When looking for homes, you’re likely to be tempted to just buy the very best home a neighborhood has. Is it smart to do this? To buy the one home on the block that costs the most? The answer is no.
You’ve got to think ahead. Assume an example of you falling in love with the Picket Place, Garland, TX neighborhood’s masterpiece home. It could have anything and everything that you dream of, from marble and an incredible kitchen to a black-bottom pool and stunning brick work. You notice how much effort, money, and time the sellers put into this home. As such, it’s the obvious pearl in this community.
You’d want to snatch it up right away, yes? Before you sit down to sign documents, you need to look over the area comps. If you do that, you’ll notice some big differences in price. That should be a wake-up call, as your dream home is selling for a lot more than the comps. That’s a warning sign.
You’ll have two issues if you buy the priciest home on the street. The first will be appreciation, since the best home will eventually get dragged down by everything around it. If you ever tried to sell, buyers would look over the comps and just laugh at your asking price.
Secondly, you’ll be hemmed in. The potential for appreciation is quite limited, which is an issue if you decide to expand on or remodel the home. The value might not go up, and it could even cut into the actual equity.
Unless you’re able to predict property values going up accurately for the whole neighborhood, then it’s not smart to purchase the most costly home on the street. If you did that, then your dream home could turn into a nightmare really quick.