Warning: Your Neighbor's Foreclosure Can Cost You Your Home!

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by Bob Nachman

Your neighbor down the street is facing the heartache of foreclosure. You feel bad for them, but really, what does their foreclosure have to do with you?

Experts say that a foreclosed home can have a huge impact not only on property values in the area, but also on the general state of the community at large.

In terms of your own home, its value can be diminished greatly by being located near a foreclosed house. One reason for this is that foreclosures sell for much less than they are worth, thereby reducing the average sale price of homes in the area. Appraisers have a difficult time assessing your own property value if everything around it has been sold at a reduced cost. You could end up losing thousands of dollars when you try to sell if there are properties around that were sold at bargain-basement prices.

Foreclosed homes often end up being unoccupied for a time, sometimes for several months, depending on how depressed the local realty market is. These houses are sometimes left in poor condition and some homeowners even trash their properties before leaving. Others simply board up the house and leave.

Windows that are boarded up or a building in a state of disrepair acts as a beacon to vandals, squatters, and criminals looking for a private place to do business. This brings an unsavory element to the neighborhood and can quickly result in a downslide of the area's safety and desirability.

The more foreclosures that occur in a community mean that more families end up moving away. This leaves local businesses crying out for customers, and can result in them going out of business. Empty, dilapidated houses, bankrupt businesses, and increasing crime can leave the remaining homeowners in the area feeling vulnerable and trapped. Their houses are worth much less than they were only a year ago, and selling may be difficult.

What can you do to prevent this kind of fallout from happening when your neighbor is facing foreclosure? The first step is keeping the vacant property from being overrun by vandals and criminals. If there is garbage in the yard, pick it up. Keep it clean and graffiti-free. Mow the lawn and do your best to keep the property looking lived-in. This is not something you have to do alone. Gather other neighbors in the area and resolve to work together to protect property values and community safety as much as possible.

Why is it up to you to take care of someone else's home? Foreclosed properties are no longer the responsibility of the homeowner. They don't own the house anymore and are therefore not responsible for maintenance. The bank takes over ownership, but has no obligation to keep the property in good repair. Foreclosed homes are sold essentially as-is. Whatever damage happens between the time of foreclosure and the sale of the house is simply deducted from the selling price. Anything you and your neighbors can do to prevent a sizable price reduction will help all of you in terms of your own property values.

In addition, whatever you can do to maintain the appearance of a clean, safe, community will benefit all of you socially as well. If you and your neighbors work together to keep an eye on vacant buildings, your street will not be an easy target for criminals and vagrants.

Take pride in your home, but look out for your neighbors' as well. It could end up saving you a great deal of money in the future, and keep your neighborhood the safe haven that you know and love.

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