Foreclosures turn the dream of homeownership into nightmare. It not only hurts the owner and the bank, it affects the neighborhood as well. Many people believe that problems associated with other owner’s property would in no way affect their real estate. However, it is vital to remember that that while foreclosures are bad for a homeowner, they are equally awful for some localities as they result into the following.
Lower property appraisal value
While assessing the value of your house, home appraisers evaluate the market value of other similar properties in your area. In many cases, big localities with one or two repossessed properties would not witness a major decrease in market value of their real estate due to those houses in particular. But, what if maximum number of homes in your area are foreclosed? In such a scenario, you are more likely to get lower selling price for your residence as property appraisers do not take into account lowered value of foreclosures as this does not provide an accurate estimate of market value of a property. With repossessed houses in your locality, your residence would be priced as per the new foreclosure market even though you have good financial standing and are paying your mortgage payments on time.
Devalue buyers’ opinion regarding a locality
More than what an appraiser has to say about property price, it is a buyer’s perception that influences the sale of a house. A buyer might reconsider of purchasing a house in an area that appears to be heading downhill. Even though there are some laws to halt this from happening, most of the times repossessed houses are not paid attention and over a period of time it becomes evident that the real estate is abandoned. With overgrown shrubs and the yard in bad condition, the prospective buyers can easily recognize nearby abandoned properties, taking them as a cause of crime.
Bad for Homeowner’s Association
The Homeowner’s Association can deliver benefits to a locality by maintaining roads, sidewalks, parks and other areas by utilizing the fees. Besides, there are a few associations that organize events, allowing the neighbors to come together and know more about each other. Some associations even employ private security patrols to increase safety in the area. All this can be achieved by paying some dues.
An individual facing foreclosure is the one who is not paying Homeowners’ Association dues. While this might not be a major issue if two or three owners are not paying the fees, it can be a big concern if a large number of people are not paying their dues, causing big trouble for the entire neighborhood. Under such circumstances, the homeowner’s association has two options. They can either reduce the services or can increase the fees for the rest of the property owners.
If you are trying to sell your property that is in a foreclosed neighborhood, it might be challenging for you. To bring yourself out of this situation, you can get together with your neighbors and do certain things that do not make the home look abandoned. If possible, ensure to do the same for other similar houses in your area.
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