I don't think that the square footage has affected the value of your home. When a property sells the appraiser has to use comparable sales and listing to come up with the value. Square footage is one of the main factors that is used. Adjustments can be made for square footage. If the add ons where made to the home without building permits then the auditors site has no record of them. the main thing that has affected a drop in price is the amount of foreclosures in the area. If a property sells under market value and is in the neighborhood and is used as a comparable it is going to bring your property value down.

Don Tepper from Solutions 3D here in Fairfax, Virginia. The other advice below is good. Consider the options if you do report it. First, the bank isn't going to spend a dime trying to get any of the non-permitted additions approved. So your city might condemn the property. Or take steps to make sure that the current (or future) purchaser either get the addition approved or remove it. So, now you'll be living next to a foreclosed, condemned house. Kind of like going from the frying pan to the fire.

And Curt makes an excellent point: Unless you're trying to sell or refinance, the value of your home is academic.

One tip if you are trying to sell your home. Make sure that not only does your home show well, but that the house next door looks good, too. Few people would want to buy your home if the next door one has overgrown grass and weeds, old newspapers on the front porch, a wheelbarrow of supplies on the side of the house, etc. So, when you're mowing your lawn, mow that one, too. Make sure that house doesn't look abandoned and in disrepair. Go out to a home supply or garden center and buy some Impatiens--bright, colorful flowers. Put some in front of your house...and some in front of the house next door. Just keep them watered and they'll do fine. It's a bit of effort, but well worth it.

Good luck.

HiBryan! Terry Ballantyne here from Indigo Beach Properties.
Are you trying to sell your home currently or thinking about selling? Was your appraisal for a potential
refnance or line of credit? I would have a conversation with the bank officer or home loan department
to ask how they factor disclosures into the mix. Credit is so very tight right now and some banks suffered more than others and have over reacted. A conversation cannot hurt. Does your home compare favorably to the foreclosed property? Were they in the middle of a remodel when they lost the home? Is there evidence of the distress? If you want to sell your home, and it compares better, the neighbor is not the only comparable that a buyer will consider. And the neighbor is not a comp until it sells and is recorded. It appears that every neighborhood is suffering from one distressed seller, but this will pass and the market will adapt back.. If you are not selling, sit tight and keep up your maintenance. Just like the stock market, homes go through valuation changes, but over the long term, which favors real estate, the value rises. In the meantime, your home is delivering a dividend every month in that you live it in. I hope your goals are realized! Thanks for checking Trulia.

Bryan, Curt Abramson from Bailey Properties in Santa Cruz here. I can understand why having a bank owned property next door can be distressing. It's vacant, probably not in the best condition, and its presence will tend to set a ceiling on what you can ask for your home, if you are thinking about selling right now. But there are some things to keep in mind: One, until the home sells, an appraiser won't use it as a comparable sale for your home; Two, appraisers are not going to base their valuation on the Realtor's estimate of square footage - they will check the county records; and lastly, unless you are selling or trying to refinance, the current value of your home is academic.

I checked the county assessor's records for the home next door to yours, and it is listed as 2605 square feet there. That doesn't mean the expansion was permitted, but the buyer will need to verify that for themselves. The agent is relying on that for the listing info.

If you are getting ready to sell, then the most important thing you can do is to make sure you have prepared your home well in order to differentiate it from the one next door. Consult an experienced local broker for advice on how to maximize your sales price and terms, and how to market it to get those. If you aren't planning to sell, just ride it out. The new owner of the home next door will probably be fixing it up and trying to increase their new home's value, and that will only benefit you. Good Luck!