How Can a Neighborhood Foreclosure Hurt the Value of My Home?

One of the biggest misconceptions I hear when talking to people is that homeowners don’t believe that a neighbor’s foreclosure can hurt the value of their home. 

The answer is — it does. 

Let me clarify: One foreclosure in a nice, well-kept neighborhood should not, but what about two foreclosures and a vacant home? 

As soon as a house becomes vacant, it starts to deteriorate. Banks are not the best homeowners, let’s face it. The lawns become long and the windows become fogged from the cold and moisture inside the home. 

Sometimes there can be a domino effect. When one neighbor sees a foreclosure down the street, he might start to think of it as a possible solution to his financial problems as well. 

A big problem is that the banks will then use the reduced sale price of the foreclosure as a comparable for other sales. This of course only hurts anyone thinking of selling. 

Over 90 percent of home sales involve a bank loan and therefore need an appraisal. Be conscious of this if you should be thinking of selling right now.

Two options for you if are trying to figure out what your home might be worth are, either to get a formal appraisal (they are not super expensive and may save you time and money in the long run), or get a licensed real estate agent who knows the area to conduct a market analysis in order to get the value that your home may sell for now. 

Both of these will make you a more informed home seller.

You may ask: What can I do about foreclosures in my neighborhood? Well, there are actually a few things you can do.

1. Talk to your neighbors.  You may be able to talk someone into getting professional help to avoid foreclosure in the first place.  Right now, it is the last resort and there may be several other options they just didn’t know they had.  Getting professional help is the key.
2. Mow the lawn once in a while.  You might think I am crazy for saying this,   but if the bank is not keeping up with the lawn, it will benefit you and your entire neighborhood to keep the property looking nice.
3.  Report any problems with the property to the police.  Any broken windows, open doors, any vandalism you might see or suspect or any suspicious activity.  The police may not do much, but if criminals see the police response and they feel that there are “ nosy” neighbors watching, there will be a lot less problems with criminals, vandals or squatters.

The idea that we as homeowners are all in this together is never more accurate.  For those of us not looking to sell right now,  if we can just hang in there a little longer,  I feel we can ride this economic downturn as it heads upward.  

---

For more information, visit www.maripatking.com or e-mail Maripat at Rmaxmpk@aol.com.