Is it possible for a fixer next door to make your home worth less? Or what if the house was in okay shape, but the yard was a disaster? I asked a handful of brokers and agents in the Sacramento area to chip in their two cents on how a fixer next door can impact a home’s value.
Barbara Lebrecht: I tell my buyers the same thing I tell my girlfriends before making a big commitment. There are some things you cannot control. Don’t marry a property and expect the neighbor to change.
Sarah Bixby: I’ll answer this from an investor angle. First, it depends on the neighborhood. Trying to sell a 500k+ home that sits next to a deteriorating fixer would definitely affect the aesthetic appeal and therefore the marketability of the home. In other lower priced neighborhoods I feel it’s more acceptable. If only the yard is unappealing, I would pay to have it landscaped and call it a day. If the home next door is a visible fixer I would still make the purchase but would have to take marketability into consideration and give a slight price reduction to compensate for the eyesore next door, or perhaps an extra upgrade or 2 that potential buyers couldn’t live without.
Jeff Grenz: My flipper buyers had a rule to “never purchase next door to a cyclone fence” and also had me include a panorama of the adjacent homes as seen from the front walk for evaluation…. that would be “yes” from the flipper investor buyer.
Kellie Swayne: Curb appeal is a significant piece to marketing any property. When surrounding homes appear unkempt and uncared for, buyers tend to notice. And, then they begin to worry about what kind of experience they might have living next to a home that is not well maintained. Whether buyers will pass on a house with a “fixer” next door likely depends on the overall neighborhood as well as the house that they are considering. And, how good of a fit the other pieces might be for them. I have seen buyers pass on a wonderful home because of unkempt homes nearby. And, I have seen buyers who are willing to overlook the “ugly ducklings” for the home of their dreams.
Jay Emerson: I’ve had buyers say “I will offer less because of the neighbor”, “I don’t want that as a neighbor”, and “I can’t see it from my kitchen (I don’t care)”. So, beauty and appeal are truly in the eye of the beholder. It also depends on the market activity; in a hot market, the neighboring homes have less of an impact. Naturally, if the fixer also has squatters or boarded windows, it’s almost certainly a “drive-by”.
Erin Stumpf: Every buyer has different peeves, but I’d say the average buyer definitely has an aversion to purchasing a home that is located next door or even within a close proximity to a blighted home. This is especially the case where the home buyer is planning to live in the home they are purchasing (versus an investment property they won’t personally live in). You only get one chance to make a first impression, and if a neighboring home is not well kept, then buyers tend to make certain assumptions about the occupants of the home without taking the time to actually investigate who lives there. If they don’t care to maintain the home’s outward appearance, what is going on inside the home? Are they hoarders? Do they have 25 cats? Will they be good neighbors? Will they be friendly? Occasionally in some neighborhoods, especially ones where homes are older, certain types of deferred maintenance in neighboring properties are a little more forgivable. But most of my buyers have opted not to offer on homes next to blighted property.
Jennifer Klein: So much is about the neighborhood. In some cases the quality of the home does not matter if the neighborhood is undesirable. Unfortunately, one run down home can certainly effect the perceived value of the home as a reflection of the neighborhood. One bad apple can ruin the bunch!
Final Thoughts: Thank you everyone for such insightful comments. I sincerely appreciate your expertise. As an appraiser I also pay attention to location. Just as there can be a huge price premium when a street is tree-lined, it can also be damaging when a street has a beat-up feel to it. And a property can certainly sell for less because of a fixer next door. Usually this type of negative reaction in the market to a fixer is going to be worked out on the front end of a transaction when buyers are turned off by the issue(s) and the price is lowered until someone takes a chance – as opposed to an appraiser coming in and making some sort of objective blight adjustment. Other times though without the luxury of being able to watch a property being marketed, an appraiser is going to have to consider what is nearby and take that into consideration in the final reconciliation of value. Ultimately the saying rings true. You don’t just buy a home, you buy the neighborhood.
Questions: Would you buy a house with a fixer next door? Anything to add to the conversation?
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Steve Ostrom – Roseville Realtor:
decrease in competition and increase in inventory makes it a great opportunity for buyers that feel a little tattered from recent market conditions.
Angela Jones – Realtor:
Keith Klassen – Realtor:
Doug Reynolds – Realtor:
Craig Dunnigan – Realtor:
Eric Peterson – Realtor: The market accelerated through the spring with higher than expected price appreciation across all segments. Unfortunately, on the 1st of July the market began to cool and once the numbers are in for the final months of 2013, I believe roughly half of the appreciation gained in the first six months of 2013 will have been given back in the second half of the year.
Gena Riede – Realtor:
Lori Mode – Realtor: