Everybody wants to be the best dressed-up person in the party. Everybody wants to have the best car among all the friends. So, is buying a house any different? Don’t we want the best house in the neighbourhood? We would certainly want. We want the neighbours to feel envy every time they pass by our home. More importantly, we should be able to introduce our house to our friends with pride as it is the best among houses as far as they can see.
It sounds intimidating but probably the worst idea that anyone can have. From the future point of view, buying the worst house in the neighbourhood is justified but never the best house. Let us see why it is so.
1. Future price is dependent on the location
The house may be the best in the area but the area matters the most. A house in the bad locality never sells for the good money. One can improve a bad house in the prime locality but a bad locality cannot be improved after buying the best house in it. When the property appreciates, it goes up with respect to the location. The location with the upcoming Govt. projects, where the infrastructure is going to improve, and with all the basic amenities nearby, gets a high appreciation over a duration of time as compared to the other locations. So, one should always eye at the location rather than the house at that location for future perspective.
2. Resale value is unaffected by the upgrades
Renovations in the house help the owner to earn a few extra money. Think again! This is not in the case of the best house in the neighbourhood. The price of the house is already much and any new upgrade would just be useless. When compared to the other houses in the same locality, the upgrades just appear as the luxury and most of the home seekers in India are interested in affordability. Never upgrade a house when the neighbouring houses aren’t a match.
3. Neighbourhood appreciation affects house price
The other houses in the neighbourhood affect the selling proposition of the best house. One does not buy a house, he buys the neighbourhood. If the neighbouring houses are not managed well; if the owner feels uncomfortable in coming to the balcony due to rotted plants in the front yard of the neighbours, why would he buy the house in the first place? We are not implying that the small houses are bad or a sore to the eye as compared to the big luxurious villas, we are saying that the luxury is always comparative and in the case of buying a house, the neighbouring view matters equally.
4. The house would always be overpriced
Being the best house in the neighbourhood, there would be no other house with which the price can be compared. When the potential buyers visit, they would always be hesitant to spend that much money when the next house is available at just the half price. Many homeowners are compelled to sell their property at the cheaper prices otherwise, it gets converted to a distressed property and gets sold at even lesser properties after years of waiting.
5. When the market goes down, the loss is maximum
The best house would also mean the best price. If someone is buying the most expensive house thinking it would yield even better profit in the future, that would be a hoax hope only. If the market goes down, there would be negative cash flow and that would mean the maximum loss too.
So before buying the house or 2 BHK flats in Jaipur, one should be looking at the long-term benefits. A buyer becomes a seller after a considerate period of time and if the buying is not done keeping the future options open, selling becomes tough. See the location, neighbourhood, and the scope of appreciation of the property.