Comments
From over-personalized aesthetics to the condition of your neighbor’s home, the sheer number of things that can bring down property value often surprises homeowners. Because of this, your property’s value can decrease without you even realizing it.
With the help of 23+ year real estate veteran Amy Camasso, we’ll cover how to stay up to date on your home’s value, six factors that can bring down your property value, and what you can do to prevent them.
How to Check Your Home Value
Before researching how to check your home value, ask yourself if you are seeking an accurate estimate or a general approximation. If you are seeking a ballpark idea out of curiosity or for planning purposes, online estimate tools are a decent place to start.
Online estimate tools such as Zillow’s “Zestimate” can give a loose estimate of your home's value. However, these tools are known for being slightly inaccurate and often completely misleading.
If you just want to keep tabs on the value, the automated value tools online are a good baseline. It’s important to note the algorithm doesn't discern between homes and doesn't take into account features like renovations, home additions, maintenance, etc. - it's only looking at the numbers.
Fun fact: In 2016, the CEO of Zillow, Spencer Rascoff, sold his own home in California for almost 40% less than his Zestimate and bought another home in the state, paying 8% over the Zestimate.
For a more reliable and accurate estimated value of your home, it is recommended that you consult with a trusted real estate professional. A real estate agent who specializes in your area will be trained on how to conduct a competitive market analysis (CMA) to determine the value of your home.
They will have access to multiple data sources and will cross-check these resources to determine how much you can sell your home for. As an added benefit, they can also take a look at the condition of your home and provide a list of recommended strategies to increase the overall value of your property.
Verify your VA loan eligibility (September 16, 2024)
How often should people check their home value?
“Generally speaking, it makes sense to check a home's value once a year; most homeowners enjoy watching the value of their homes increase. I have homeowners who want to know the value of their homes now because they want to sell in six months. So, I will provide today's value and continue to update the homeowner when there's any activity going on in their community, such as homes for sale, sold or pending.”
How do you find the past or historical value of a home?
“Ask a Realtor or check the local property appraiser's website. The appraiser's website should have historical data from past sales and you might even be able to access the deeds from the site. If there is no data there, check with the Clerk of Court or the County Recorder who records, indexes and archives documents.”
What Determines Property Value
Simply put, property value is determined by the number of buyers interested in purchasing your home and the amount they are willing to pay. Market factors, including your home’s appeal, have the biggest impact on buyers' willingness to buy.
If your home is in high demand and there is a limited supply of homes on the market, it’s likely to drive up prices, while low demand or a surplus of homes can lead to lower prices.
When it comes to home appeal, there are a lot more things that can influence it, even some outside of your direct property line. Learning about what brings down property value and how to mitigate it can help homeowners preserve and even increase their property's worth.
6 Factors that Cause Property Value to Decrease
1. Deferred Maintenance
Ignoring necessary repairs like a leaky roof, faulty plumbing, or damaged windows can lead to more extensive damage over time. Homes that have fallen into disrepair are difficult for homebuyers to secure lending for. In addition, they appear to be expensive red flags from the buyers’ point of view. After all, if you’re not going to fix the sagging roof, a buyer will eventually have to if they choose to purchase the home.
2. Unideal Neighbors
When you think of “bad” neighbors, what comes to mind? Some homebuyers imagine rude or noisy neighbors. Other picture neighbors who refuse to silence a barking dog, mow their lawn, fix their fence, or pick up after themselves.
How your neighbors present themselves and their property can impact the value of your home. In fact, any household in your neighborhood can have a direct influence on how prospective home buyers perceive your home.
With that being said, neighbors who are also registered sex offenders can negatively sway the value of the homes in the neighborhood. Homebuyers often check these registries before attending showings, and homes surrounded by offenders statistically receive fewer and lower offers.
3. Outdated Interior Features & Overpersonalization
Although it is not recommended that you update every aspect of your home before selling, having too many outdated features can greatly bring down its value. Gradually upgrading your bathrooms, kitchens, and flooring over time is a great way to increase its appeal while not dropping a ton of cash at once.
When renovating kitchens, bathrooms, and flooring, think “neutral.” Consider what upgrades will be considered modern in a few years but also neutral enough to attract the most buyers. The same goes for flooring. Having carpet can make a space feel more comfortable, but hardwood flooring is more long-lasting and timeless.
The same goes for bright paint colors, which can make it difficult for buyers to picture the home’s potential beyond the eccentric color scheme.
4. Recalled or Uninsurable Items
Having recalled items, like certain appliances or electrical fixtures, can pose safety hazards. If parts of your home are uninsurable due to outdated or faulty systems, buyers will factor in the risk and cost of necessary replacements, leading to a lower valuation.
Amy specifically cites polybutylene plumbing and Sylvania electrical panels as ones you should watch out for. Polybutylene plumbing is a type of plastic piping used in residential plumbing systems from the late 1970s to the mid-1990s. It is prone to leaks and failures due to its tendency to degrade when in contact with chlorine in public water systems, leading to potential water damage and costly repairs.
