10/7/2011 6:12 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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Well, it would seem Liz weston is still writing articles for 'flip this house', and most of the people posting are still thinking in those terms. People PLEASE! Buy the house you want to LIVE IN, in the neighborhood you want to LIVE IN!
So, 'waddya know', do you like the house you live in? If yes, then you made a good deal! If no, then you didn't. What the market does to the 'value' of YOUR house, in someone else's eyes is irrelevant. Do they live there? No? Then who cares what they think it is worth! It's like owning 'bob' (best on block). Do YOU like your house? Wonderful! You turned it into what you wanted! That is what it is all about! Screw the realtors, appraisers, and anyone else that told you living where and how you want is a mistake. Again, buy the house YOU want. (or buy something close and make it what you want) DO NOT buy a house thinking it is an investment. Think in terms of making it a HOME. It's YOURS. The only consideration is 'is this what I want'. The end!
This article is about property values, not individual lifestyles. My home is where I live and I like it to fit me and my budget. When it's time to move on, I have to accept that my choices are not going to appeal to most buyers.
My husband is a realtor and we see this over and over. Vanilla houses sell, but they aren't much fun to live in.
I decided to live exactly the way I've always dreamed of living....far from the maddening crowd. We got a gutted rehab (everything in the home is new) for no money down and 100% financed. Now I have peace, quite, wildlife (that isn't really wild at all), not many humans to speak of, no sirens, gun shots, vandals or thugs. Just stary skies, profoundly low property taxes, 14 acres and MY OWN golf course. Yep! that much land.
Do it before it is too late! Do it before there is no more middle class in America. Homeowners will be favored over renters in the financial market. THAT day is coming my friends!
Try living in Vegas, home prices are so low, nothing can help them go up at this time. Paid 100K for my townhouse 15 years ago, now it is selling for $68K. Wouldn't suggest moving here for the low home prices, unemployment rate is highest in the nation.
Good common sense reminders. Noise (neighbors, road, dogs, etc.) is such a key point. We walked away from a nice home "on a corner lot" in a decent neighborhood because the people across the street appeared to live 90% of their time in the front "yard" and a weekend drive down the street proved that they were as loud as their "curb repel" appeared to be. Life is too short to spend your money to live next to the jerk store.
These days, also very important for condo owners to do what they can to ensure good financial health of their HOA. It's more than keeping up the curb appeal now, too - new buyers will be frustrated by your neighbors who aren't keeping up their HOA payments, as the bank will check them out as closely as they are doing for mortgage applicants!
@ARPanet - YOU may think it's "sooooo much more convenient" to not have a basement.....obviously the majority of people disagree.
Not a bad article, but people need to realize their houses aren't made of gold. Just because you think your house is so great, doesn't mean others feel the same. All of your "upgrades" might look like garbage to a prospective buyer, and (in their opinion) may detract from the value because they now have to re-do it to their own taste.
No, these things are NOT in addition to the housing bubble - these are the same things that have always brought home values down!
BUT, that said, I agree, when the housing bubble popped, that is what caused the biggest drop in home values.
My wife and I built a new home in 2005 in a 33 lot subdivision. There are now 23 homes complete and 28 lots sold. Of the 23 houses built, 18 were custom built by the lot owner. We therefore, do not have that "cookie cutter" type development, since no 2 homes are alike, but all seem to blend in style and construction. I believe this adds to value of the entire subdivision. Our home is one of the smaller homes at 2,760 finished s.f.. 280 sq. ft. is a sunroom heated and cooled that was a screened porch in the plan. It is a single story home which increases the cost, since we have more roofline, (and many gables) than a 2 story. We spent our money to purchase the best windows (Andersen 400 Casement) and insulated well and built it so we have no outside maintenance (all brick with vinyl sofitts). We also put the best inside finishes in it, we could afford. We planned this to be our home to live in for the rest of our lives and built a home that is very livable but not to big. Many people have gone overboard with building/purchasing large square footage homes with (builder grade materials), we opted to build a home we could afford to heat and cool, clean and maintain with the best materials available including using finished in site hardwoods and ceramic tile and no carpet. We have more cost per square foot ,but it has much lower utility bills and minimum maintenance. We also had a reputable buiider who has pride in his workmanship and is honest. It was a wonderful experience for us!
Those who built or purchased 2 story homes with no bedrooms downstairs will have problems engaging steps as they age and in selling these homes down the road - and there are many of these, as the price for these type homes are so much less.
Beckett...paying 5k too much for a home? you've gotta be kidding!! We waited to buy our present home until we thought the market had hit bottom. That was 2008...we closed with $80k in equity because we got a deal on new construction standing inventory. now we are $80k under water...that's a $160k drop in value in 3 years. Dont worry about $5k...
sharriannie...yeah - we're in Vegas too. Not only record unemployment here, still record foreclosures...the home values keep dropping. We're hoping to break even in about 10 years....*sigh*
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