Foreclosures Affect Your Property, Too

MYFOXNY.COM - Foreclosures can be devastating for families and for the economy. But if your neighbor's home is in foreclosure, beware, because it could affect you too. That's what Virginia Miller of Long Island says is happening to her.

"As you can see it is absolutely gorgeous block, it is one of the high ends of Manoverville," she says, showing Fox 5 her neighborhood.

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So that is why she is worried that her neighbor's house is in foreclosure. She says before her neighbor left, he took down a fence that borders her property and secured her built-in swimming pool.

"I don't know if the previous owner owned half of the fence or didn't own half of the fence, but it was sitting on my property line," she says.

Now she is waiting for the installation of a new fence, which will cost her $2,000. In the meantime, she put up a temporary orange fence to keep out the kids in the neighborhood.

"He is also stripping everything over there and dumping garbage all over the place, which makes quite a mess for the rest of us to live," she says.

Miller believes that her neighbor's money trouble will also affect her in the pocketbook: "until somebody moves in and refurbishes that house from top to bottom, it is going to bring down the value of everybody's property on the block."

Miller could be right according to a recent study done at the University of Connecticut.

The study found that homeowners who lived within 300 feet of a foreclosed residential property experienced a 1.3 percent drop in home value.

"It absolutely affects the neighborhood, you have the values of homes negatively impacted," says Helena Lobo-Zagroski, a real estate agent for Prominent Properties Sotheby's International Realty. She says that foreclosures are not just hitting homeowners, but people who live in condos and co-ops.

"If your neighbor is in financial distress and he is not paying his mortgage, he's not paying his maintenance and taxes as well," Lobo-Zagroski says. "So someone has to make up the difference of the lost maintenance. So that will be pro-rated over to the other owners in the building. It will impact everyone in that particular building."

Lobo-Zagroski says that besides impacting your maintenance fees, if foreclosed properties have sold in your building for below market value, it could also affect your unit's appraisal.