Sylvania electrical panels were common in homes built between 1950 and 1980. They are known for design flaws that can cause circuit breakers to fail, posing significant fire hazards and potential electrical issues.
5. The Property’s Setting
Where your home is located has a huge impact on its pricing. Being close to facilities with bad smells (a pig farm, for example) or associated with danger, such as power plants or prisons, can greatly decrease property value. Noise pollution is probably one of the greatest impactors of property value that is located outside of the property.
A 2018 study analyzed how noise pollution affects the median selling price of homes in San Diego County and found that once noise levels exceeded 60 decibels (equivalent to a conversation in a restaurant), the home prices began dropping by hundreds of thousands of dollars.
The upside of this study was that homeowners could avoid such a drastic cut in home value depending on the building materials (higher-quality materials can be quite effective at filtering noise pollution) or the overall value of the land.
6. Poor School Ratings
The quality of local schools is also a significant factor in determining a home’s resale value. Homes in areas with poorly rated schools often experience lower demand, as families prioritize education and seek homes in districts with better-rated schools. Poor school ratings can signal to potential buyers that their children may not receive a high-quality education, leading to lower offers and a reduced overall property value.
How much does a busy street affect home value?
Depending on the setting of the home and the neighborhood, a busy street can really affect the home value by thousands of dollars. For example, I recently sold a home in a gated neighborhood, and there were two homes for sale. Both homes had the exact same floor plan and had pools. One had a conservation view, and the other had a street view with storefronts from the backyard. Although both were listed for the same price, the conservation view home sold within days, and for almost $40,000 more than the home with the street view.
As you can see, when it comes to determining property value, there are variables that you can control as a homeowner and a multitude of aspects that are completely outside of your control.
While you can’t change the current job or real estate market conditions, you have agency over your home's physical condition and appearance. If you wish to raise the value of your home, focus on what is within your realm of control and what will most positively impact its appeal.
How to Keep Your Home Value from Decreasing
Addressing issues before they arise is the most impactful way to prevent your home's value from decreasing, in other words, maintenance.
Maintenance. Simply maintain your home. Buyers want to walk into a clean home that has been maintained. Buyers generally don't want to have to deal with the seller's long honey-do list. Additionally, buyers will automatically default to thinking that there is more wrong than meets the eye and will eliminate a home just based on the obvious lack of maintenance.
When you’re getting ready to sell, certain updates are worthwhile, and others could give you less bang for your buck. Make sure you’re not just throwing your money around, and have a sound strategy when determining what to fix before selling.
If you’re a homeowner who suspects your home value is on the decline, here are some effective methods for increasing it.
Best Updates to Increase Home Value
- Paint & Siding: Do you have warped siding? Or is your exterior paint cracking? Freshen up your interior and exterior paint with neutral tones. Any damaged siding should be replaced to maintain a healthy-appearing home.
- Landscaping: You don’t need fancy landscaping features to keep your home value from decreasing! Keep your lawn neat, tidy, and decluttered with yard tools, trash, and toys.
- Regular Home System Maintenance: Regularly maintain critical home components, such as your roof, foundation, plumbing, electrical system, and HVAC system.
- Energy Efficiency Upgrades: Home buyers enjoy features that could enhance energy efficiency while saving them money in the long run! Consider updating your home with smart thermostats, energy-efficient windows, and LED lighting. There are even loan programs that are specifically tailored for energy-efficient upgrades.
- Security & Safety: Adding an alarm system or flood lights and updating safety features such as smoke alarms will help keep your home value from decreasing.
Instead of focusing on value-decreasing factors you can’t control, such as your neighbors or living on a busy road, steer your attention to the positive changes you can make. Remember, you don’t have to overwhelm yourself with renovation projects to increase your home’s value. Upkeep your home to the best of your ability, and regularly check your home’s value so you don’t get hit with big surprises.
See What You Qualify For
Answer a few questions below to speak with a specialist about what your military service has earned you.
BySamantha Reeves, Executive Broker, Veterans United Realty
A licensed real estate agent and former loan originator and attorney, Samantha has insider experience dealing with VA loans, from the initial application and contracts to loan funding. She has over 15 years of real estate experience, and nearly 300,000 people follow her Veteran Friendly Real Estate Agents community on Facebook.
About Our Editorial Process
Veterans United is recognized as the leading VA lender in the nation, unmatched in our specialization and expertise in VA loans. Our strict adherence to accuracy and the highest editorial standards guarantees our information is based on thoroughly vetted, unbiased research. Committed to excellence, we offer guidance to our nation's Veterans, ensuring their homebuying experience is informed, seamless and secured with integrity.
Related Posts
- What to Do Before Listing and Selling Your House Updated on April 25, 2024 Use this free home selling checklist and guide to help you prepare to list and sell your home successfully. Read More
- How to Host a Great Open House Updated on April 24, 2024 Open house etiquette is vital to a successful home sale. Learn how to prepare for an open house with our 11 expert tips. Read More
