Your home is more than the setting for life’s important moments; it’s a significant asset where you grow your wealth through equity over time. But what if your home starts depreciating? You’ll need to discover what hurts property value so you can roll up your sleeves and kick-off the comeback story.
Like any investment, you want your home to appreciate, so you can eventually reap the ultimate reward of ownership: selling your home for more than you purchased it for.
We’ve researched the common culprits squandering property value by pairing reputable studies with expert insight from top real estate agents Jennifer and Andrew Oldham, top Californian real estate agents with over 19 years of experience selling homes in the Bay Area down to Monterey.
Your home’s value drops when you neglect repairs and updates
On a property level, depreciation typically occurs when several areas of your home require improvement or repairs. Say your curb appeal pales in comparison to the neighbors’, your HVAC system could use an update, and your shag carpet is. . . well, shag carpet. Standing alone, one of these issues barely nudges property value, but in culmination, the harm grows more significant.
1. Deferred maintenance
If it ain’t broke, it can still lower your property value. Regularly check the condition of your home’s structural components and systems. Dated and damaged structures lower your property value, making your home worth less than your neighbors’.
The U.S. Department of Housing and Urban Development (HUD) provides a comprehensive maintenance checklist to help you improve and monitor your home’s condition. Here’s an overview of deferred maintenance that impacts home value:
- Damaged or old HVAC system
- Termite damage
- Wood rot
- Decaying foundation
- Frayed electrical wires
- Cracked driveways and pathways
- Leaky plumbing
2. Home improvements not built to code
When you build without a permit, you actually lose money in the long run. Home additions built without a permit are illegal and won’t count as added square footage in a home appraisal, negating your return on investment. Savvy buyers aware of unpermitted renovations may also negotiate for a lower sales price, considering they’ll need to either obtain a retroactive permit and pay to bring the work up to code, or live with the risk.
Speaking of risk, if a pipe bursts or electrical fire starts due to code violations, you’ll need to cover the damage out of pocket since illegal construction voids homeowners insurance. Now that seriously harms property value.
3. Outdated kitchens and bathrooms
Nothing dates your home more than an old kitchen and original bathrooms as cabinet, countertop, appliance, and fixture styles evolve with the decades.
“You’ll see that a lot in houses, where they’ll fix up everything but that one bathroom, and that one bathroom is from 1970 and it looks horrible,” shares Andrew Oldham, who along with Jennifer Oldham completes 16% more sales than the average agent in their region.
“But still, even when you look through 30 photographs, all you’re gonna remember is that one bathroom. When a buyer will describe the house to us, they say, ‘Oh, yeah, that’s the one with the pink bathroom.’”
The Oldhams insist on replacing white appliances, frameless built-in mirrors, pastel tiling, and outdated countertops to recover value in these important spaces.
According to Remodeling Magazine’s annual Cost vs. Value report, a minor kitchen remodel adds on average $18,206 in value to your home (77.6% ROI), while a major kitchen remodel adds $40,216 (58.6% ROI). Remodeled bathrooms significantly increase home value as well, adding between $13,688 to $49,961 on average, depending on the quality of finish.
4. Shoddy workmanship
Cringeworthy results from hasty, low-budget renovations can damage your property value. In a home appraisal, your property receives a quality score based on the level of workmanship, materials, and finishes throughout the home. The higher end your home, the more detrimental shoddy workmanship is to your property value, lowering the score to reflect the inconsistency.
When it’s time to sell, buyers view poorly executed renovations as problems to fix, regardless of how recently the “upgrade” was completed. Expect lower offers if your home includes any of the following:
- Crooked tiling
- Warping flooring
- Awkward home additions
- Uneven decking and railings
- Gaps between flooring and walls or thresholds
5. Bad landscaping
With your black thumb, you never stood a chance at maintaining the previous owner’s elaborate landscaping. While we sympathize with your struggle, unfortunately letting your landscaping go from “good” to “poor” can diminish your property value 5% to 15%.
The Appraisal Institute recommends keeping landscape improvements on par with your neighborhood standard to protect your home’s value. At a minimum this includes regularly trimming plants, fertilizing and mowing your lawn, and replanting every five to 10 years depending on growth.
