Home-buyers remorse is a feeling of regret experienced after buying a home.
Here we will explore how to be prepared in advance so you don’t get bitten by the remorse bug later on.
1. Overpaying for a home
2. Home maintenance costs being too high
3. The house being too small or too big
4. Mortgage payment being too high
5. The neighborhood not being a good fit
“Caution and investigation are necessary armor against error and imposition,” – Alexander Hamilton (not the musical, although this is one of his catchier phrases).
The best remedy is to be totally prepared by fully investigating the property upfront. Use various sources to value the home. Ask an expert to help prepare an expense budget that includes all expected monthly costs. Make a list of the activities you intend to do in the home and how much space you’ll need to feel comfortable. Prepare a full monthly budget, including the mortgage cost, and determine whether that is a comfortable payment. You can also look at averages and typical ranges rather than going by your feelings – for example, the median single-family home sold in the US in 2020 had 3 bedrooms and was 2,333 sq. ft. Need a 4th bedroom? An average bedroom size is 132 sq. ft. and can accommodate a queen size bed. Trying to compare neighborhoods? Use our neighborhood guides, neighborhood videos, and detailed listing information to explore more neighborhoods online than you could practically explore in person.
If you discover the house is the wrong size, or you don’t like the neighborhood, it might be impossible to be happy other than by selling the home and finding something else. If you didn’t overpay and can sell and break even, that might be a satisfactory outcome. If there are financial issues preventing you from selling, our counterintuitive advice is to look at those as opportunities, rather than problems; if you follow our advice and keep money in reserve, you can look for opportunities to make positive ROI investments in your home that can help you recoup your overpayment, or lower future maintenance costs. If taking a loss on the home is unavoidable, consider it tuition and vow to do better next time. Use your reserves to bounce back quickly and pounce on a home in the neighborhood you wished you had bought in.
Emotions are fickle. Make a list of reasons you need to buy this house. If you truly needed to buy the house, that set of reasons will persist even when your emotions potentially flip in the future.
That buyer’s remorse is likely sinking in because you put so much energy into closing on the home that you assumed everything would be perfect from the day you moved in. Don’t fall into this trap. Be realistic and make an assessment of all the improvements you can make to the home during the first 100 days you live there. This may be difficult to do while you’re worried your loan won’t close, or the movers might cancel; but the payoff in preparedness and staving off future anxiety is huge if you follow this practice. This can force you to focus on the negatives of the home, which could be emotionally or intellectually difficult while you’re in the middle of making one of the biggest purchases of your life for something you have to admit to yourself isn’t perfect; the good news is, if you stare into this abyss filled with negatives before signing a non-contingent purchase contract, you’ll either decide to withdraw before it’s too late, or you’ll be moving forward with realistic expectations that won’t set you up for future regret.
Our other guides cover all the steps you should take to prepare to buy a home. Ideally, you will have a chance to do a full inspection before committing to a purchase. However, in a hot market, this isn’t always the case. Furthermore, it’s even possible that the inspection misses an issue; or you move in and visit your neighbors’ houses and realize your home is missing some upgrades that you will need because of weather issues, pets, or just to keep your home on par with other comparable homes that will be sold in the future. For these reasons, we would advise not to spend your entire budget upfront on the home purchase, but to save some cash or capacity to take out a loan to spend on improvements to the property, even above what you may already have budgeted in your 100 day plan. Even if you followed the advice of having a 100 day plan – you should size you post-closing liquidity with some cushion if your 100 day plan was incomplete. The number one reason people have persistent remorse is that they can’t re-sell the home without losing money. However, there are a lot of upgrades you can do to a home where you can get a positive return on investment. For instance, spending $50k to upgrade your kitchen could net you an additional $100k on your sale price. Remember, you are not the only person desperately trying to get out of a mistaken purchase – surveys show >40% of buyers experience remorse after their purchase. If you are competing with these other sellers, you can stand out by having the special upgrades that other buyer’s hadn’t budgeted for, helping you recoup your investment while they are stuck with a worse outcome.
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