When it comes to selecting the right home in a neighborhood, many homebuyers have been advised by real estate professionals to steer clear of the largest or most expensive priced house in a community. This home buying concept is rooted in the belief lower priced, smaller square footage homes will drive down the resale price of a larger home. Subsequently, when you decide to relocate or dispose of the property, you’ll receive less profit. When you carefully consider this theory, you’ll see it doesn’t appear logical.
Let’s say the smaller home appreciates at a rate of 6% per year, and the bigger home appreciates at a rate of only 2%. With the passing of time, the smaller home would have a higher resale price than the larger home-which of course wouldn’t happen. Implementing the rules of compound interest, we find this assumption to be untrue, just like the claim the nicest communities always appreciate faster.
You would have a difficult time locating a scenario where a smaller property had a higher resale value than a larger property in the same area. If you’re contemplating the purchase of a larger home surrounded by smaller neighboring homes, your decision should be based on whether the home suits your needs, objectives, and is priced correctly relative to the smaller homes. If you have the opportunity to pick up the property at a bargain price for not much more than a smaller home, it may be a great deal. But if the market price is unreasonably high, you might want to keep looking.
The next time you come across the largest home in a neighborhood, spend some time researching to see if it’s a good buy. You might be surprised at what you discover.
You should also take note of the property’s square footage and attributes and compare them against your needs and dreams. If your family has a lot of members or you need extra space for a home office or just want the luxury of a bigger home, selecting the largest property in a neighborhood of smaller square footage homes by satisfy your lifestyle needs and conserve your money.
Think about the potential options you have with all that extra room. What features have you always wanted in a home but never had the extra room for? Have you ever dreamed about setting up your own art library at home or a home gym or an arts and crafts area? Would you be able to rent a portion of the house to roommates for extra income or convert part of it into an in-law suite?
As you shop the local real estate market, take the time to view the largest homes in a community of smaller homes and analyze each one for its money making potential