If your current landscaping feels unrealistic for your lifestyle, replace your greenery with lower maintenance options. Exchange your lawn for native plants, gravel, stones, and drip system irrigation, so your yard stays in top form no matter how busy life gets.
6. Damaged roofing
Missing shingles, decaying siding, and moss — all signs your roof needs some TLC. Doubling as curb appeal and an essential structural feature, the condition of your roof significantly impacts your property value. Installing a new roof increases home value by almost $12,000, bringing a fairly high return on investment compared to other home renovations.
“It’s not uncommon to need a new roof, and that’s one of the big ticket items that the seller has to address whenever they prepare a home for sale . . . it can be a $2,000 repair to a $40,000 repair. So generally what we’ll do is get a roof inspection upfront,” Andrew Oldham explains.
For a low-cost improvement, the Oldhams recommend hiring a professional to clean your roof for as low as $450. By removing debris and dirt build up on the shingles and gutters, you’ll boost curb appeal and improve your home’s marketability.
External factors can squeeze your property value
Your property value may also decline due to external factors related to your neighborhood and surrounding area. While many of these value busters are out of your immediate control, staying cognizant of their impact can help you combat depreciation through compensating home improvements (or may even influence a decision to sell).
7. Increased noise pollution
Road noise audible from your home may increase due to population growth, highway extensions, or other nearby developments. Whatever the case, a noisy urban soundscape can hurt your property value by 1% to 10%.
8. Registered sex offenders close by
Safehome.org estimates that 752,000 people are listed on state sex offender registries in the U.S.. When a registered sex offender moves into your neighborhood, your property value drops in response. A 2008 study by the American Economic Review reveals that the average price of homes sold within a one-tenth mile radius of sex offenders declined by roughly 4%, while homes directly adjacent dropped a full 12%.
9. A neighbor’s neglected home
Even homes in the most coveted neighborhoods may lose value from one bad egg on the block. Jennifer Oldham shares a recent story of listing set back by a nearby decaying property:
“We took a client into a great neighborhood in Carmel to look at this beautiful house they saw on the MLS and all of the listing aggregators. We pull up and just two houses before that one, it was like the Amityville House . . . This house had tires, old tractor parts, and it had a dummy doll sitting in a chair. Literally, I got worried. And everywhere around, there were beautiful homes. That poor neighborhood got wrecked from that one house.”
Oldham’s client quickly decided not to offer on the property — they couldn’t imagine living next to a home plucked from a horror flick.
10. Nearby unpleasantries
Loud, odorous, and hazardous facilities negatively impact property values in their vicinity. Here are a few examples of nearby sites your home takes a hit for:
Dumps: In a study in Cleveland, Ohio, researchers compared property values around five municipal landfills, concluding that the stench dragged down property values by 5.5% to 7.3%.
Power plants: University of California at Berkeley found that homes within two miles of a power plant experience a 3% to 7% drop in value.
Hospitals: Homes exposed to hospitals’ endless parade of sirens, supply semis, and generator hum, see on average a 3.2% decrease in value.
Don’t sit back and watch your property value decline, take action
Get your property value back on track with these easy home improvements, notorious for boosting your home’s value and marketability:
- Apply a fresh coat of neutral paint: Colored walls rarely work in your favor when it’s time to sell. Paint your home’s interior and exterior where needed to neutralize and refresh its appearance. Consumer Reports states that painting your home’s exterior can boost property value by 2% to 5%. According to HomeLight’s own research, fresh exterior paint adds an average of $4,228 to your sale price.
- Replace old appliances: Jennifer and Andrew Oldham say you’d be surprised by how many people judge a home by the appliances. Swap out old models for new, stainless steel appliances to improve your home’s marketability. In our Top Agent Insights Q3 2019 Report, 75% of agents agree that stainless steel is still the most popular finish among homebuyers.
- Combat noise with a new soundscape: Reduce noise pollution by upgrading to double paned windows, solid core doors, and soundproofing insulation. For even more coverage, add a fountain or other water feature to hide traffic sounds.
- Strike a deal with your neighbor to clean up their yard: Navigate an awkward conversation by offering to help your neighbor repair fencing, landscaping, or clutter that borders your property. Jennifer Oldham recommends proposing to split the cost of a neighbor’s needed upgrade to create a win-win situation.
Header Image Source: (Gabe Pierce / Unsplash)