It used to be that owning a home was a good investment because the property typically rose in value. But, after the foreclosure crisis that began in 2008, many people found that part of the American dream had turned into a nightmare. When you combine declining home values with other factors, you might have a house worth less than what you paid for it. A home in need of repairs inside and out is just one example of why its value could be in decline.
People don't want a bunch of cozy little rooms in their house. They want open, airy space, especially in the kitchen and master bathroom. If a house has small rooms, an outdated kitchen and no master bathroom and bedroom to write home about, the small rooms will bring down the property’s value. Richard Gaylord of the National Association of Realtors told Bankrate.com he doesn't sell many homes that aren't bright and airy.
Nothing brings the value of a property down faster than an exterior that needs repairs. “If you’ve got an old roof and outdated paint … you won’t get the buyer out of the car,” said house appraiser John Bredemeyer in a 2007 Bankrate.com article. If the roof needs to be replaced, the house will not be worth as much. If the exterior is obviously uncared for, you might make people wonder what else is wrong. Those people won't make an offer according to Myra Zollinger, a North Carolina broker with Coldwell Banker Realty Center.
The condition of the yard also determines whether anyone will want to have a look-see at the house. A yard with no trees has less value than a house with well-cared-for mature ones. The difference in value could be as much as 20 percent of the home’s price, according to Realty101.com. A mowed, edged, and well-manicured lawn should surround those trees. A weed-filled lawn with dead, brown patches will negatively affect the value of the home.
Some things out of the homeowner’s control can also drive down property values. If a sex offender moves into the ‘hood, or a power plant or funeral home takes up shop nearby, the home can lose as much as 15 percent of its value according to Brian O’Connell, writing for MSN Real Estate. Bad neighbors don't help either. Most real estate pros agree a bad neighbor situation is anything off-putting to a potential buyer, which could be someone who keeps barking dogs to one with cars parked all over their yard. It's also a fact that a lot of foreclosures in the area will damage the property value of the non-foreclosures.
If the property is in an undesirable school district, the value will fall. O’Connell's MSNBC story pointed to a statistic from the National Association of Realtors, who found that 75 percent of homebuyers believe the quality of the schools are “somewhat important” to “very important.” One way to find out about the district’s schools is to go to the state’s Department of Education website and look at test scores. If the scores are among the bottom third in the area, you can't count on that home maintaining its value for long.
Cluttered or No Garage
As a general rule, houses with two-car garages are worth more than single-car or no-garage homes. Exceptions are homes in a historic or urban neighborhood. The condition of the garage is important too. It should be clutter-free and have no stains or spills on the floor. A 2005 survey by Thompson's Co., maker of water seals, found that 91 percent of people are more likely to buy a house if the garage is well-kept.
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