Impact Of A Bad Listing In Your Neighborhood

Impact Of A Bad Listing In Your Neighborhood

  • 11/7/16
Question: My husband and I own a townhome in a small but popular community.  There is one unit that has been on the market for a few months because it was a rental for many years, is in very bad shape, and frankly, overpriced.  How can the performance (or lack thereof) of this property impact our ability to sell our unit, which is in great condition and move-in ready?  Should we try to sell ours sooner rather than later to avoid a low-end comp in the neighborhood or will other agents understand this is not a true “comp” for our unit?

Answer: This question may seem specific at first, but it applies to many communities in Arlington across all types of housing — condos, townhomes and single family homes — that are similar in size, design, floor plan and value. It’s a fairly common question I get from owners considering a sale and concerned about a problematic listing in their neighborhood.


  • Your home is comparable to the problem home
  • Most/All of the homes in your neighborhood are comparable
  • It’s clear the other home isn’t in great condition when you look at the pictures online and when you see it in person
  • Your home is clearly a notch above, will show better, and will photograph better than the problem home
  • There are not any other similar listings in your neighborhood

List Soon For Higher Sale Price

Chances are that interested buyers will look at both homes and your neighbor’s poorly maintained home will make yours look even better (increased relative value). You can use your neighbor’s overpriced home to your advantage by pricing yours slightly above market value and leveraging the fact that your home is a bargain compared to the neighborhood competition. So by listing now, while the other property is on the market, you have an opportunity to command an above-market sale price.

Impact Of A Bad Comp

Your question about the impact a lower comp can have (if you decide to wait) is relevant, but the impact will be limited as long as it’s clear in the listing photos and sales data (high days on market) that there’s a significant difference between the homes. As long as there are some other sales in the neighborhood of homes more representative of yours, I wouldn’t worry too much about it from a sales standpoint.

One area where the impact could be felt is on the appraisal. If the problem home sells for significantly below the market value for homes in your neighborhood and is one of the only sales in the last 6 months, most appraisers will factor this into their assessment. Any time a home is purchased with financing, the bank requires an appraised value at or above the sale price, and low appraisals can cause problems. However, a good listing agent understands how to manage the appraisal process and help guide the assessed value in the right direction, which should be fairly simple in your case.

What’s the takeaway here? In many cases, it can work in your favor to list your home in direct competition to a similar, but worse home in your neighborhood because it improves the relative value of your home. One scenario I recommend being careful of is competing against a poorly maintained home that is priced significantly under market value because buyers might get estimates from a contractor on the cost of updating the cheap home and end up making your home look overpriced, even if it’s not.

Have a question about local real estate? Don’t be shy! Send me an email at [email protected] or tweet me @EliJTucker with your question and I’ll answer it in a future column.


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