The Top Threats To Your Home's Value

Do you know what your home is worth? To you, it may be priceless. Those are probably the rooms where your children grew up, where memories were made. But a potential buyer may only notice whether or not there are granite countertops, an open floor plan or a well-groomed lawn when deciding whether to buy and what to pay.

To get top dollar, it helps to know what could hurt your home's value, whether you're looking to sell now or later. Some factors are out of your control, while others have simple solutions.

Here are the top threats to your home's value and a rough sense of their potential impact — high, medium or low — according to the professionals we interviewed. Keep in mind, though, that every market, neighborhood and home is different, so the actual impact on each home's value can vary considerably.


Location




© Kimberly White/Bloomberg via Getty Images


Threat to value: Could be high; in some cases, 50% or more

What are the three most important factors in determining a home's value? You guessed it: location, location and location.

"If you build (an expensive) home in a location where it will be unique for the area," says Danny Wiley, a Tennessee appraiser, "there is a good chance that the value will be much less than if you build that same home in an area where it is more typical."

Although you likely considered location when you bought or built your home, something may have changed since then: rezoning, an increase in crime or a new city dump.

Unless you plan to uproot your house and move it elsewhere, there's not much you can do about your home's location. But it is important. For example, a home near a freeway or railroad can see a 10% to 15% reduction in value, Wiley says.

So what can you do? Well, that depends on what about your location is bringing down the value. If you have a view of the city dump, for instance, you can plant some privacy hedges to make it less of an issue. Play up your home's strengths; make sure every interior and exterior detail is perfect and be patient.

Lack of updates

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Threat to value: Low to medium; usually, at least 10%

An oversupply of homes right now means that buyers can be picky — and they definitely are. Rather than seeing the potential in an outdated kitchen and bathroom, a buyer will just move on to another home that won't require as much work and vision.

"If you don't have granite countertops, someone wants to know what's wrong," Wiley says.

The same goes for new appliances and a modern kitchen and bathroom, says Amy Downs, a Dallas real-estate agent.

"If your house is not updated, you might as well not sell it," Downs says.

Fortunately, you can fix this easily. For between $5,000 and $8,000, you can install those granite countertops, update the light fixtures and add fresh paint and carpet, Downs says. You'll likely get a return of $15,000 to $20,000 when it is time to sell.


Bad floor plan

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Threat to value: Medium to high; up to 25%

"An open floor plan is huge," Downs says. "If you've got a long hallway, and all the bedrooms are off that hallway, no buyer I've shown homes to has ever wanted a house like that."

Appraisers such as Wiley consider odd floor plans when appraising homes. One home, priced at more than $2 million, had an unusual floor plan with only a back stairway and no formal foyer, he says.

"The market would have probably accepted that in '06 or '07," he says. "Now buyers are more critical. Everybody hates the fact that there's not this big, easy access upstairs."

Appraisers classify that as a functional problem and determine value based on the market. Wiley says he has seen a bad floor plan reduce an appraised value by as much as 25% compared with similarly sized homes, "particularly right now, because of oversupply."


Major systems and structures

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Threat to value: Medium to high; up to 20%

"A buyer wants to be able to walk in and say, 'I could move right in,'" says Downs, who adds that she has seen major system and structure issues kill potential deals in high-end neighborhoods. "Have an inspection done before you list your house and fix the major things."

A roof that needs to be replaced could knock 15% off the value, she says. A heating and air-conditioning system that needs repairs could cut the value by as much as 20%, and an electrical-system problem is probably somewhere between 8% and 10%.


Rental properties

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 Threat to value: Medium; up to 15%

"People don't want to live near a bunch of rental properties," Downs says.

As an agent, Downs says she lets potential buyers know if an area is saturated with renters. This can affect a home's value by as much as 15%, she says.

But it's not the fact that there are rentals in the area that turns off buyers, Wiley says.

"People who rent tend not to maintain the properties as well," he says. "And absentee owners tend to not maintain properties as well."

You can't change the number of rentals in your neighborhood, but you can maintain a good relationship with landlords and tenants, and you can volunteer to help with upkeep and maintenance of those properties.

To read about more threats to your home's value, read the article "13 Big Threats To Your Home's Value" on MSN Real Estate.
Source:  MSN Real Estate