8/20/2012 2:15 PM ET|
Weird stuff that hurts home values
All sorts of factors can diminish what your home is worth, such as the way your house compares with others in the area, your neighbors or a faulty appraisal.
If you know anything about real estate, you know that location matters most.
A house in a nice neighborhood is worth more than the exact same house in a sketchy area. A good school district adds value, while struggling districts detract. A house on a quiet street is worth more than one on a busy thoroughfare.
But there are other factors that can significantly affect the value of your home that aren't so obvious. Such as:
Your house sticks out like a sore thumb. If your house is dramatically different in style or scale from its neighbors, its value could suffer.
A contemporary-style house in a neighborhood full of colonials, for example, may not get the same value as it would if it were in a neighborhood of similarly modern homes, said Don Boucher, a senior residential appraiser in Washington, D.C.
Likewise, if your home is 3,500 square feet and neighboring homes are typically 2,000 square feet, you also won't get full value, Boucher said.
"People who want a 3,500-square-foot house are generally looking in other neighborhoods," Boucher said. "People tend to congregate in homogenous groups . . . they want to be in a neighborhood with bigger homes."
This can come as a shock to someone who poured a small fortune into adding rooms or upgrading the kitchen and bathrooms far beyond the general level of the neighborhood. If you add too much square footage or "over-improve" your home, compared with your neighbors' houses, "you're not going to get your money back," Boucher said.
That's not to say your outsize or fancy home won't be appraised for more than your neighbors' houses. But you'll likely get less per square foot than comparable homes receive. When it comes to real estate, bigger isn't always better.
"It's OK to have one of the smaller homes in the neighborhood," Boucher said.
If your decorating taste veers far from the mainstream, you also could wind up with a white elephant. Painting the house bright orange or lining the driveway with David statues isn't going to help get you top dollar when it's time to sell.
You're missing a bedroom, or a family room. Here's another area where conformity pays off. It's perfectly fine to have two bedrooms, or even just one, in a hip urban neighborhood that caters to singles and childless couples.
But if your neighbors all have four bedrooms, your house should, too. If you own one of the few houses in the neighborhood that has only two or three, Boucher said, your home value might get punished for that.
Likewise, if family rooms or "great rooms" are the norm and your house doesn't have one, your appraisal could take a hit.
That doesn't necessarily mean you should spend the money to tack on a room. Most home improvements are money losers, returning less than you invest even if you sell right away. If your plan is to move within a few years, skip the remodeling, and let the next homeowner decide whether to add.
But if you're thinking of expanding your house anyway for your own enjoyment, bringing it up to the norm for the neighborhood can get you a better return when you do decide to sell.
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