Have you ever been to a neighborhood where most of the homes are 2000 sq ft, and in the corner is a vast mansion trying very hard to be inconspicuous? That, my friends, is an overbuilt house.

But what makes a home ‘overbuilt’? And is it a bad thing? Let’s take a look at some of the reasons why owning an overbuilt house can be a good thing – or a huge pain – for homeowners.



Why Overbuild?

Most examples of overbuilt homes aren’t deliberate. Typically a homeowner starts with the good intention of improving their property, either by adding extra square footage or upgrading the interior rooms. This can be an excellent way to increase the market value of your home.

Problems arise, however, when the upgrades and renovations a homeowner makes to the home, exceed the potential resale value of the house. Sometimes this happens through no fault of the homeowner – for example, if the property market takes a dip and you have recently renovated. Usually, the market will correct itself – it may just take a little time.

However, if you have entirely overbuilt your home to the point where it does not fit in with the surrounding homes or local market, it can be challenging to recoup your investment.



Selling An Overbuilt Home

When it comes to selling an overbuilt home, you need to get lucky with your buyer. Overspending on amenities, finishes, and square footage doesn’t always add up to more equity.

Anything from ornate painted ceilings, to a 10,000 sq ft house surrounded by 1500 sq ft mid-century modern homes, can mean money — and time — lost when you decide to sell.

There is nothing wrong with a home having a little personality, but homes that have been entirely customized to the current owner’s tastes can be off putting to potential buyers. Owners who have over-customized can find themselves having to wait patiently for the right buyer, or even having to renovate back to a blank canvas or cut the asking price.

Sometimes though, overbuilt houses find the perfect buyer, who loves the individualized nature of the property and all of the quirky interior decisions. This is the best case scenario for the homeowner — but this is the exception, not the rule.



Are Overbuilt Homes Really That Bad?

Not necessarily. There are times when an overbuilt home can be a benefit. For example, if you have deliberately overbuilt your home because you love its location, it’s perfect for your family, and you have no intention of selling anytime soon, there’s no reason not to love your overbuilt masterpiece.

Real estate land values are subject to change. An area which previously had low land value can undergo gentrification, or experience a sudden building boom – and in turn, can be worth much more than it previously was. If you buy in an area like this which is ‘up and coming,’ having an overbuilt home doesn’t have to be a problem — as long as the building continues to happen around it and the real estate prices continue to rise. 



The Bottom Line

Your neighborhood and local market primarily determine the value of your home.

If you’re planning on making significant renovations to your property or buying an overbuilt home, think carefully about how much of your investment you will be able to recoup. Sometimes it makes more sense to sell your house and move to one that has everything you need. An overbuilt home rarely makes sense for most homeowners.