As the press goes on another witch hunt, this time after the rat infested KFC/TacoBell in New York City’s trendy Greenwich Village neighborhood, some want to know how something like this will affect property values. I was interviewed yesterday for a story today in the NY Sun by Jennifer Lee entitled Rats and Resale: Can Rodents Affect the Bottom Line. As far as rats and rodents go, I don’t particularly think that property values will be greatly affected by something like this. It’s been said that rats exponentially outnumber people in New York City and it hasn’t done much to property values thus far. Having said that, there are indeed some instances that I have personally experienced where a neighbor, either residential or commercial, has had some affect on a property owner’s bottom line. The beauty of this blog is that I get to elucidate upon that which was quoted in this article. So here goes:
- I once represented a seller of an apartment in a building shaped like a U. In the center of the U was a ventilation stack for the bistro that occupied the first floor. The smell of old grease permeated every apartment that faced that stack and made it incredibly difficult to find a buyer for the home. Most had no desire to live there and eventually when someone did show interest they used this ventilation stack as a bargaining chip to procure a reduction in price…it worked.
- Several years ago the press was going crazy reporting about "toxic dry cleaning chemicals" and the potential harm for those who lived in close proximity to dry cleaners. I actually remember having at least 1 or 2 people contact me to purchase apartments and specifically ask not to be shown properties above dry cleaning establishments. Quantifying the affect of this story is virtually if not totally impossible, but I suspect that it did thin the pool of buyers for these properties.
And it’s not just commercial tenant/neighbors who may affect value:
- Awful Smells: I once represented a seller who had an elderly neighbor with multiple cats. The woman had hospice care so it was very difficult for her to keep her home clean and odor free from the cats. The smell of urine was so strong that we never found a buyer (in perhaps the hottest real estate market in NY history) for the apartment and the owners are still living there.
- Bizarre Tenants: When I first started in the business in 1992, my boss at the time shared that he walked into an apartment with a customer and the tenants were barbecuing monkey (no joke…monkey) on a grill in the living room! Black smoke was bellowing upwards, across the ceiling and out an open window. The pungent, sour smell brought tears to your eyes. Needless to say, the buyers weren’t interested and the property didn’t sell until these tenants were gone.
- Loud Noises: Barking dogs can be obstacles too. I finally sold a property just recently which had an "anxious" barking dog next door. EVERY time I showed the apartment, the dog barked incessantly. Most prospective purchasers were greatly turned off by this.
So what can a seller do when faced with any of these issues? In the case of proximity to dry cleaners or restaurant ventilation systems, not much. Just hope that you find a buyer like yourself who isn’t concerned with these neighbors. As far as residential neighbors like those mentioned above:
- Offer a cleaning service: I only thought of this now but it would have made a lot of sense to offer the elderly woman with the cats a professional cleaning service on a weekly basis to help sell the neighboring apartment. A small expense that could pay big dividends…or in this case…any dividends.
- Communicate with your neighbors: In the case of the cooking monkey, my bet is that the owner of the apartment would not have approved of this had s/he known that the tenants were grilling in the living room. In other instances, simply keeping your neighbors informed of showings and open house schedules may do the trick.
What should a buyer do to protect themselves from situations like this? Ask questions…lots of questions of your attorney and the seller’s agent. Make sure that your attorney is effective and thorough with due diligence. Things like odors, rodent or insect problems, and problematic neighbors may in fact be recorded in the Board’s minutes…a MUST read!
Finally, I want to be abundantly clear that I don’t believe that the rats at KFC/Taco Bell are going to ultimately affect the price of property in the surrounding areas. That said, I wouldn’t put my home on the market until this all blows over and don’t be surprised if a buyer makes an attempt at leveraging the "rat news" in an attempt to get a price reduction. If your apartment is already on the market, no worries as this too shall pass.