🥇15 Reasons Why Your Home can be Devalued🥇 (2024)

Ever since the housing crisis of 2008, homeowners have done just about anything they could to maximize their property value, including adding pools, converting garages, and even adding a second story. Unfortunately, some of those things may not add to a home’s value but instead, take away from it, so it’s a good idea to know what helps and what doesn’t before someone starts making major changes to their house.

Home devaluation occurs when the price that someone sells their house for is less than the price they initially paid for it, which means they take a loss on their purchase. This can occur for any number of reasons, some of which are completely unexpected. Here are some of the most common reasons.

Unavoidable Home Devaluation Factors

Most homeowners invest money into their home to increase their value, the internal section of your home must be maintained and updated every so often to generate value, however, there are things which you cannot control an example of this would be property damage. To be sure, some damage can be coincidental and not impact the home value much at all. Things like tornado or storm damage can happen anywhere, so people tend to not associate those accidents with a specific location. Other forms of damages, however, tend to impact the home value because of the perception that they can occur again. Still, other issues may threaten the home value without the owner being able to do anything about it.

Sinkhole Damage

Sinkholes are a natural phenomenon where the ground opens suddenly or over time, swallowing anything that stands on top of it. In some cases, these can prove to be fatal, but in other situations, they simply mean a destruction of the property. Whether or not they ever happen again is a toss-up, but once a property has been stigmatized with the perception of being on a sinkhole, it can be hard to sell. In fact, one Florida real estate agent said any house that is built on a sinkhole should expect to sell fornearly 30% lessthan what it is originally listed at.

Awful Neighbors

Noisy neighbors are a nuisance, not only because they tend to throw wild parties that bleed over onto a neighbor’s lawn, but because they also make it nearly impossible to sell. Not every walk-through or house showing happens during the daytime, so if someone has potential buyers walking through in the early evening on a Friday night, they might be scared away because of the activity next door. If someone is living near a neighbor that likes to throw wild parties at all hours of the night, they should expect to receive anywhere from5-10% off their sale priceright off the top.

Dumpy Neighborhood

Sometimes, it’s not just noisy neighbors that ruin a sale, but the entire neighborhood that contributes to a collective downfall. The old rule of “never being the most expensive house on the block” rings true in this instance because if a person has neighbors that obviously are hoarders or are otherwise messy, it can decrease a sale price byas much as 10%. Unless someone is influential enough to either enact a homeowner’s association (HOA) or orchestrate a neighborhood clean-up, that might just be a hit they have to take.

Noisy Area

There’s a reason why areas near highways and airports sell for substantially less than ones that don’t, and it’s because very few people want to be woken up at 2 AM with the sound of an international flight coming in for a landing. While proximity to airports may be a key selling point for business travelers, living right next to the runway is a definite turnoff.

Other Foreclosures

The housing crisis brought with it a slew of unfortunate bank foreclosures on homes in nearly every part of the United States, producing a snowball effect of homes that simply couldn’t sell once the bank had taken control. Once these houses start to creep into a neighborhood, it tends to drag the whole value market down with it, primarily because of the perception that only people who “can’t pay their bills” live in this neighborhood. The reputation of financial irresponsibility makes for an undesirable area to live into unless the family plans on buying it, renovating it, and flipping it for a substantial profit. If there are several houses in the area that are foreclosed on, however, it might be nearly impossible to get out of that house once they’re in.

Undesirable Schools

Couples looking for an area to buy a house in where they can raise their new family will consider several unique factors in their consideration, such as safety and proximity to parks. One of the major influences, however, is the quality of the school district that they are moving into. While this may not have been an influence for the older couple that already has kids out of their house, a declining school system can kill the sale price. Conversely, if an average house is in an above-average school district, they can see their home value rise rather substantially.

Annoying Intrusions

No one wants to look out their back window and see a forty-foot sign that is advertising a local fast food chain since it kills the whole relaxation and “home sweet home” vibe that so many homeowners desire. Additionally, the presence of a city dump, behemoth cell phone towers, and other undesirable obstructions can absolutely devastate a house value. Still, it can be difficult to avoid them once someone has moved in simply because of zoning laws and government-owned areas that allow them to put just about anything they want on those lots. Homeowners can try to fight it, but in the majority of those situations, they lose.

