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