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With the residential real estate market overheated for more than a year now, I wanted to go over some tips to avoid or greatly eliminate homebuyers’ remorse.
Thoughts:
1. Know the location of the home you are going to buy. It’s not enough to know the zip code of a home. Home prices can fluctuate tremendously in a zip code. You need to know the subdivisions and the houses almost at a street level. Of course, an experienced real estate agent can help guide you but you need to know where you are buying so you can make a decent comparison.
2. Make sure your comparable sales are relevant Homebuyers tend to rely on appraisals to know if they’ve purchased the right home. That’s a mistake, in my opinion. Your real estate agent should be able to pull comparable sales within an area…but those comparable sales need to be relevant. For example, a home with a two-car garage will have a different value than one with no garage. Make sure you are making an apples-to-apples comparison.
3. Sometimes, the highest bidder is the ultimate loser In this market, you will see multiple offers. Some buyers are motivated by “winning” the bidding game and forget that they are actually buying a house. Overpaying for a home is not “winning”. It’s a mistake, and can lead to buyer’s remorse. To avoid this, use your knowledge of the market, and your comparable sales to come up with a number you are happy with BEFORE you submit an offer. When the time comes to make an offer, stick with the number that represents your best guess at the actual value of the home.
4. Never buy a home that you haven’t physically seen in person. Real estate agents are savvy marketers. We know what sells houses. When you look at listing photos online, you are seeing the absolute best the house has to offer. When you see these homes online, you start to think there isn’t anything wrong with them. That’s probably not true. The only way to know what you are actually buying is to physically see the home in person. It might be a hassle. You might not even be living in the community. While video tours have come a long way, nothing can benefit you more than physically seeing the house.
5. If you are feeling tremendous pressure from your real estate agent to make an offer on a house you aren’t interested in, fire your agent. The general public is pretty smart. While they might not know the intracies of the real estate market, they can definitely sense when a real estate agent is pushing them in the wrong direction. While it’s normal to feel nervous about making such a large purchase, it’s not normal to be “pushed” into making an offer. This is a sign that you aren’t on the same page with a real estate agent and you are better off finding one that better fits your personality.
6. There’s a reason a home sits on the market for a long time relative to the market. Don’t be the one to find out the hard way. I’ve had two houses that I’ve seen listed in my career that were complete basket case homes, and they were inexplicably priced similar to homes in their neighborhoods that were not a mess. One was a house where there was a disclosed sinkhole that was underneath the basement floor, and another had steel supports under a concrete floor that had disintegrated due to water damage. These homes needed work done by professionals….and they needed to be purchased at much lower prices.
7. Use an experienced real estate agent when making a home purchase. I see so many people who hate real estate agents and so they do everything they can to avoid them. But I’ve seen what can end up happening when they do. I currently know a buyer who is going to pay more than 100,000 more than what they should because they aren’t using a buyer’s agent and the seller is going to really pull one over on them. Experienced agents, even in this crazy real estate market, are invaluable and can help you find the right home without having buyer’s remorse.
8. Don’t buy a home at the very top of your budget The lender has given you the ability to buy a home at the very top of your budget. Don’t do it! Why? No matter what home you buy, there is going to be ongoing maintenance. Who pays for this maintenance? You. Buying a home at the top of your budget could easily cause homebuyers remorse because you no longer have the money just to maintain the home in its current condition, much less have money for improvements.
9. Home inspection, appraisal, and finance contingencies are benefits to the buyer. In this market, the “cleanest” contract to purchase is likely to win. That means one that waves the inspection, finance, and appraisal contingencies. As a buyer, however, ask yourself if you really should buy a home without a private home inspection. Does that really make sense in any market? Should you waive the appraisal contingency? Why? Are you uncomfortable with the home appraising? Waiving these contingencies can cause easily homebuyer’s remorse. Most sellers are good people who try to put themselves in the shoes of buyers. They aren’t intimidated by inspections or appraisals because they would want the same thing. Is losing out on a home because of a home inspection hard on your emotions? Absolutely. Is that better than living in a home with a serious structural issue that will cost thousands to fix? Absolutely
10. Make sure you take enough time to make a decision to purchase . Time can be used as a benefit or a curse. As a buyer, take the time you need to make a decision to pursue a purchase. How does this work in the real world? If home showings on a particular new to market home start on a Friday, and the seller and real estate agent are reviewing all offers on Monday, that gives you Friday, Saturday, and Sunday to make a decision to write an offer or move on. Contrast that with scheduling a showing early Monday morning with mere hours before you have to submit an offer. That’s likely to cause a snap decision and eventually lead to buyer’s remorse.
Source: Me! John Schink of Deerwood Realty
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