New to Reazo? We’ll help you get started on your home buying journey by providing extensive knowledge to help you navigate the home buying process. You’ll discover how to find a mortgage that fits your needs, how to choose a real estate agent, how to find a house within your budget, and so much more. Reazo’s blog and comprehensive ebook, “Mastering the Art of Homebuying”, covers every area of the home buying experience. We’ve got you covered when it comes to finding answers to your home buying questions. Welcome to Reazo!
You’ve been house hunting and finally find the home you’ve been dreaming of. You quickly make an offer, the seller accepts, and you sign the contract. When you wake up the next morning, you start to regret your decision to buy the house. Uh oh. Let’s look at some ways to avoid buyer’s remorse when purchasing a home.
“Did I pay too much for the house?”
“Should I have spent more time inspecting the house?”
According to a recent survey of 6000 real estate agents across the U.S., by John Burns Real Estate Consulting, buyer’s remorse is one of the top recurring themes of the 2021 housing market. When there are few homes on the market and a lot of competition among homebuyers, offers are made quickly out of fear of losing the house to another buyer. Even without competition, some buyers fall in love with a house at first sight and make an offer before they’ve explored all of their options. There are many reasons homebuyers experience buyer’s remorse, but you can avoid it by addressing the following areas.
1. Due Diligence
Due diligence means you and your real estate agent have fully reviewed and understood the details of the home purchase agreement and disclosures.
- Has someone died in the home?
- Are there HOA (Homeowner’s Association) restrictions?
- Are the sellers taking fixtures, doors, appliances, or other pieces with them?
Thoroughly review the home inspection report with your agent and the inspector, if possible, to ensure you fully understand the condition of the house. If the inspection uncovered any major issues with the home, you’ll want to discuss your concerns and options with your agent to avoid getting stuck with a major expense you could have avoided (ex. old, faulty furnace).
Another way to avoid home buyer’s remorse is to have a firm understanding of the home appraisal process. A home appraisal determines a fair price for a home. A home seller may think their home is worth $500,000 but it might appraise for only $400,000. Selling it above the fair market price, say $450,000 could lead to issues for the homebuyer. For instance, if you offer $480,000 on a home listed for $450,000 and it gets appraised at $400,000, you would need to come up with an additional $80,000. When you take time to understand the appraised value of a home, you’ll be less likely to purchase a home for over-market value.
3. Over-Asking Price Offer
Offers made over the asking price often result from a housing market with little inventory and numerous buyers competing for the same house. Before you submit your above-list-price offer, make sure you talk to your real estate agent and loan officer to ensure you understand how much your projected monthly mortgage payments will be including interest, principle, home insurance, and HOA fees. Buyer's remorse can develop when you get the house you wanted but end up paying inflated monthly mortgage payments.
4. Financial Limitations
An experienced real estate professional will help you stay within your home buying budget. If you’re looking for a $300,000 home in a housing market that averages $550,000 per home, your agent will have to get creative to find a home in your desired price range. Another option would be to wait until more homes come on the market that fit within your budget.
Don’t feel pressured by your agent, or a highly competitive market, to sign a contract on a property that’s overvalued and above your loan threshold. You might have to move further away from your desired neighborhood to find a home you can afford, but you won’t be burdened with a higher-than-expected mortgage payment.
When buying a home, avoid buyer’s remorse by fully understanding the home purchase contract, disclosures, inspection, and the home appraisal. Stay within your home buying budget and don’t feel pressured to make offers well above the asking price. Rely on an experienced real estate agent to guide you through the home buying process so you can avoid buyer’s remorse. Then, sit back and rest easy knowing you purchased a home that fits within your budget and meets your needs.
Have you experienced buyer’s remorse when purchasing a home?
We would like to hear about your story in the comments below.