenders Nearby
Being located near registered sex offenders can significantly lower a property’s value and appeal to families with children. Home buyers want to minimize this risk. Proximity to multiple sex offenders causes the greatest value loss.
History of Crimes on Property
If a notable or violent crime occurred on a property, such as homicide or kidnapping, most buyers will avoid the property regardless of price. This crime stigma can cause values to decrease 20% or more. Sellers may need to wait years before the stigma impact fades.
Poor School District
Homes located in school districts with poor reputations or low test scores tend to have lower property values, especially for families with children. Factors dragging down district appeal include:
- Low graduation rates
- Discipline and violence issues
- Dilapidated school buildings
- Lack of funding and resources
- Old facilities needing upgrades
- Poor administration and management
Homes in districts graded C or below tend to have values 5-10% lower than those in A/B-graded districts.
Airport Noise Exposure
Homes near airports with frequent jet noise have decreased values. Constant overhead jet noise makes enjoying the home and outdoor space less pleasurable. Signs of excessive airport noise include:
- Home within 5 miles of a major commercial airport
- Frequent plane noise overhead
- Need to pause conversations as planes pass above
- Unable to enjoy backyard activities due to noise
- Home located under main takeoff or landing flight paths
Airport noise can lower values by 10-20% depending on loudness and frequency of jets heard.
Bad Feng Shui
While not scientifically proven, some home buyers avoid properties with bad feng shui design. This can hurt value for superstitious buyers. Signs of bad feng shui include:
- Home faces or backs up to cemetery
- Pointy roof angles directed at the home
- Broken items or non-functioning structures outside
- Front door facing a busy intersection
- Excess clutter blocking doorways and hallways
- Mirrors facing outside the home
Beliefs aside, bad feng shui houses just feel less welcoming and peaceful to many buyers.
Signs of Neglect
Homes showing obvious signs of neglect and deferred maintenance have decreased buyer appeal. Signs of neglect dragging down value include:
- Overgrown landscaping
- Dirt/grime accumulation on exterior
- Peeling paint everywhere
- Rotting deck and patio
- Leaves/debris accumulation everywhere
- Cobwebs/dust built up everywhere
- Moldy bathroom/kitchen caulking
Buyers know neglected homes likely have underlying issues. Value can decrease by up to 15% for obvious neglect.
Drug Activity in Neighborhood
Living near properties with known drug activity and sales makes a neighborhood less desirable. This lowers appeal and values for nearby homes. Signs of area drug activity include:
- Frequent loitering around certain homes
- Increased foot and vehicle traffic coming and going
- People visiting homes late at night for only brief periods
- Drug paraphernalia litter found in area
- Drug deals witnessed in neighborhood
Drug activity makes buyers feel unsafe and anxious. Homes may see 5-15% lower values in affected areas.
Conclusion
Many factors beyond the home itself can drag down property value. Location, neighborhood nuisances, community and environmental issues, and buying trends can all impact a home’s worth. Current homeowners looking to maintain or boost their home’s value should be aware of red flags diminishing their appeal and proactively make improvements if possible. Knowledge of items hurting value helps home buyers negotiate a fair price reflecting the true market value.