What are the Pros and Cons of buying the highest priced home in the neighbourhood?
The Pros are pretty easy to identify with. You don’t want to compromise, you want the perfect home, the home as certain features you can’t find elsewhere in the neighbourhood and usually the biggest reason is to show off your accomplishments both personally and professionally. These are all valid reasons and if these are important to you than find that best home in the neighbourhood.
However, you should realize that there are some drawbacks to the highest priced home in the neighbourhood.
- The value of the home will not increase like other homes in the neighbourhood. You are always pushing the ceiling for price in the neighbourhood no matter what upgrades you do your return will always be less.
- The progression/regression principle. A lower priced home will be positively influenced by the value of the majority of homes in the neighbourhood. The opposite is true with homes that are the highest priced. They will be negatively influenced by the majority of homes that are similarly priced.
- You will struggle to find a buyer as they will be attracted to neighbourhoods that have similar homes to yours.
A Realtor can quickly determine the appropriate value of a home using a Competitive Market Analysis (CMA). The factors above will be identified by the Realtor and he/she will try to determine the impact on the probable market price. Call me for a free CMA on your home!