Real estate experts for once will all agree without exception: even if it’s the mansion of your dreams, the best house on the block might not leave you in the best position!
Here are reasons why you never buy the best house in the neighborhood:
To buy the best house in the neighborhood will mean your value will increase at a snail’s pace
All things being equal, the value of your property will increase.
Compared to the worst house in the neighborhood, the increase in the value of the best house will be a rather slow one.
This is because every improvement in the worst house will add value immediately.
However, the home improvements you will make in the best house have no power to affect drastic increases in value!
For example, you might find the worst house on the block increasing in value by as much as 20-30%.
In the same period, the best house might increase by not even 5%.
Also, if your house is in the mid-range, sales on the same block of a higher value will boost your property value.
If your house value is at the top of the pile, there will, of course, be no higher sales in the area.
So, unfortunately, no benefit to your house value!
Reason #2 – To buy the best house in the neighborhood will prove quite the tough resale one day
Sure, you might think you are moving in for life right now!
But many buyers don’t realize that there may be major changes to your circumstances.
For example, there may be a career change that requires relocation; a sudden change in family situation (i.e. divorce) or financial troubles.
Those kinds of changes are exactly the ones which result in the (unexpected) need to sell.
If yours is the best house in the neighborhood, there are many reasons why it may be difficult to resell.
For one, there is the value issue described above.
For another, the majority of the market tends to buy in the mid-range of the desired area.
This means that there will be a smaller pool of buyers looking at the top house on the market in that particular area.
Is the house surrounded by unattractive properties?
You better hope not, because, even if the house itself is quite the looker, you will battle to sell it if it’s surrounded by eyesores!
Reason #3 – To buy the best house in the neighborhood won’t affect whether the overall area will improve (or not)Nobody has a crystal ball – at least not one that can actually predict the future.
You might think that the neighborhood is up-and-coming.
And you’ve clearly placed your bet with the action to buy the best house in the neighborhood!
However, buying the best house is still a major gamble.
There is always a chance that the market will stagnate or even decline!
You thought there would be an improvement, but instead, you are now stuck at the top in a neighborhood where prices are sliding every quarter.
Considering the points above: what is a better course of action?
Take a look at what you might be able to afford in a better neighborhood at the same price.
You could even go lower in price!
Immediately invest the balance into some home improvements.
Doing so will increase your equity right away!
Just don’t keep improving your home until it’s the best in your new neighborhood!