By Erik J. Martin, CTW Features
When you make a major purchase like an overseas vacation or new car, it’s normal to second-guess and be self-critical of your decision – especially if the transaction set you back big bucks and didn’t quite live up to your expectations.
It’s only natural, then, to experience regret after forking over serious finances to claim a house, particularly in today’s robust seller’s market. In fact, one in four purchasers of American homes suffered buyer’s remorse, according to a 2020 survey of buyers conducted by real estate startup Flyhomes. The reasons are multifold, experts concur.
“In the current housing market, we’re seeing continued limited home inventory despite historically low mortgage interest rates. Not only did the pandemic cause home loan interest rates to drop, but it also brought the emergence of a new buying trend for more space in suburban regions,” explains Jess Kennedy, COO of Beeline, a Providence, Rhode Island-based online lender. “With so many prospective buyers looking for similar criteria, houses are flying off the market at exceptionally fast rates – with home costs being double or even triple the price in certain regions compared to previous years.”
Consequently, home shoppers must jump on available properties quickly to keep up with the fast-paced market. That often means bypassing basic steps like conducting a private tour and eliminating stipulations in your home offer, such as the contingency to have the home professionally inspected. The latter move could, for example, result in buying a property with serious flaws that aren’t revealed until after the closing.
All these reasons can lead to serious remorse.
“One of the things we been hearing frequently from customers is that they are afraid to overpay for a house,” says Ryan Dibble, COO of Flyhomes in Seattle. “But not being prepared to do so can mean losing out or being outbid, which can create a sense of urgency and panic.”
Even if you are home shopping in a less competitive area with a more ample supply of available homes for sale, other self-imposed pressures can later contribute to buyer regret.
“Some buyers have a narrow window to secure a home before relocating for work or trading up from their current home. This urgency to act quickly may result in not getting everything on your list or spending more than planned,” says Ron Leffler, a real estate broker in Alexandria, Virginia.
But there may be a silver lining to these cautionary tales.
“Buyer’s remorse is normal. The good news is that it passes for most people within a few months,” says Dibble. “That feeling that you overpaid by several thousand may be all in your head. And, more importantly, it won’t matter much three years from now when you’ve made the house your home, built up more equity in the property, and likely seen your property increase in value.”
Still, the feelings that accompany property purchase compunction are troubling and taxing. That’s why the pros recommend avoiding the risk of regret altogether by following recommended tips.
“First and foremost, do not buy under pressure. If anyone pressures you and you feel uncomfortable about it, do not proceed until you have more thoroughly assessed the situation and your comfort level,” advises Betsy Ronel, real estate agent with Westchester County, New York-headquartered Compass. “Also, choose an area where you know you want to live, make sure the schools are what you need them to be, and ensure that the house is inspected and passes muster with areas that are of concern to you.”
Not comfortable with getting caught up in a bidding war? Sit things out until the market settles further, Ronel adds.
Additionally, be intentional about your goals before you begin the house-hunting process.
“Ask yourself: ‘Do I want to spend the rest of my days in this place or am I looking for an investment to help me reach the next phase of my life?’” suggests Dibble.
When it comes to your budget, crunch the numbers carefully. Then, crunch them again.
“Be confident in what you can afford. Get pre-underwritten by your mortgage lender so that you’ll have the loan process completed upfront and you’ll know exactly what your budget is. That information will help reduce stress and enable you and your agent to create the best negotiation strategy,” Dibble says.
Lastly, avoid purchasing a home sight unseen.
“You should be able to inspect the home in person, at least through a trusted source who can walk through the property on your behalf if you cannot,” Kennedy recommends.