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Dealing with an eyesore next door

In a buyer's market, curb appeal -- yours and the neighborhood's -- becomes even more important.

By Rachel Koning Beals, MarketWatch

Fresh paint, a new front door and colorful landscaping often are sure-fire ways to tease potential buyers over the threshold of a home for sale. But in some cases, no matter how perfect your pansies, nothing can draw their gaze past the tired-looking two-story buried in weeds next door.

More than 60% of 900 people surveyed by contractor-referral site ServiceMagic.com said they have or have had neighbors who make the street look bad by not taking care of the outside of their homes (21% admitted they were the culprit). Common problems: tall weeds and grass, imposing trees or a dying lawn; piled-up junk, particularly old cars; and peeling paint or a visible exterior defect, such as a broken window. Sloppy properties aren't exclusive to older dwellings in established or up-and-coming neighborhoods. Bad habits are on display in new developments too, say real-estate experts.

Neighborhood eyesores aren't a new or uncommon problem. But curb appeal, yours and the neighborhood's, takes on greater significance in a nationwide buyer's market. For buyers, eyesores may present yet one more negotiating advantage. Remember, appraisals factor in the condition of nearby properties.

Michael Lee, a realty broker for 30 years in the San Francisco Bay Area and author of "Black Belt Negotiating," said sellers near eyesores "don't have to have a fire sale, but do need to put their listing at a price that attracts plenty of traffic ... or risk having a home that just sits on the market."

"That is death," he said. "It becomes the tainted house."

The National Association of Realtors says an eyesore can shave about 10% off the value of a nearby listing. Market-by-market differences affect that percentage, real-estate experts say, as does the situation -- an overgrown lawn across the street is better than a boarded-up property right next door.

"If there are or were other similar eyesores in the area but the market is heading up, it's likely that the home will get fixed up or torn down sooner than later," said Bob Golden, a 20-year Atlanta agent with Re/Max. "If it's the only house in the area that looks bad, it can have a greater impact on the resale of neighboring homes."

Size up the situation

Approaching a neighbor can be uncomfortable to say the least. In the ServiceMagic survey, 75% of respondents said they'd made no direct contact with their neighbors about the issue; 18% said they confronted their neighbor, it created tension and the house still looked bad; 4% said their talk produced a satisfactory outcome all the way around and another 4% said the problem was fixed but it created lingering tension.

Neglected properties likely belong to one of two types of people: those physically or financially unable to keep up with the work and those who purposely buck social norms, said Tara-Nicholle Nelson, an Oakland, Calif., broker, author and creator of female-focused resource site Rethinkrealestate.com.

Knowing what you're dealing with is the key.

"In 'Black Belt' we talk about 'spying' on your opponent, true in martial arts and in any negotiation situation," said Lee. In some cases, the homeowner may have just fallen behind after taking on new responsibilities -- for example, a new job -- or facing unexpected health issues. Bringing your concern to their attention may do the trick. Stress that keeping up the condition of the neighborhood helps the value of all properties. Think: What's in it for us, not what's in it for me.

A group effort may pay off. Some local branches of the National Association of Realtors have created funds to help older or incapacitated homeowners keep up their exteriors. Getting other neighbors to collectively rally behind your cause may bear more fruit and may come across as neighborhood improvement projects, not the ranting of a picky neighbor.

Absentee owners -- say, if the property is rented out -- may require plenty of correspondence, so don't wait until right before you put your home on the market. If the out-of-town party is agreeable to changes, it may make sense for you to offer to secure contractors or other necessary laborers.

Ask for more than you think you're going to get, said Lee. Your fallback position, then, is that you will take care of making the fixes, either paying for them or doing the work yourself.

Unexpected sweat equity to resolve someone else's problem may seem more hassle than help, but that first impression is everything these days. Consider this: Lee admitted he once took a pass on a $750,000 listing just because the sellers refused to repaint their dog-scratched front door.

Call in the authorities

If personal negotiation stalls, or if hostile neighbors become threatening, residents sometimes can lean on municipal laws, administered through the building department, health department or similar entity, to get neighbors to clean up their act, said Neil Garfinkel, a Manhattan real-estate attorney with Abrams Garfinkel Margolis Bergson.

Some areas levy fines for keeping around piles of wood that attract animals, as one example. Municipal codes can make for interesting, if dense, reading. Nelson said that her home city of Oakland includes an anti-rooster ordinance on its books.

Asked about bringing in the authorities, some 20% in the ServiceMagic survey said they "snitched" on their neighbors, another 20% said they intended to bring in the authorities but hadn't yet, and 14% said someone else in the neighborhood beat them to it. The remainder said they just put up with the nearby eyesore.

Getting results can be frustrating. The government is most likely to act only when a property's condition risks public health. The process of resolving a complaint can be long and time-consuming, real-estate experts say.

Eye of the beholder

Kina Lane, principal in Sunshine Development Partners, which buys and sells property in Chicago, Wilmington, Del., and her own neighborhood of New York's Harlem, stressed that eyesores are subjective. Real estate, like any investment, carries risk and reward. Proximity to eyesores may present a buying opportunity to some and keep others from even getting out of the car.

Some buyers, like Lane, see a mix of fixer-uppers and ongoing projects as a fruitful challenge; others don't want daily construction noise over several months or years. Urban house-hunters might be more tolerant of a mix of building styles and conditions than suburban or rural buyers, she said.

Eyesores aren't restricted to homes, Lane said. The mix of nearby commercial properties may not fit everyone's sensibilities -- a liquor store at the end of the block, for instance. Other buyers may enjoy the proximity of retail stores.

Empty industrial or retail buildings can have a negative impact as well. A potential buyer is left wondering if an area is on the rise or on the decline. A seller setting a listing price must keep the entire feel of the neighborhood in mind, Lane said.

Sometimes the house down the street is in good condition but its purple facade and lawn sculptures don't speak to everyone's taste. Whether homes need to conform by city ordinance to a general architectural feel varies by area, so check the rules.

In this case, Lee said, expand beyond conventional marketing venues to go after potential buyers who would welcome living in an eclectic neighborhood. Post your listing in galleries and restaurants, in independent newspapers and on ad Web sites such as Craigslist.

Develop a buyer profile, Lee said, and then go after that buyer.

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