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What Makes a Property's Value Decrease? 7 Key Factors

So, we've all heard about the factors that increase our home's value, but what about those that cause it to decrease? We'll take a dive into seven key factors that make a property's value go down. If you're looking to sell your home for top dollar, you may want to be aware of these potential issues.

So, we've all heard about the factors that increase our home's value, but what about those that cause it to decrease? We'll take a dive into seven key factors that make a property's value go down. If you're looking to sell your home for top dollar, you may want to be aware of these potential issues.

What are some key factors that can decrease a property's value?

1. Noisy Neighbors

When home buyers are on the hunt for the perfect home, they’re looking to fall in love with not only the property but also the surrounding area — neighbors included.

If you’re unfortunate enough to live next door to a band practicing in their garage during the evenings, or maybe have neighbors with noisy construction work being done, potential buyers are sure to notice. In fact, statistics show that living near a bad neighbor can lower home property values by more than 5% to 10%.

2. Bad Schools

Buyers with school-aged children, or those looking to start a family, take extra notice of a home’s school district before purchasing a house. If your property happens to be located in a poorly-rated school district, this may be cause for potential home buyers to look the other way.

Neighborhoods that are positioned near closed-down or low-ranking schools are less attractive, causing a decrease in property values.

3. Noise Pollution

If a home's location has unattractive views, smells or sounds, you can surely expect the property value to take a hit. Living near railroad tracks, garbage dumps, or busy highways isn’t exactly appealing to potential buyers.

Being situated near an airport is not ideal either; having planes landing and taking off all day and well into the night over your home is not exactly appealing to many. Statistics even show that airport noise has been known to drag down property value.

4. Poor Curb Appeal

Up until now, you’ve probably been worried that you’d have little to no control over reducing these issues causing your property’s value to decrease; you can’t exactly move your home to a quieter neighborhood, now can you?

Here’s some good news amidst the more unpleasant bits; ramping up your curb appeal is absolutely within your power — and probably won’t cost you much either.

If your front lawn needs mowing and could use a fresh bed of flowers, that’s an easy fix; take care of your shrubbery before listing your home to avoid an unnecessary decrease in your property’s value.

5. Poor Functionality

When looking at your home for the first time, buyers will take notice of its layout. Things like an open concept kitchen and a master bathroom are major benefits, to list a few.

But that’s not all they’re looking at; if your home has small bedrooms, a kitchen upstairs, or is lacking a formal dining room, these can be real downfalls for your property’s value. Buyers may not be able to wrap their heads around a master bedroom situated downstairs, or a staircase positioned just a few feet away from the front door.

6. Color and Interior Design

Although you may love the floral wallpaper in your foyer, it could be distracting to many potential buyers. If they have a strong dislike of the wallpaper or paint colors in a home, they could be left with a bad taste in their mouth when thinking back on your property later on.

Real estate agents often advise homesellers to remove all wallpaper from their house before putting it on the market, saying it really dates a home. And it’s been proven that houses with a lot of wallpaper are significantly harder to sell.

The good news is, this is a fairly easy and cost-effective upgrade you can make to before listing your home.

7. Increasing Mortgage Rates

Buyers can afford to spend more on a house when mortgage interest rates are low; their monthly mortgage payments will be lower as a result, having to pay less over the life of the loan.

On the reverse side, however, as interest rates go up, home affordability decreases for potential buyers. In this instance, it’s likely they won’t be able to spend as much on the initial purchase prices due to higher monthly mortgage payments.

When people have to pay more to buy your home at higher rates, the purchase value takes a dip. You’ll begin to see the number of prospective buyers dropping rapidly. In order to appeal to more buyers, you may have to lower your list price.

Sellers that are concerned about their property value, or who need assistance with valuation and pricing should partner with a local experienced agent to ensure the best possible outcome. Clever can help.

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Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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