Home Buyers: Should You Buy the Best House on the Block?
No home buyers set out to purchase a terrible home, unless they are looking to flip or really love to renovate. Most homeowners want a house they can move into quickly and be comfortable without doing a lot of repairs or projects.
A home that is dressed to the nines can be tempting. But watch out, if that house is the best in the neighborhood it may be the worst investment home buyers can make.
Resale Value
Unless home buyers plan on forcing their children to take over their home, they are likely going to sell a house at some point to retire. Buying a house that is worth more than any other house in the neighborhood is setting that sale up for failure. While someone might happen along that is willing to purchase a house that is overvalued for the neighborhood, it is unlikely.
There is also no way to increase the value without making the house completely out of the range for the neighborhood. There are few people that want to be surrounded by houses that have half the value of their own, especially if the neighborhood is not the best.
The more renovations or improvements done on a house that is already the best in the neighborhood will be overkill.
Ability to Improve and Personalize
Looking for a house that may not be perfect but is in a good neighborhood, with similarly valued houses, is going to leave more room for change. This type of house is going to increase in price at a reasonable level and leave the home buyers with the ability to sell for more than they bought the house for.
In fact, many people suggest looking at “ugly” houses in a great neighborhood. These houses are typically overlooked by home buyers because they want a nice house to go along with the nice neighborhood.
If a homeowner is willing to put the work in, the house can greatly increase in value. Plus, it allows someone to move into a neighborhood even though they cannot afford a completely renovated house.
Neighborhoods Change (But Sometimes They Don’t)
There are some people who have purchased a great house in a terrible neighborhood and eventually the rest of the houses were renovated and brought up to the same quality as their own. While this turned out to be a good investment, it is very dangerous to rely on this idea. It is not common for an entire neighborhood to raise its value.
It is much more likely that the house will remain the best house in the neighborhood and the other homes will remain in the condition that they are in. The housing market fluctuates and changes frequently, but it is likely that the investment will spell trouble for the homeowner. It could cost them money when trying to resell the property or they may be unable to sell at all.
As tempting as a beautiful house it, it is always important to consider where the house is located. A house in poor condition can always be renovated and repaired, but a neighborhood cannot be easily changed. Picking a house in a neighborhood that will make the homeowners happy and give them the opportunity to sell the house later is the much smarter choice.