How do I sell my house when my neighborhood is trashed?

Today, one of my home sellers confessed:

The reason she wants to move is that the neighborhood has gone “downhill.”

The neighbors:

• have overgrown lawns,
• cause the street to be overcrowded with cars,
• sit on their front porches at all hours of the day, and
• generally don’t care about keeping up appearances.

She loves her home, but hates the drive to and from it. If she hates her house this much, does she have any hope of finding a buyer? What effect does the neighborhood have on the home price? Is there anything she can do to fix the problem temporarily?

I will address each of these items below. In short:

• The neighborhood does have an effect on price, but you might still be happy with the offer price.
• In this case, the neighborhood drops the price by about $75,000, but every situation is different, talk to a realtor to get a price estimate on your home.
• Yes. You absolutely can take steps to temporarily fix the problems during the sale period, but make sure you disclose everything to your future buyer!

For more information. Keep reading.

The neighborhood does have an effect, but someone will buy your house.

The phrase that comes to mind is usually reserved for yard sales: “One persons trash is another person’s treasure.”

In terms of real estate, it is still true. For every property in the world, there is at least one person who wants to own it. Even if the street is overcrowded, even if the yards are overgrown, someone will see the house and the neighborhood and think either: “I can live here,” or even better “I want to live here.”

“Somebody in Bakersfield would love to own your home! (Even if you think that’s crazy)”- Jared Clemence

The good news is that this person exists! What this means for you, is that if you are dealing with a similar problem you have a way out. You can sell your home and buy in a different neighborhood that matches your values and preferences better.

What effect does the neighborhood have on the price?

In this specific instance, I brought pictures of the house home to my wife. My wife, who is also a Realtor, looked at the photos of the house. She ooh’ed and awe’d as she flipped from picture to picture, and then said, “Jared, this house could sell for $425,000, easy.”

Not so fast, Tarah! The seller has concerns about the neighborhood. Tarah’s instinct was correct. In other neighborhoods, this house might sell for $425,000, but in this neighborhood, the comparative sales value is just $350,000.

Other people have similar opinions about the neighborhood, which means that fewer people are available to bid up the housing prices. There are still home buyers out there, but they are going to pay less for this neighborhood than they will for another neighborhood.

It’s not all bad news.

For my home seller, she was excited to hear about the $350,000 price. Even though it was $75,000 less than the house might be worth in other neighborhoods, it is still almost $200,000 more than she paid for the house 10 years ago.

Neighborhoods do affect the price of the home, but home values still increase (in general), and so it all works out in the end. What this means for the buyer who eventually buys her home is that they are getting the same house they could buy elsewhere for $425,000 at a discount, and the reason for that discount is the neighborhood. For the person who eventually buys this house, they will be overjoyed to have such a beautiful home despite the neighborhood.

If I move to a new neighborhood, what guarantee do I have that the neighborhood will remain the same?

When the home seller moved to this neighborhood, it was new construction. There was no fortune teller who could predict whether the neighborhood was going to attract the kind of people who have a strong pride of ownership or the kind of people who prefer to celebrate their life indoors and away from yardwork.

While some neighborhoods are older and more established, there are never any guarantees. People are moving all the time. Economic trends cause people to shift around the city en masse, and sometimes this causes neighborhoods to change their feel over time. A neighborhood that is older will slowly be replaced by younger households as the occupants either pass away or move away. The younger occupants are going to have different values and beliefs than the previously older occupants. As this happens again and again in every neighborhood, the neighborhoods shift and undergo cyclical changes slowly over time.

“Every neighborhood changes.”- Jared Clemence

So, when you buy your new house, do you have any guarantees? No. You don’t. But that’s okay. Change is what makes life interesting. The best way to help influence change is to pick your neighbors. When you see a house go up for sale, call people you like and let them know: Hey, the house down the street went up for sale and I want you to be my neighbor. It will feel silly, but you never know… maybe that person has been looking for a change!

Can I temporarily fix the problem by paying for repairs or a gardener or sending the loud neighbor on vacation?

Yes, but . . .

This is actually a great tactic to improve the first-impression your home has on potential buyers. It works best when only one neighbor is causing the problem. It doesn’t have to be the lawn, maybe they:

• haven’t painted in 30 years,
• own a fence that is falling over,
• yell too loudly into the cell phone on a relaxing Saturday afternoon, or
• use the front lawn as a storage depot.

Whatever the issue, you absolutely can offer to help remedy the problem. But, consider this:

1. You have to approach the issue delicately. You never want to offend.
2. You MUST disclose this agreement in your transfer disclosure statement and your seller property questionaire, because it is, by the very nature of your concern, a material fact affecting value.

Sellers have a duty to disclose. If you take affirmative steps to hide the neighbor’s ugly yard, then here is what happens: First, you sell your home. Congratulations! After a few weeks, when you are no longer taking care of the problem neighbor, the problem returns. The buyer then learns from neighbors that you had an agreement to take care of this problem and hide it for the purpose of selling your home. At that point, the buyer sues you for damages, because you actively concealed and hid a problem that you knew about and you knew the buyer would care about.

So! What do you do to protect yourself? Disclose, disclose, disclose! Put it in writing that you mowed the lawn, hired a garner, painted the fense, or frequently got into arguments. Whatever the issue, put it in writing, and make sure the buyer sees it and signs off on it. If the buyer buys your home knowing that you contributed to temporary repairs, then the buyer accepted the risk and you are free and clear. (check with your lawyer to be sure, but the general rule is Disclose, Disclose, Disclose!)

Who do I call if I want to change neighborhoods?

I have transitioned from Real Estate into Law, so I no longer take general listings (unless they are probate listings, I still do those). However, I have a great network of realtors that I work with who will serve you well. If you need a person to list your home for sale, give me a call and tell me that you need a referral. You can reach me via the information on my contact page.

Of course, if you’d like to roll the dice and risk working with a random real estate agent, you can always find a Realtor on Zillow or by flipping through those free magazines outside the local restaurant.

Regardless of how you choose your real estate agent, we have many great agents in Bakersfield, and you should reach out to at least one of them to discuss your options.