Home value killers: Problems that could make your property near worthless
Anyone who’s bought a house knows about the little things that can affect its value: a marble countertop adds a few grand; a lack of parking takes back a bit more. Unfinished basement? See ya.
But, there’s another class of value killers that can eat up hundreds of thousands of dollars, or make a home essentially worthless. And with our wealth increasingly tied up in our homes, finding out you just bought a “stigmatized” home can be ruinous.
A potential nightmare example emerged last week with an Antigonish, Nova Scotia house that saw its assessed value drop to $1 from $365,000 after the owners found Mi’kmaq artifacts on the property and reported them. If the goal was to reduce property taxes, it was shrewd. But selling the place could be nearly impossible if potential buyers worry they won’t be able to do anything with the property.
Real estate laws in Canada can be murky on this stuff, as sellers are only required to disclose material defects to the property, such as a crack in the foundation. And while nobody expects to find a burial site when they start digging out the basement, there are value killers you can watch out for.
You thought we’d start with ghosts, right? Not even close. From a value perspective, you’re better off with voices in the attic than past grow-op activity. And it’s not just the criminal element thing. The big issue is mould. Running a marijuana grow-op requires lots of heat and humidity, which is rocket fuel for mould. And the catch is that it can be easily hidden beneath flooring and drywall, so the home inspector might miss it, and the selling agent may not even know, leaving it for you to discover when you reno the basement two years later. Then you’re in for a pricey remediation, and a potential insurance nightmare.
“Some people have stripped the house right off on the inside. Sometimes the cops catch it at the very early stages, but it’s still a marijuana grow up, so people are afraid of them period,” says Barry Lebow, a broker and expert on stigmatized properties.
Some cars end up being lemons, and some houses just end up flooding a lot. It can be because of unfortunate location, the surrounding landscape, or the peculiarities of the local sewer system. But if you’ve got a flooder, you’ve got a problem.
“Flooding is huge, not because your basement backed up once, but four times, seven times. Would you want to buy that house without being told about it? I wouldn’t,” says Lebow.
And this can be a tough one to uncover beforehand, because neighbors may not want to talk about something that could be a problem for them as well.
You may be diligent about properly disposing of old paint, but previous owners may not have been. And just because you’re house isn’t next to a gas station doesn’t mean somebody a few years back didn’t try to DIY the emptying of the old oil tank in the basement. You won’t see it when you glance at the yard during the open house, but ground contamination stays, and can seep into other properties as well. Once the cat’s out of the bag, nobody will want to touch your place.
It’s not necessarily about haunting. Some people who don’t believe in ghosts and don’t mind creaky old houses would never think of putting an offer on a house that’s had a murder in it. Notorious murder houses often end up getting razed, and even then the property has trouble selling.
Currently, only Quebec has a murder disclosure law, so don’t expect to be given this information beforehand. The good news is that in relatively safe Canada, major crimes usually make the news, which means you can check up on this beforehand.
“I always say Google the property address you’re thinking of buying,” says real estate consultant Mark Weisleder.
The folks next door
This one gets in to uncomfortable NIMBY territory, but the fact is that your house value can be hurt by the people around you. Past cases have involved buyers suing sellers after learning of convicted sex offenders living nearby. But it can be as simple as the house across the street that likes to host front yard parties three nights a week all summer. Maybe there’s a biker presence on the street. If you don’t find out about it before you buy, you will after you move in.
The good news is that in the current real estate climate, it’s tough to have an unsellable house. A stigma will cost you, but take the price low enough and someone will see potential.
“At a price, everything’s for sale,” says Lebow.