Did you know that almost half of the home buyers suffer home buyer remorse? Why? Unfortunately, too many people do it the reverse way, they start shopping for a home, they fall in love with the house, and they pull all sorts of strings to get the mortgage. They go through the home buying process from decision to decision, not knowing what they should expect next. That’s not a recipe for success. So for the eager homebuyer, warning! Buyer’s remorse is not fun BUT there are ways to prevent it. I will show you how.
Key questions to ask yourself before signing on the dotted line:
Does the home meet my needs?
Is the home within my budget?
Do I like the neighborhood and the condition of nearby homes?
Does the neighborhood have good schools, parks, amenities, and shopping stores?
Does the property need repairs and if yes how much will they cost?
Can I genuinely afford it?
What is a buyer’s remorse?
Buyer’s remorse is simply an emotional response to the uncertainty of not knowing whether one has taken the right decision.
Homebuyers wonder, did I buy the right house? Did I overpay? What if prices drop? Is it the right neighborhood? Can I afford the mortgage payments? All sorts of scenarios pop up, and that’s just the beginning.
So, how do you buy a home without falling victim to home buyer remorse?
You have to follow a well-planned step-by-step process while being surrounded by a strong team that you can trust. Preparation is the key – to avoid home buyer’s remorse, do your homework. Make sure your credit is in good shape, find out how much you can afford, and set realistic goals and expectations.
Here is a detailed list of the main reasons why people get home buyer’s remorse, and the ways you can avoid them.
1. You move in, but the house is not really what you wanted
Perhaps it’s the size, the yard, the noisy neighbor, or it may be that you just moved in but had to replace the roof and the AC. Even if you fell in love with the house when you decided to buy it, the love affair can quickly fade out once you move in and find out the house is not really what you remembered.
How to avoid it:
Create a list of your must-haves and nice-to-haves. This will help you ensure that you know exactly what you are looking for and that the home you select includes the features that are important to you.
When viewing homes use a house hunting checklist. Use this list to make sure the home you want to buy includes all the important factors included on your must-haves list, and compare for each home stacks up against other homes you visit.
Spend at least 30 minutes viewing each home and always ask questions. Find out why the seller is selling; ask how old is the roof, the furnace, the plumbing AC and heating system. Asking the right questions, and being thorough when viewing homes can end up saving you a lot of money and aggravation in the long run, while finding out why the seller is selling will allow you to negotiate a better deal.
Get a home inspection. Getting a home inspection is like getting an insurance policy of knowing the exact condition in which the home is in. It is your hedge for avoiding future expensive repairs.
Analyzing the facts that can lead to regret your home purchase will help prevent the uncertainty associated with making this big investment.
For in-depth step-by-step instructions on how to succeed in the home buying process, you should consider taking our New Home Buyer’s Course.
2. You don’t like the neighborhood
Often, buyers find it hard to pinpoint exactly what went wrong. In a seller’s market, for example, many buyers get their offers turned down; then they look for other properties and become emotional, they forget their original plan. They enter the negotiation unprepared; they did not check the neighborhood; they are rushing now, and this time they want to win; the difference is this time their offer is accepted and the deal is sealed. Then the buyer realizes the mistake, they don’t like the neighborhood, but it is now too late.
How to avoid it:
Choose the neighborhood before you pick the house. Before you start the house hunt, choose 3 – 5 of your favorite neighborhoods, and look for homes only those areas. Looks at the streets, the sidewalks, the trees, the traffic; are there good schools in the area? How about shopping centers, parks, and libraries? Find out the rate of homes occupied by owners vs. renters. Remember you can renovate the house, but you can never renovate the neighborhood.
3. You continue looking for houses after you have purchased yours
Continuing to view other homes for sale after you have bought your home, is like going on dates with other people while being in a relationship. Many people do it out of curiosity, or to get home renovation ideas; the issue is that in the process many of those people end up falling out of love with their own homes even though they just bought.
How to avoid it:
No matter how tempting it is, once you have bought your house, stop looking. Unless you think the inspection will be unsatisfactory, or that the home will not appraise and cause the deal to fall apart, there is no reason to torture yourself by viewing other homes.
When in doubt, think about the reasons why you bought your home in the first place, and review the house hunting checklist you completed when you viewed the home. Chances are you will find the reasons why you bought your own home, and be satisfied with the choice you made.
4. You are not ready for homeownership
The biggest prerequisite to buying a home is being ready to buy. Getting ready to buy a home is as important as training before going to the Olympics; without the training, you won’t get far. However, during the preparation stage, it might seem that waiting delays your goals of becoming a homeowner, and you might even think now is just as good anytime, and decide to give it a shot. Unfortunately, going for it without a plan can backfire, and start you out of a path of financial ruin.
