If you’re searching for a new home, you may want more than just a comfortable place for your family to live. You may also want to impress your relatives and friends. If you come across a house for sale that is the biggest in the neighborhood, you may be tempted to snatch it up, but that could be a mistake.
Potential Effects on Property Values
Houses appreciate, or gain value, when their owners build additions or make home improvements. If you buy a house that’s already larger than the others around it and has already been updated with modern amenities, there won’t be much you can do to increase its value. Your neighbors, on the other hand, will be able to make upgrades that may significantly increase their home values.
According to the principle of progression, less expensive houses gain value if they are surrounded by more expensive homes. Under the principle of regression, an expensive house can see a decline in value if it’s surrounded by cheaper homes. That means that if you buy the largest and most expensive house on the block, it likely won’t gain value, and it may actually lose value over time.
Possible Difficulty Selling
If you buy the biggest and costliest house in the neighborhood, you may struggle to sell it down the road. Homebuyers generally look for properties somewhere around the median price. That may be all they can afford, or they may plan to buy a house at a relatively low price, make some improvements to increase its value and then earn a profit when they eventually sell it. The largest and most expensive house in the neighborhood won’t appeal to many buyers.
The characteristics of the city and neighborhood can also influence whether prospective buyers will be interested in buying a house. If you own the largest and most impressive home in the neighborhood, but your neighbors have small properties that they don’t do a good job of maintaining, or if the city does not have quality schools and other amenities that buyers consider important, you may struggle to sell your house.
It may take several months to find a buyer and you may have to lower your asking price. That may be problematic if you lose your job and need to sell the house quickly. If you’re stuck in a house you can’t afford, you may have to sell it at a loss or go into foreclosure.
Is This the Right House for You?
If the largest house in the neighborhood has specific features that are important to you and that you can’t find anywhere else, it may make sense for you to buy it. Just understand how owning the biggest house in the area may impact its value and your ability to sell it down the road. Discuss the pros and cons with your real estate agent.