Bad Neighbor!

As the mortgage mess continues, with more foreclosures expected in 2008, another factor — while usually not nearly as dramatic and tragic as losing one's home, but one that affects a homeowner's wallet nonetheless — is living either next door to bad neighbors or within very close proximity to them.

Bad neighbors are like perpetual doses of bad karma because their rotten habits — which may range from being noisy and nasty in attitude to sloppy and seedy in home upkeep — can bring bad luck in the form of lower property values for good neighbors.

Not only is living next door to irresponsible, impossible people irritating, it can be costly for homeowners who maintain their houses in the hope of one day selling for considerably more than they paid. And sometimes there is either no sale at all or one that comes much later than anticipated.

"It's a very tough situation for the good neighbor. I had a case just like that in Bensalem, where the house across the street from a listing I had was a complete wreck that needed paint and a whole lot of fixing up, but the people there didn't respond to requests to fix it up from the people trying to sell their house, and they didn't respond to township officials," explained Joan Goldstein, associate broker at Coldwell Banker Hearthside, Southampton.

"In the end, after trying to sell the house for a year, I lost the listing, so it cost the good neighbor money, and it cost me a potential commission. The bottom line is that you can't force someone to be a better neighbor, and there isn't a whole lot that can be done legally when someone's house is a mess."

Forrest Huffman, Ph.D., professor of real estate and finance at Temple University Fox School of Business, noted that bad neighbors are recognized as a nuisance legally.

"The issue of bad neighbors is well-documented in nuisance law, zoning codes and deed restrictions, to some extent, but there is little research evidence from academia that I know about," he said.

Aside from legislative recognition of the existence of bad neighbors, are there other steps the good neighbor can take?

"A homeowner may be able to screen out some obvious problems by using fencing and so on. And it may be possible to report enforceable infractions by neighbors," he said. "However, at some point, the seller must account for any negatives associated with neighboring property by adjusting the listing price to reflect what economists call the 'negative externality.'

"Keep in mind, sellers are under a legal obligation to disclose relevant information regarding the property, so one must be careful in attempting to minimize or ignore the problem when negotiating with buyers. Furthermore, the potential for significant price appreciation, such as has occurred from about 2001 to 2005, can allow potential buyers to accept higher listing prices.

"But, in the current declining market, buyers will be less inclined to accept such listing prices. As a result, there is a greater likelihood that a seller, with a bad neighbor problem, will be forced to lower the listing price due to the problem," stated Huffman.

Foreclosures, he continued, can present significant problems for responsible homeowners, who are or may be selling, particularly when foreclosed-upon owners simply walk away from their properties.

There have been reports, he said, of neighbors of such owners going to the empty houses to cut the grass and fix up the abandoned properties in the effort to minimize the impact these properties may have on the neighborhood and housing values.

"As foreclosures continue, the problem will become more prevalent," predicted Huffman.

Condominium expert Harvey Sklaroff of Harvey Sklaroff Real Estate in Penn Valley, offered some simple advice on the issue.

He said that "neighbors who behave badly or don't take care of their properties call into question quality of life issues that can happen anywhere to anyone, including to people who live in single homes, townhomes and condos."

While buying any home is basically a case of buyer beware, in terms of asking questions about the property, at least, he added, there are some things nice neighbors can do to try to iron out problems that can affect people's peace of mind and, likely, but not always, lower property values and affect the selling price.

"It's up to the buyer to investigate the property and what it would be like to live in the setting in question, but neighbors faced with quality-of-life problems should first try a phone call or knock on the door of the offending party before going to the authorities. These simple steps can work to keep things from getting out of hand," said Sklaroff.

Addressing the Situation
In condos, residents troubled by unruly neighbors — who live just above and just below — have recourse through the condo association and its rules of order.

Anne Rubin, associate broker at Century 21 in Elkins Park, recalled that in her nearly 20 years in real estate, she has dealt with the issue of problem neighbors "not often — but, definitely, often enough."

"Most people are reasonable about being so-called 'bad neighbors,' and will try to do something to correct the problems they've created. But bad neighbors do exist, and sometimes present conditions that can affect the value of homes for sale by people living next door or across the street," she said.

Aside from talking first to bad neighbors and trying to appeal directly to their sense of reason in terms of liability, Rubin said, sellers can go to local authorities for redress through departments of licenses and inspections, in addition to code enforcement.

"It depends on the severity of the problem," she acknowledged honestly, "but often, the offense amounts simply to a nuisance, and so there isn't much that can be done legally."



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