How to avoid it:
Check your credit and your finances. Make sure you have reviewed your credit and worked to take your credit score to at least 700 points. To get a loan from “A” rated lenders, you only need a credit score of 680 but aim to be at no less than 700. This way you can negotiate a better rate with the lender of your choice. Also, check your finances and be sure your income is secure and reliable; if you just changed jobs, it might not be the right time to buy, unless what you do has high employment demand.
Can you afford the price range? Stick to your budget, and never allow yourself to push your offer above your comfort level. The amount of your offer must be based on a comparative market analysis prepared by your real estate agent, and not on future expectations of price growth.
5. Your agent is not supporting you during the closing period
It is the agent’s job to assist you through the closing day and beyond. Some buyers experience problems finding home insurance, or they have questions and doubts, but the agent is not around to help get the answers. That’s when panic can start settling in, and that can quickly turn into buyer remorse.
How to avoid it:
Know that buyer’s remorse is a common feeling. Contact your agent and discuss with them your concerns. If you have chosen a good agent, the purchase transaction should go smoothly; remember that it is the agent’s job to look after your best interest, so use their expertise, knowledge, and skills to your advantage by asking all the necessary questions, and getting the agent to do the research work so you don’t have to surprises after the purchase is final.
6. You don’t have money left for much else
After closing on a home and paying the down payment, land transfer taxes, and closing fees, many buyers get nervous because their bank account was depleted by tens of thousands that went out of their savings and into the purchase of the home. This can make them feel insecure about financial stability, and wonder if they did the right thing.
How to avoid it:
The amount you spend on housing-related expenses should be no more than 1/3 of your after-tax family income. Follow your budget and do not overextend yourself in the purchase of your home because there are many other expenses you will still need to pay for.
Take steps to rebuild your emergency fund; this may require putting off renovations or purchases such as new furniture, new appliances, and reducing your entertainment spending until your emergency fund has reached a comfort level.
Remind yourself the money is not lost but invested into a less liquid asset (your home)
For in-depth step-by-step instructions on how to achieve successful homeownership, you should consider taking our New Home Buyer’s Course.
7. The mortgage is too expensive
Perhaps everything is perfect with the home, but you regret that you did not get a good deal on the mortgage. You might wonder, how did this happen? It could be that you signed the purchase agreement and were in a rush to get any mortgage you could get approved for, so you wound up with a higher rate than you could have got elsewhere. Or simply it may be that you did not have the knowledge and experience to negotiate a better mortgage, so you regret buying the home altogether.
How to avoid it:
Review your credit report. This way you know how lenders will view you as an applicant, which will give you the negotiating power you need to ask for what you are looking to for.
Start your research online and look for the best mortgage rates. Once you have the best mortgage rates, select a lender that you can trust, and ask the lender to get the best rate you found from your online research.
Don’t just accept what the lender offers you. Lenders usually can give rate discounts to lower risk clients that ask to get better rates than what the lender advertises to all their clients. You have nothing to lose, and thousands in interest to save, so simply ask to get a better rate.
Canceling the contract
If your concerns are valid and you have to cancel the contract make sure that the pre-set conditions of the contract allow it; otherwise you could face a hefty penalty and even a lawsuit from the seller.
Sometimes your doubts and concerns can be dissipated by speaking with family and friends, as well as with your real estate agent. Remember that once you and the seller have signed the agreement, it is binding, and there is no cooling-off period protection when it comes to real estate. So it is a good idea to include conditions on the agreement, such as a home inspection; this will allow you to get further assurances that you made the right decision while giving you time to reflect on your purchase.
The best way to deal with home buyer’s remorse is by avoiding the mistakes that can lead you to regret your home purchase. Certainly buying a home can be stressful when you don’t follow a plan, and that can lead to homebuyer’s remorse. Before going ahead with an offer, it is important to take time to make sure the home meets all your requirements, and that you have researched everything there is to know about the home, including the neighborhood, the condition of the home, area amenities, and being comfortable with the price of the home.
Follow your home buying plan, and trust your instincts if you have hesitation about a property; there will always be better homes you can find. However, make sure your judgment is not being clouded because you made the mistake to continue seeing more homes after you purchased yours.
In most cases homebuyer’s remorse is simply a result of feeling uncertain because you are outside of your comfort level and ended up talking yourself out of liking your home; recognize that homebuyer’s remorse is a common phenomenon, and understanding why you feel this way can help you work through those issues. If you decide to sell, you may want to wait a few years so you can recover your investment, and accumulate more equity. Chances are as time goes by you will fall back in love with the property because you made it your home.
It time to share your stories. Do you know anyone who ever suffered through buyer’s remove after purchasing a house?