What to Know Before Buying the Best Home on the Block

If you’re an avid watcher of home renovation and real estate reality shows, then you’ve probably seen the potential benefits of buying the worst house in the best neighborhood. Put in some money and a bit of sweat equity and you could be sitting on a pretty solid investment. But, what happens if you fall in love with the best house in your desired location? Is it a huge score or bad financial move?

Let’s examine the pros and cons of buying the nicest — and possibly most expensive — home in the neighborhood.

 

The Drawbacks
When house hunting, many buyers forget that they’ll likely sell their new home at some point down the road. But, when we’re talking about an investment as large as a house, it’s important to consider future resale. 

In most cases, a property’s value will increase over time, which is known as the appreciation rate. However, with the best house in the neighborhood, the rate of increase will likely be much slower than it would be with other homes in the area.

REALTOR^® Missy Lord with RE/MAX Real Estate Professionals says to also consider that when you own the nicest, most expensive home in a neighborhood, you won’t have other homes to boost your value.

“When you buy a low or mid-range house, you’ll typically see an increase in value when a higher value property in the neighborhood sells,” she said. “But, when you already own the highest-value home, you’ll be helping your neighbors’ value, but they won’t be able to do much for yours.”

As we mentioned earlier, a home is an investment. As a homeowner, you’ll ideally be adding to and improving your home in the hopes of building equity and seeing a decent payoff when it’s time to sell. However, with the best house in the neighborhood, it’s difficult to increase equity.

 “Know that your pool of buyers will be smaller, and it may take a bit longer to sell,” said Lord. “Remember, people looking at your home will be receiving the same advice and analyzing the same pros and cons you are, and some of them may think the negatives outweigh the positives.”

 

The Benefits
So, what are the pros of buying the best house on the block? Well, sometimes buyers simply want what they want. If the best house in the neighborhood checks all the boxes, and if you can justify it financially, then it may be the right move for you.

“Sometimes a property has certain amenities or specific features that are hard to find in other homes” said Lord. “If it fits the buyers’ needs and they plan on staying in it for the next several years, it may be the right decision for them.”

Buying a home is a stressful and expensive decision, and it’s important to have a strong understanding of what you’re getting into. That’s why it’s critical for buyers to partner with a local, professional REALTOR^® to get sound advice and have all their questions answered.

For instance, when Lord has a client who is considering the best house in a neighborhood, she always turns the tables, taking them through a home that may not be as nice, but is in an even more desirable neighborhood. Sometimes seeing the distinction makes them reconsider their decision, but she also has clients who just can’t stop thinking about that “best” house, which she says is perfectly fine as long as they have all the information.

“Our job as REALTORS^® is to show our clients the options and make sure they understand the pros and cons,” said Lord. “In the end, I not only want my buyers to feel confident that they’ve made a good financial decision, but I also want them to choose a home that works well for them and one they’ll be happy in for years to come.”

For a listing of local professionals who can guide you through your next real estate transaction, visit the Greater Lansing Association of REALTORS^® website at www.lansing-realestate.com.