Bad neighbors with annoying pets, unkempt yards, unpleasant odors, loud music, dangerous trees and limbs, or poorly maintained exteriors can cost homeowners big time.
The Appraisal Institute today cautioned homeowners and potential homebuyers that bad neighbors can significantly reduce nearby property values.
The Institute advised owners and buyers to walk streets neighboring a property on several days at various times to learn more about what is happening in the neighborhood. A home’s proximity to a bad neighbor also can impact the rate of potential decline in value.
“I’ve seen many situations where external factors, such as living near a bad neighbor, can lower home values by more than 5 to 10 percent,” said Appraisal Institute President Richard L. Borges II, MAI, SRA. “Homeowners should be aware of what is going on in their neighborhood and how others’ bad behaviors could affect their home’s value.”
Appraisers refer to this as “external obsolescence,” which is depreciation caused by external factors not on the property. External obsolescence may be caused by economic or locational factors, and may be temporary or permanent, but it is not curable by the owner, landlord or tenant.