Home Buying in Oklahoma City>Question Details

Holly, Home Buyer in Oklahoma City, OK

Is buying the most expensive home in a neighborhood a bad idea?

Asked by Holly, Oklahoma City, OK Sun Nov 16, 2008

We are looking to build a home with Ideal Home builders in an Ideal Homes neighborhood Oklahoma City. The neighborhood we are looking at is established, new and in a prime area. We looked at all the floor and plans fell in love with a certain home that is about 1900 sq. ft. It is 3 bedrooms with a study and 2 bathrooms with all the upgrades for $175,000. The only problem is that we choose the second to largest home. The neighborhood homes start at $140,000. They are already beginning to build a new section of the neighborhood, most likely with higher price tags. The neighborhoods a mile around our chosen neighborhood are houses ranging from $100k to $300k. We also have looked in a million other locations at houses in our price range and have found nothing that compares to the house we want to build.

So... are we making a bad decision buying the second to most expensive house in the neighborhood?

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It depends on how long you think you are going to live there. If your occupation may call for you to relocated in 3 to 5 years - it is not a good idea. If you know, without a doubt, you will stay in your home for 7 to 10 years you are probably OK. Be careful about using other subdivisions for comparison. Just because homes a half mile away are selling for over $200K does not mean those same buyers will want to live in a subdivision with 5 or 6 home elevations. Ideal Homes can build a decent home. However, like many large builders they save money by keeping their home designs to a minimum so the framers and other trades can build them faster with fewer problems. If you are dealing directly with the builders representative PLEASE have someone review your contract (attorney) and an engineer review your plans. $175,000 for a 1900 sqft is $92 per sq/ft. Subtract the lot, which is at least worth $35,000, and that works out to $73 per sqft. The big question is how do the upgrades compare to other equally priced homes. How many other new (completed) homes priced between $165,000 and $185,000 have you looked at to compare trim, applicances, countertops, fixtrues, lighting etc? How is the lot? Is there more than10ft of land behind the home? There's a lot to understand when buying a home to be built.
1 vote Thank Flag Link Sun Nov 16, 2008
I work with a lot of buyers on this exact issue and her is my experience: I wouldn't buy the most expensive home in the neighborhood unless it was absolutely my dream home and I didn't care about the value because I didn't plan on selling it. (Although, all buyers should have an 'exit strategy' when making an investment this big just in case) When the 'castle' in the neighborhood is purchased it immediately appreciates the value of the neighbors properties. However, when the neighbors sell their properties it inadvertantly depreciates or drastically slows down the appreciation of the 'castle'. I've seen this scenerio many times and the 'castle' will always sell for less per square foot than the competition with less square footage in the subdivision. I would advise you to go in eyes wide open that you will not make huge gains in terms of appreciation and plan on it being a long term purchase.

Good luck,
Susan Walker
1 vote Thank Flag Link Mon Nov 17, 2008
Holly,
Ed & Terry did a good job of answering your question, but I have to ask, for what purpose are you buying the home?
If you plan on living in it a long time then you should be more than fine, especially if you are building the home for yourself, meaning adding upgrades that appeal to you.

Now if you plan on building this home as a starter home and know your growing family will need something larger, then you may want to take a second look at what you are doing and seek some professional advice to ensure you are not overspending on an item that may not give you the returns you want or need. Yes, I know.. here comes the "Realtor" pitch but its true. An experienced agent may be of assistance here, but that decision is for you to make.
So as you can see, it goes back to the original question.
With all my buyers, including commercial property buyers we need to do some real life planning sometimes to decide how and where we look and invest. I honestly believe all the good agents do this. This is putting your needs (the client) first then making decisions based upon those needs. Without this information the fact that your house is the second largest is moot. But assuming this house is the one that fits ALL your needs for the long term. The short rule of thumb is NEVER over-build. So don't be the mansion surrounded by shacks, if you ever plan to recoup your investment.
0 votes Thank Flag Link Mon Nov 17, 2008
I agree with Ed if you are going to live there 3-5 years...it probably is a borderline investment. If you plan on living there for 10+ years then you will be OK. It is always a good idea to get two or more opinions when buying a house. Buyers agent and a sellers agent. Another thing is how did you come up with the values of the other homes in the local area. Did you do a CMA? If the houses START at $140K in your new neighborhood, then you are probably OK...but, we don't know for sure without the particulars.
Happy Home Buying!!
0 votes Thank Flag Link Sun Nov 16, 2008
Work with buyers agent who can provide additional info. on your behalf. There could be new construction homes foreclosures with equity another option for you.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sun Nov 16, 2008
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