Can Your Neighbors Affect Your Property Value?

Can Your Neighbors Affect Your Property Value?
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Neighbors who fail to keep up their homes and yards can not only be an eyesore, but can cost you at appraisal time. In addition to your home's structural and cosmetic features, appraisers take note of surrounding conditions, such as cluttered yards or noise disturbances. Neighborhood nuisances such as an overgrown yard or a persistent odor could bring down the value of adjacent homes by 5 percent to 10 percent, says Richard L. Borges II, the president of the Appraisal Institute.

External Obsolescense

What we might think of as just a sloppy, annoying neighbor or obnoxious barking, an appraiser would consider "external obsolescence." This can be defined as a type of incurable depreciation caused by negative factors not on the subject property. These factors can be either environmental, social or economic, and can diminish your property value by appraisal standards. Some neighboring eyesores may even prevent a property from selling altogether.

Causes For Alarm

Possible negative factors that can hurt your property can include: unkept yards, noise disturbances, proximity to a convicted sex offender or multiple vehicles next door. But a bad neighbor doesn't necessarily mean just residential property; it can also be a local business or government facility. For example, power plants and landfills can drive home prices down and keep buyers from purchasing in your neighborhood. A closed school can also keep buyers away.


One of the single most negative factors that drive neighborhood prices down is nearby foreclosures. These homes tend to be severely neglected, initially by the original owner and then by the banks that foreclose on them. Most foreclosures will not have water or electricity connected to the home and can sit empty without a caretaker for several months or years, making it a long term eyesore and a driving force for declining home prices.

Covenants, Codes and Restrictions

Many subdivisions have covenants and restrictions, which are neighborhood guidelines that homeowners must follow. If you happen to have a homeowners association regulating the bylaws, you might just simply need to report a violator to the HOA and let it do the rest. Many times a simple letter is effective in getting a bad neighbor to conform to the rules, but in some cases, a court order is needed. Your city may also have enforceable codes for irresponsible homeowners.