You may be considering the biggest house in the neighborhood as a flip prospect; or, you may be considering building an addition to enlarge a flip project house.Be warned that you don’t want to be marketing the biggest house in the neighborhood!Why is that?

Imagine the market of all the buyers in this neighborhood as a bell curve. The biggest section of buyers is found around the middle of the bell– by definition, the average sales price.That is the sweet spot, the price range with the most buyers so you can sell your flip project more quickly.

What’s wrong with being at the higher end of the local price range with a larger-than-average house? Very simply, the high end is on the tapering small end of the bell curve. There are very few buyers interested in buying the most expensive house. And higher-price-range buyers aren’t interested in this neighborhood because they want to live in a neighborhood of houses similar to theirs in class and size. In a word, like wants to be with like.

Don’t make the mistake of over-valuing the big house on the block, in your mind or in your listing. Here are more reasons why the biggest house in the hood is usually a disappointment for flippers.

• Compared with others for sale in the neighborhood, the biggest house needs an above-average income to pay above-average bills for utilities, maintenance and repairs. Buyers see right away that it also needs more furniture, window treatments, décor and other out-of-pocket expenses.
• It is easier to show buyers in the ‘average’ range, comparing with other average sales listings,that a small price discount is a good buy, thus moving an ‘average’ house to sell more quickly.
• It is more difficult to show buyers looking at the highest price tag with no neighborhood comparables that they are getting more for their money even if it is in fact a bargain for its size.
• Considering all the reasons above, by comparison it is almost always easier to flip the smallest house than it is the biggest.

The biggest house on the block (and/or the fanciest) is rarely a good option for a flipper, because it is the one with the smallest buyer market in this neighborhood. Don’t lose sight of your real flip market when you find what seems to be a great price on a house that is a little too big for its britches.

How much more expensive is the biggest house in your flip neighborhood than the average?

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