Bad neighbors can affect appraisals

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Strategies for avoiding and remedying ‘external obsolescence’

neighbors_shutterstock_17352274It’s true: Bad neighbors can ding home values. Appraisers even have a term for bad neighborhoods and other troublesome hyperlocal issues that can affect property values: external obsolescence.

“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, in a statement. “Homeowners should be aware of what is going on in their neighborhood and how others’ bad behaviors could affect their home’s value.”

The Appraisal Institute recommends that prospective homebuyer visit the street where they’re considering buying at different times over the course of several days.

A number of social networking websites allow users to share insight about neighborhoods. They include NabeWise, Nextdoor, BlockAvenue, StreetAdvisor, and Airbnb. Other sites offering data at the neighborhood level include Walk Score and PolicyMap.

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