Your Neighbors Affect your Market Value – So Say Appraisers

This news may seem either common sense or unreasonable, depending on your position, but the fact is that neighbors affect market value.

“I’ve seen many situations where external factors, such as living near a bad neighbor, can lower home values by more than 5 to 10 percent,” said Appraisal Institute President Richard L. Borges II, MAI, SRA. “Homeowners should be aware of what is going on in their neighborhood and how others’ bad behaviors could affect their home’s value.”

I showed a house this afternoon in a nice little neighborhood – house was in good condition, great yard, manageable needed upgrades … but the guy on the four wheeler flying down the road, (I think the technical term is “whizzing”), the honda racing down the road … those folks are negatively impacting the value of the entire neighborhood, not just adjacent neighbors.

Buyers can paint and replace carpet … but replacing neighbors?

I’m no attorney, but this is an attorney describing what may constitute a public nuisance (and what neighbors may be able to do about it).

After minutes and minutes of googling, I can’t find how this case in Arizona was resolved, in which this was the subject of the case, “Do you have to disclose the fact that your neighbor is disruptive before selling your house?”

So … if you’re buying, visit the house and the area around the house several times before you buy.

* Thanks to VARBuzz for pointing out the appraisal article

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  1. Daniel_N February 8, 2013 at 12:17

    Thanks for this info. I find it odd that the appraisers in the article frame external influence on property values entirely in the negative, as if the ideal home is completely isolated from all other people and places. In my own experience, good neighbors are as much a benefit to living where I do as bad neighbors may be a problem sometimes. Same with commercial, public areas, etc.

    1. Jim Duncan February 10, 2013 at 11:35


      I presume they start from a neutral opinion and go down from there …

      I find when showing property that generally we’ll notice that, for example, lawns are well-kept … but we don’t “add value” for that as the expectation is that folks take care of their lawns. But we will “take off” value if the neighborhood has an unkempt appearance. Same with cars on blocks, or four wheelers racing on residential streets …

      1. RobE February 14, 2013 at 01:36

        Depends on who wants to buy the house. Someone riding down the street on four wheelers might entice some buyers to purchase if they in fact love four wheelers.

        1. Jim Duncan February 14, 2013 at 14:27

          Agreed … but in a residential neighborhood that’s generally not a plus. 🙂

  2. your fav 4th Estate February 13, 2013 at 16:30

    Okay, so your neighbor doesn’t keep his house in order. There’s nothing that can really be done about that legally, right?
    Unless there’s HOA standards, I’d assume.

    1. Jim Duncan February 14, 2013 at 14:31

      HOAs could deal with it, and if it’s bad enough I assume the County could get involved.


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