As one of the few Windsor Ontario real estate agents who have worked in the industry for over 25 years, I have seen housing trends come and go. Ten years ago, home buyers wanted the biggest house on the block. Of course, times were different then as real estate was booming and the recession was still a few years away. However, for many of those that bought those big homes, they have discovered they are difficult to sell when times get tough. That is why, bigger is not always better.
There’s an old rule in the real estate business: don’t buy the biggest and best house on the block. Look at it this way, if you buy a mini-mansion on a street of smaller homes, the house will only appreciate so much. In other words, your home will only go up in value as much as the homes on your block. So if you are living in a house that you paid $400,000 yet it is surrounded by homes half the price, your appreciation is going to be limited. Not only that, but larger homes located among smaller homes often take longer to sell. The majority of buyers don’t want to buy a home where the value isn’t there. Even if you have made every improvement and your home is a showpiece, it won’t increase the price because the comps determine the price. Remember, your house is only worth what a buyer will pay for it – not what you think.
Another rule in real estate: buy the worst house on the block. This is actually very good advice for a number of reasons:
1. It can allow you to get into a neighbourhood you couldn’t otherwise afford. If you have had your eye on a particular area yet the homes have been outside of your budget, then finding a home that needs work but in a highly desirable location can be a win-win. You can make updates and improvements gradually while realizing that the appreciation of your home will go up.
2. Homes in sought after areas often sell quickly.
3. The worst home on the block per square foot always trades more than the biggest house.
But remember: if you buy the worst home on the block, don’t upgrade and expand to make it the biggest home on the block because then you are faced with the problem mentioned above. You simply won’t get the cost of your upgrades back. For sellers, nothing is more frustrating than watching their expanded dream McMansion sit on the market or receive low ball offers while other smaller, not as nice homes, go quickly.
Remember this before buying a large home: how long could you keep it if you lost your income? Could you maintain the landscaping, home repairs, taxes, insurance and other maintenance issues? These are what more and more buyers today are considering when looking at larger homes. The up and downs of the real estate industry in the past ten years have made many buyers leery of over extending themselves. Which is why many sellers are sitting on their big homes right now and taking huge losses.
Again, when buying a home you must consider the surrounding homes, the schools (even if you don’t have children you want to buy a home in a good school district) and the overall area. Is the neighbourhood prone to crime? Is it close to shopping, businesses and entertainment? Too often I have seen clients with their “must have” list of everything they want in a home only to throw it out the window when they see a property that has all the bells and whistles yet in an area that is not so great. So keep in mind that location is critical and don’t forget to pay attention to the comps.
Don’t pay top dollar for a home just because it’s the biggest and best on the block and you will be the envy of everyone everywhere. Again, don’t ignore the comps. If your home appraisal comes in lower, then your bank won’t proceed with the loan unless you come up with the difference in cash or the seller lowers the price.
If you are looking for a home this fall, contact our office by calling or dropping us an email. We would love to find you the perfect home for your needs and lifestyle. Our goal is always to find you the best home for the best value.