When it comes to real estate and property; location matters as much as, if not more than, the actual details of the house. Factors outside of the house that affect it’s value are known as “external obsolescence.” While you can’t control many of these factors, it’s important to know how they affect your home value.
Although you might make every effort to make the outside of your home appealing — mowing the lawn or putting some flowers by the front door — if your neighbors aren’t doing the same, it can be a red flag to buyers. Neighboring homes that look neglected or that have a lot of junk on the front lawn or in the driveway can drive down the value of yours, as they send the message that people don’t care about the neighborhood.
The Price of Nearby Homes:
The price of homes near yours that have recently sold can affect how much people are willing to offer for yours. For example, if you have a four-bedroom, three-bath home, and you list it for $300,000, but similar homes have recently sold for $200,000, potential buyers are going to wonder why yours is so much more expensive. Unless your house has something that really makes your home worth $100,000 more, it can be difficult to get a buyer when homes around you sell for much less.
Even if buyers don’t have children, the quality of nearby schools impacts the price of homes. If your home is in an area known for great schools, demand is likely to be higher, and you can expect a better price for your home. But, if you live near struggling or failing schools, your home’s value is likely to drop.
Area Businesses and Amenities:
Convenience is a major factor when people are looking to buy. If your home is in a neighborhood with lots of amenities, such as a park, community pool and nearby supermarket, it will be more appealing, and worth more, to buyers, compared to a house that’s in a more remote or less-settled area.
Similarly, a home in a neighborhood or area with lots of job opportunities will be more valuable than a home in an area with a high unemployment rate. Homes in areas with lots of business opportunity, which are near major research centers or universities, offer more job options and opportunities for growth to potential buyers.
A research study from the University of Chicago found that a decrease in crime rate in an area led to an increase in property value. If your home is in a neighborhood that sees a high incidence of crime, it can be a challenge to get a good price when you sell.
Although you have no control over whether your neighbors pay their mortgages or not, having a number of foreclosed homes in the area around yours can bring down the value of your property. According to the Center for Responsible Lending, a foreclosed home reduces the value of homes near it by more than $7,000.
Understanding how your neighborhood impacts your home is an important step in becoming an educated seller. If you have any issues with messy, noisy or unruly neighbors, check out this post for tips on how to deal with them.
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