| When looking at homes, one is tempted to buy | | | | to be dragged down by the structures around |
| the best home in a neighborhood. Should you | | | | it. If you take a $900,000 home from a |
| buy the most expensive home on the block? | | | | private community and put it on a block of |
| No. Think Long-TermAssume you fall in love | | | | $250,000 track homes, the $900,000 value is |
| with the masterpiece home in a particular | | | | going to come down a lot because the |
| neighborhood. It has everything you could | | | | neighborhood will not support it. When you |
| dream of: black bottom pool, marble, an | | | | eventually sell, buyers are going to look at |
| incredible kitchen, top of the line windows, | | | | the comps in the neighborhood and laugh at a |
| stunning brick work and so on. The sellers | | | | $900,000 asking price. The second problem is |
| obviously put a lot of time, effort and money | | | | "hemming." Since you own the most expensive |
| into the home. Accordingly, it stands out as | | | | house in the neighborhood, your appreciation |
| the pearl on the block. Why wouldn't you want | | | | potential is already limited. This becomes a |
| to snap it up immediately?Before you start | | | | bigger problem if you want to remodel or add |
| signing documents, take a look at the sales | | | | on to the home. |
| prices of comparable homes, "comps", in the | | | | |
| neighborhood. | | | | Taking such action would typically add to the |
| | | | value of a home. With the most expensive |
| If you compare the comp prices to the dream | | | | home, not only will it not add value, it may |
| home, you should notice a pretty significant | | | | cut into your equity. Why? If you do a |
| price difference. This difference should act | | | | $50,000 remodel, you may see a $10,000 gain |
| as a metaphorical slap in the face or pouring | | | | for your $50,000 cost. You just lost $40,000. |
| of cold water over your head. The dream home | | | | Dream or NightmareUnless you can accurately |
| is undoubtedly selling for a price range far | | | | predict an increase in valuations for an |
| beyond the comps. Warning lights should be | | | | entire neighborhood, you shouldn't buy the |
| going off at this point. You are going to | | | | most expensive home on the block. |
| have a problem if you give into temptation | | | | |
| and purchase the most expensive home on the | | | | If you do, the dream home could quickly turn |
| block. In fact, you are going to have two | | | | into a nightmare. Raynor James is with |
| problems. | | | | FSBOAmerica.org - a FSBO homes for sale by |
| | | | owner site. Visit our "Sell My Home" page to |
| The first problem is the appreciation of the | | | | list your FSBO Home or visit our home buying |
| value of the home. The appreciation on the | | | | page to see homes for sale. |
| best home in a neighborhood is always going | | | | |