What Causes A Home’s Value To Decrease? (5 Mistakes to Avoid)
Mar 23, 2020
For many people like ourselves, buying a home is the single, largest purchase and investment we will make in our lifetime.
But do we really understand what makes the home valuable? Even worse, do we know what is hurting the value and how to stop it?
5 Mistakes To Avoid Hurting Your Home's Value
To prevent your home's value from decreasing, here are 5 mistakes to avoid an d how to fix them if you've already moved forward.
1. DIY Projects Gone Wrong
With the rising popularity of the show “Fixer Upper” and the promise of profit for flipping homes, more and more people are taking on home improvement projects. Most people start a DIY home renovation project with the idea that they are going to add value to their property. However, while the jobs can be exciting challenges, they can also end up a disaster that devalues the home.
A very common mistake people try to take on is a DIY project that is too large, such as building a deck or an addition to the house. Even if you have superb carpentry skills, it often takes a professional with knowledge of design to execute the project or ensure the addition is level. If not done properly, these types of projects can depreciate your home and leave you worse off.
If you want to improve the value of your home with DIY projects, do your research on best practices and keep it simple.
A fresh coat of neutral or warm paint on cabinets or walls can do wonders for the appearance of a room. It will leave a nice, first impression and allow buyers to picture themselves living in the space. Another idea is to update the bathrooms. Changing out bathroom fixtures such as faucets, shower heads and lighting can quickly give your bathroom a facelift.
Since you want to eventually sell your home for top dollar, try to avoid misguided upgrades that date easily and only appeal to a small portion of potential homebuyers.
Pro Tip: Calculate your home's value and those of neighboring properties before starting a project to make sure your renovation will be worth the return.
2. Unpleasant Home Smells
A human being’s sense of smell is acute and alerts us to potential dangers like rot and decay, food that has spoiled, and dangerous molds. As none of these are appealing, it is essential to ensure that your home is free from offensive odors.
Not only do smells leave a bad impression, but they also can have an affect on the value of your home. According to a study by Realtor.com, smoking in a home was found to reduce a home's resale value by 29%. Whether it be from cigarette smoke, a pet, or the fish you fried the week earlier, these smells can negatively affect your home sale.
In addition, a big mistake many homeowners make is trying to mask smells with chemically-based fragrances instead of identifying the origin and eliminating it.
The obvious solution to this issue is to avoid the root of the smells in the first place if possible. However if it’s too late for this, the single most effective way to control odor is by removing its source. Which means in order to target the culprit and remove it, you need to clean house.
If your house has an old or musty smell, your first suspect should be mold. If the mold damage is bad enough, you will need to hire a professional to help remove it as mold can have serious health consequences. Another common smell that people often don’t consider is from a dirty dishwasher. A dishwasher requires a simple vinegar wash monthly to keep odors at bay.
When cleaning, remember baking soda is your friend. Sprinkle it on carpets and upholstery and then vacuum it up after letting it soak a few hours. After removing the smells, you can perfume the air naturally. Cutting a lemon in half and placing the pieces around the house can make your home smell fresh and clean. Rubbing vanilla on a lightbulb is another simple way to freshen the scent naturally.
3. Poor Neighborhood Conditions
A house may have the perfect features homebuyers are looking for, but one glance at poor neighboring properties can sway them away quickly.
Perceptive buyers want to pull up to a home they are interested in without being distracted by the messy and unkempt yard next door. And if the outside of the home is a mess, imagine what the inside might look like. There could even be infestations of pests or other issues that could cause serious health problems.
A neighborhood that has houses with peeling paint, broken windows, and significant “yard ornaments” generally has lower home values than clean and well-kept neighborhoods. According to one of the nation's largest associations of real estate appraisers, external factors can sometimes lower home values by more than 5%-10%.
Prevention is key here. If you don’t want to be burdened by messy neighbors, then you probably don’t want to move into a neighborhood who already has them.
If you are a homeowner already stuck in a neighborhood that has an eyesore or two, you could offer to help your neighbor. You never know what the circumstance might be that is causing the neglect—your neighbor might be sick or too old to care for their property appropriately. If you offer to help in a friendly way, the results could potentially have a positive effect for the entire neighborhood and your potential home sale.
4. Nightmare Neighbors
Just as your neighborhood matters when it comes to the value of your home, so do your neighbors. If you have neighbors who frequently have several vehicles parked at their house or who are loud late into the night, then this can affect the perceived value of your home.
With that said, very few appraisers are going to devalue a home because of noisy neighbors. But that doesn’t stop the noisy neighbors from causing a scene when prospective buyers come to view the house.
The best way to avoid moving into a neighborhood with unpleasant neighbors is by striking up a conversation with them. It shouldn't take long for you to gauge whether or not they will be good neighbors. Plus, this convo could help you learn more about the neighborhood and what makes it a desirable place to live.
You could also choose to rent in an area before you buy, just to make sure you are happy with your choice. If you are already in a situation where you are dealing with neighbor problems, try to work it out with your neighbor first. Pay them a friendly visit to discuss options and try to keep the situation on a positive note.
Dealing with an unpleasant neighbor can be a nuisance, but it’s good to try to alleviate the issue before it costs you.
5. Less Than Ideal Location
There are many factors that can affect the value of a home. One of those is the proximity to certain things considered bad or annoying—or unhealthy.
For example, many people don’t want to live near power lines because of the perceived effects they can have on your health. And by and large, most people want to steer clear of noisy trains which means you have to avoid train tracks. Highways, fire stations, airports, or loud traffic areas are other “bad” locations that can negatively affect the value of your home.
Far too many people underestimate the impact surrounding areas can have on property values. If you already own your home, it’s important to be aware of what’s going on in your city that can affect your home positively or negatively.
If a new shopping center is being built, then it may be in your best interest to hold off selling until you can reap the positive benefits of this new attraction on your home value.
On the other hand, if the city is pushing for something that could negatively affect your home price, then it’s important to be up-to-date so you can avoid as many negative repercussions as possible.
If you’re buying a home, make sure you pay attention to more than just the home and the cool restaurants around it. Look into the city’s website to find out what’s happening in the area before you buy.
There are many relevant factors that contribute to the depreciation of a home. Understanding these factors, avoiding as many mistakes as possible and fixing common errors can help you maximize a home’s value and give you the biggest future return.
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All you have to do is enter an address and verify a few details about any updates or improvements you’ve made if applicable. A local agent will then put together a comprehensive, home valuation report that gets sent straight to your inbox. Plus, it's completely free.
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