There are a number of external factors that can affect the value of your home, whether they are man-made or force majeure. Natural disasters, such as sinkholes, are one example of something caused by nature that can negatively impact a home’s value. But aside from mother nature, there are also plenty of human-based factors that can impact a home’s value.
The building of a government site, such as a city dump or power plant, can greatly affect neighboring homes’ values. The development of a large shopping complex not only invites more traffic, but it also takes away from the peaceful aesthetic of a neighborhood. And it isn’t just the creation of new real estate that can harm a neighborhood. The closing of a school or library is also a crucial factor since people value school rankings very highly when considering buying a home.
In addition to property development, a bad neighbor can also affect your home’s value. Bad neighbors come in all shapes and sizes. Thanks to the internet, there are a number of easily searchable sites that list locally registered sex offenders, which can make people not want to live in certain areas. In addition, if a neighbor doesn’t maintain their curbside appeal, either with a poorly-maintained lawn or by hoarding items, that will reflect poorly on you, regardless of how well-manicured you keep your lawn. Savvy future homeowners will even spend time canvassing a neighborhood to get a feel for the dynamic of the immediate area. If you have a neighbor who likes to throw loud parties, this can impact the sale of your home. Since your current neighbors will also be their future neighbors, it helps ideally to not live near anyone who can cause a potential prospect to turn and run.
In addition to having bad neighbors, vacant lots and foreclosed homes also tend to bring down the value of an entire neighborhood. There are several reasons for this. An empty or foreclosed property is known to invite higher crime and it leaves a literal door open for potential squatters, thieves, and vandals. It also makes an entire neighborhood appear as if it’s trending downward since at least one home has been evacuated/foreclosed upon.
Comps is a term that refers to comparable homes that sold recently in your area. Whenever a home sells, an appraiser will determine the fair market value of what that home is worth. They base their data on location, home condition, and similar past sales in the area. Mortgage lenders will then look at the appraisal to decide whether the mortgage loan amount being requested is accurate.