Criminal Activity

One of the worst things that can develop in any neighborhood is the presence of criminal or otherwise illicit activity. Meth labs or drug houses are known spots not only for crimes but violence, which means anyone with a family or money to move elsewhere probably will. Even if those homes get raided, they still can have a hard time being relisted because of the negative association with them, so if someone starts to see their neighborhood head in that direction, it’s a good idea to look at other options. A big killer of home value is registered sex offenders moving into the area. While they may be totally rehabilitated, a neighbor that has been convicted as a sex offender can lower your housing value byup to 12%.

Energy Wells

For those who haven’t heard, “fracking” is a term that describes forcefully pushing liquid at extremely high pressures into rocks or underground areas to force oil and natural gas out of their coves to be mined and developed. It’s a controversial practice by some, but an extremely effective and common tactic used by energy companies to extract their products. Most recently, it has beenpossibly linked to unsafe drinking conditions, making a house anywhere near a fracking site a potential health hazard. If a house uses groundwater and lives within a couple miles of a fracking site can expect adecrease in property valueby an astounding 24%.

Things a Homeowner Can Avoid to Prevent Home Devaluation

While there are several factors that can severely impact a home value and are almost completely unavoidable in some instances, there are several more factors that can do the same thing that the homeowner can and should steer clear of. In many cases, the things below are either done through neglect or in good faith that they will help the value of the home, but if the new owner doesn’t like it as much as they do, the price will take a hit as a result. Best practice is to study the market trends and only put the money in on renovations if the owner views it as a personal decision and not as a potential investment move.

Over-Exaggerated Personalization

Putting up a few knick-knacks from someone’s travels around the world is not a problem, but when a homeowner decides to knock down walls, put up tough siding that is bolted to the structure, and turn their 2012 build into a vintage art deco feel, they might have difficulty selling it. Personalization is fine, but homeowners that are even remotely concerned about home value would do well to make sure they don’t do anything that can’t be removed later.

Loud Colors

Once again, personalization is one of the greatest parts of home ownership; the ability to make a space their own is what people love most about the process. But if a homeowner has decided to paint the entirety of their house a variety of rainbow colors, such as hot pink, bright yellow, and teal, make sure it’s painted back over before the house goes on the market, otherwise, it’ll be a turn-off. The home must appeal to as many as people as; neutral colors such as beige or white accomplish that very well.

Illegal Renovations

Nearly every city in America requires anyone who decides to make renovations to their house (big or small) to obtain a permit in order to ensure that the house meets current standards, but not everyone always does. Someone who tries to slip past government standards may find themselves in a tough spot when trying to sell the house and a savvy buyer asks about the permits for the various renovations. If the government finds out, they could force the homeowner to either rip out the renovation, levy a fine, or both.

Converted Rooms

Turning the garage into an extra bedroom sounds like a great idea to so many people, but no matter how great it sounds on paper, to many people who walk through, it will always feel like nothing more than a large, cold room. This presents a bigger problem in areas where inclement weather such as hail or rainstorms are a part of everyday life and people want a garage in order to keep their vehicles indoors. Contrarily, many people also prefer bedrooms on the inside to be left where they are at the expense of more living or dining room space. Walls that are blown out to remove a bedroom and add an extra 15 feet for kitchen space are seen as a negative for potential homebuyers who want to keep that option for themselves.

Installed Pool

For homeowners with teenage children, having a pool is a great investment. Not only do they get hours of outside playtime, but it affords a nice gathering point for parties and the occasional bar-b-q. Anyone that’s ever actually had a pool, on the other hand, can attest to what a massive pain in the neck it can be if it’s not properly maintained. In some parts of the country where the weather stays warm year-round (like Florida, for example), having a pool is not an inconvenience; indeed, in many cases, it’s expected. But for people who have never had a pool before and don’t want the headache of maintaining it, the presence of a pool can be an instant deal-breaker. If someone is considering adding a pool, in most cases it should be because they want it and not because they think it will increase the cost of the house.

Obvious Repairs

Before a house ever goes on the market in the first place, the homeowner should make every effort to fix the obvious (and not-so-obvious) issues with their house. Potential buyers who come in and see several thousand dollars’ worth of damage will normally insist that that cost be deducted from the sale price, which can add up to a lot if much is needing to be done.