Other buyers select a small home and, when they outgrow it, they add on or remodel it so it becomes bigger and better than other homes in the neighborhood. When they decide to sell, they find that their home won’t appraise for as much as they value it, and they won’t be able to recover the money they have put into it. In real estate lingo, that’s called a white elephant.
As a prospective home buyer, it’s tempting to sink your money into one of these white elephant deals. It appears you’re getting a bigger home or one with more amenities for a good price. However, when you decide to sell, you may find it takes longer and requires deep discounts to move it.
On the whole, it’s better to sell a home you’ve outgrown and buy a larger one in a neighborhood that will support the square footage you need. It’s interesting to note that, when asked why they overimproved for the neighborhood, owners often say that they intended to live in the home forever, so it didn’t matter.
Then, however, a job loss, relocation, divorce, or similar problem forced them to sell—and ‘‘forever’’ suddenly became the present. Americans are a mobile society, and according to the National Association of Realtors, the average length of time people stay in a home is slightly over six years although that will probably change as the current home buying and selling economy plays out and owners stay put longer.
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