What Is Your House Worth?
No matter what you think your home is worth, at the end of the day, it’s worth only what someone else will pay for it. Many factors influence a home’s value, including obvious qualities such as its physical appearance, structural integrity, square footage, and amenities—but that’s not all. A home’s value also depends on considerations beyond the perimeter of your yard, including local economic trends and the appeal of the neighborhood. Be on the lookout for some of the following factors that could negatively affect the value of your home.
Your Property Tax Valuation Has Dropped
No one looks forward to getting their property tax bill in the mail, but if you find when you open yours that the amount you owe has gone down, don't be so quick to cheer. First, compare last year’s valuation with this year’s. That lower tax bill could indicate that the county appraiser thinks your home is now worth less than it once was.
Related: 10 Ways to Lower Your Property Taxes
More Students in Classes
School districts usually have a set student-to-teacher ratio, such as 20 students for every 1 teacher. But when businesses begin leaving a community, the county collects less in property taxes, which means there's less money available to pay teachers' salaries and benefits. When this happens, district officials may start laying off teachers and combining classes. A jump in local class sizes could be a sign that the local economy is in trouble, and property values could drop as a result.
Your House Is Outdated
Orange shag carpeting and autumn yellow bathtubs may have been all the rage in the 1980s, but today’s home buyers see them as drab and dated. If you haven't renovated your home in the past 30 years or so, it won’t show well when you put it on the market. In other words, it won't get the same price as a similar home that's been maintained and updated.
Nearby Homes Are Selling Low
If nearby homes that are similar to yours in style and age are selling for less than you think they should, your own home could be dropping in value. Through their real estate agents, potential buyers research recent home sales and make offers accordingly—which means that low prices in the neighborhood can drag down the price of your house.
It’s a Buyer’s Market
When the housing market is saturated—when buyers have a plethora of houses to choose from—your home will be in less demand and its value is likely to drop. If you have flexibility, it’s usually better to hang onto your house until there are fewer on the market. When your house has less competition, you’ll stand a better chance of getting an offer closer to what you think your home is worth.
Businesses Are Leaving
If you start noticing vacant storefronts in your local commercial district, that's a sign that businesses are leaving the community, which means there will be fewer local jobs and opportunities. When businesses pull out, real estate values often drop. This is especially true if anchor stores, such as Walmart or Target, leave. You can either try to sell your home quickly before the trend accelerates, or wait it out and hope new businesses move in and buoy up real estate values.
Your Home’s Curb Appeal Is Lacking
Your house doesn't get a second chance to make a good first impression. If its curb appeal is dismal, so are your chances of getting the price you want when you go to sell. Make sure your home's view from the street remains tidy and welcoming by maintaining the lawn, trimming back unruly bushes and shrubs, and keeping the exterior in good repair. If the street facade is looking dingy, it's worth considering adding a fresh coat of paint or replacing a worn entry door with a new one.
Your Neighbors’ Curb Appeal Is Dreadful
Even if your house is picture-perfect, if your neighbors are neglecting their houses, your home’s value could suffer. While you can’t force your neighbors to clean up their act, you can offer to help them mow and maintain their yard. If they agree, your neighborhood will be cleaner, and your home value will probably improve.
Your House Has Been on the Market Too Long
While local housing markets vary, according to Realtor.com the average house spends 85.5 days on the market before it sells. If a house is on the market for longer than the average, potential buyers begin to think something must be wrong with it. To prevent your house from languishing on the market, don't overprice it. Before you list it, ask the agent to perform a market analysis to determine a likely sales price for your house—and then price it accordingly.
Crime Is Up
No one wants to live in a dangerous neighborhood. If potential buyers see security bars on doors and windows in your community, your home’s value will drop. While neighborhood crime isn't actually under your control, if you feel that your street isn’t as safe as it used to be, consider banding together with your community to start a Neighborhood Watch program. Not only will you end up with a safer neighborhood and increased property values, but you may also be able to build a stronger, more involved community.
Public Areas Are Being Neglected
When a community starts losing businesses and residents—and the tax revenue that came with them—then budgets have to be cut. Parks and recreation areas are often first on the chopping block, so if you notice that these areas are being neglected, it’s a sure sign the community is declining. By the time this happens, home values have probably already been affected.
“For Rent” Signs Are Everywhere
When you're trying to sell your house, even worse than a glut of houses on the market is a glut of properties available for rent. This often happens when owners have already vacated their homes but have been unable to sell them. They then try to cut their losses by renting out their properties, which is a bad sign for home values in the community.
Banks Are Foreclosing
When businesses and jobs leave a community, homeowners may end up stuck with mortgages they can’t pay. Eventually, the lenders will foreclose on their homes. To attract potential buyers, lenders will often put a foreclosure sign in the yard. The presence of these signs on your street is a home-value killer, because buyers are reluctant to purchase in a declining neighborhood.
Your home is most likely your largest investment. Home insurance is a valuable way to protect the investment, but could you save money on your home insurance policy? Read our top tips for how to safeguard your property while saving money.