Should You Buy The Worst House in the Best Neighborhood?

By Ramsey Judah

worst house in best neighborhood

Statistically, no. But it also depends on what you do with it. The worst house on the block is the worst house for a reason. The myth is that all the other amazing homes will propel the worst home’s value upwards. The value that the worst home will get is that it is in a great neighborhood, not due to the homes next to it.

When calculating your home’s value, a realtor has to compare apples to apples. The realtor cannot take your home and price it according to homes that are bigger than yours, have more rooms, more bathrooms or have different construction styles.

So your home will have to be compared to homes similar to yours, which means that its value will be derived from homes outside of that amazing neighborhood. Statistically speaking as well, it’s value will be a difference of a few percentage points at most, if any.

But what you do with the worst house in the best neighborhood could make all the difference. I have a client who bought a poorly kept tri-level everyone in the neighborhood hated because it was such an eye sore. My client was also an experienced real estate investor who then renovated the house and after a few weeks, the neighborhood no longer had a “worst house” and my client made a great return.

This does not necessarily mean that only investors should purchase the worst house. But a buyer who would really consider this purchase must understand that work will have to be done in order to make the worst house just another house in the neighborhood. That is how you will maximize your return on this purchase.

Ramsey Judah is a real estate broker and can be reached at ramsey@TheJudahGroup.com or on Twitter and Instagram @RamseyJudah.

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