Keeping up or increasing the value of your property is often the focus, whether you’re a property developer or a homeowner hoping to sell and make a good profit on your home. Sometimes, some surprising things can bring down the value of a property.
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If you are working to improve your property, it’s important to work with a reputable builder, like Lee West builder.
Increasing Mortgage Rates
Low mortgage interest rates encourage buyers to spend more on a house, thanks to lower mortgage payments.
However, when interest rates begin to creep up, the affordability of property drops for potential buyers. Mortgage payments will be higher, which will mean they will have less to spend on the initial purchase of their house.
A mortgage rate increase will impact on sellers too. Your property will be less valuable when people have less to spend. This can mean you have to drop your listing price and accept a lower amount to get the property sold.
Natural Disasters
A natural disaster in your area can really impact the value of your property. Flooding, wildfires and other issues can cause real problems.
Flood zone maps can change over time and require your property to need flood insurance. This is off putting to buyers, as it shows that a property may be at risk of expensive, distressing damage. This then has a knock on effect on the value of the property.
Of course, another problem is damage caused by natural disasters. If you’ve had to spend a lot on repairs, even insurance payouts might not be enough to help you recoup your losses on a property you were hoping to sell.
Buyers will be hesitant to buy a property that has been previously hit by a disaster in case it happens again.
Foreclosures
Foreclosures and short sales in your area can also cause your property value to fall. This happens because it skews the value of comparable sales in your neighbourhood.
For example, if a home with a similar square footage and number of bedrooms is foreclosed on, this drives down the average price and could push your property value down.
Short sales or foreclosures on the same street as your property are also a problem. Even if the properties aren’t directly comparable to your own, they are in close proximity, making the whole area come down in value.
If a neighbourhood has a lot of foreclosures, this can be a concern for a prospective buyer. They may be more hesitant to purchase, as foreclosures suggest that an area is unstable. They may worry about the future value of the home if they have to sell in the future. This means a buyer will want to negotiate on price, meaning you may have to accept a price below what you had hoped for in order to secure a sale.
Property values can be impacted by a lot of different factors, so it’s important to play close attention to the market if you are hoping to sell.
