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After a lot of saving and a lot of stress, you’ve just bought your first house. You’re thrilled, thinking to yourself, “Finally, I can stop throwing money away in rent. I actually own a home!” Then, the reality of homeownership hits. You start to notice the wear and tear around the place, the things that need to be fixed and how expensive that’s going to be. You wonder how you’re going to maintain the property and pay all your other bills, in addition to your monthly mortgage payments. The next thing you know, you’re thinking, “What was I thinking?” This is what it’s like to have buyer’s remorse as a homebuyer.
- Buyer's remorse is a feeling of regret or anxiety after making a purchase. For homebuyers, it means they regret buying a house.
- People might feel homebuyer's remorse if they come to believe they overpaid or dislike the location once they move in, for example.
- To avoid buyer's remorse, it can help to get preapproved for a mortgage, work with a knowledgeable local agent and include contingencies in your contract.
Buyer’s remorse data and statistics
- In Bankrate’s recent Financial Regrets survey, 3 percent of Americans said that buying more home than they could afford was their top financial regret.
- Of that number, only 1 percent of baby boomers (aged 59–77) said that they felt it was their biggest financial regret, while the rate was 3 percent for Gen X (aged 43–58), 5 percent for millennials (aged 27–42) and 6 percent for Gen Z (aged 18–26).
- In a 2022 Hippo report, 47 percent of respondents said unexpected issues left them regretting their decision to make a home purchase.
- In Bankrate’s April 2023 Homeownership survey, 12 percent of Americans surveyed regretted not getting a better mortgage rate on their home.
- The same survey reveals that 41 percent of respondents regretted buying a home that had more hidden costs than expected.
- A 2022 Clever Real Estate survey of homeowners found that more than half — 60 percent — have experienced buyer’s remorse over their housing purchases.
What is buyer’s remorse?
Buyer’s remorse is a feeling of regret or anxiety after making a purchase. Also known as buyer’s regret or buyer’s disappointment, it stems from the feeling that the purchase decision was the wrong one — either because it was an outright mistake or because there’s a better option out there.
Buyer’s remorse can result from any sort of purchase, but it usually occurs after a significant commitment, like buying a house or a car.
Buyer’s remorse is common among house buyers, especially first-timers. After all, a home is typically the biggest-ticket item most people ever purchase. It involves not only a lot of money, but a big change in their lives — and it’s going to have consequences for a long time, too.
What causes homebuyer’s remorse?
Buyer’s remorse occurs for any number of reasons. If you’re feeling it as a new homeowner, it could be because you’re thinking one (or more) of these things:
- You paid too much for the home: Money is probably the most common regret. It often hits a homebuyer at or right before the closing, when they see, laid out in black and white in a single statement, all the closing costs they have to cover, plus the ongoing expenses (like mortgage payments and property taxes) they’re now obligated to pay. Or maybe you got caught up in a bidding war and, in the flush of victory, didn’t fully understand how far over budget you’d gone.
- You didn’t buy the home you really wanted: It’s rare that a house ticks every item on your checklist, with no compromises. Still, if you bought a home that’s too big, or too small, or doesn’t have most of the features you wanted, buyer’s remorse can set in. It often compounds if you jumped at the first place you saw, were under pressure to find a place or bid because you were just sick of looking.
- You don’t like the neighborhood/location: You didn’t notice it until you moved in, but the area lacks certain amenities, or is noisy at night, or has more traffic than you realized, making commuting to work or other places harder and more time-consuming.
- You find the maintenance too much: This one often hits a homeowner if there are things that were not disclosed by the seller, are not as expected, or that break down shortly after the move. Whether it’s sudden repairs or ongoing chores, the upkeep just overwhelms you. All your income seems to be going into the home, making you feel house poor.
- You miss your old home: Sometimes the source of your remorse has nothing to do with the new house, but nostalgia for your old neighborhood or lifestyle.
Legal options if you are experiencing buyer’s remorse
Coping with buyer’s remorse can be complicated when it’s over a home, not just because of the sum involved but because of the lack of legal recourse.
FTC cooling-off rule
The Federal Trade Commission has a law known as the Cooling-Off Rule, which gives a person three days to cancel a sale or back out of a purchase — as long as they request it within three days of signing a contract. Some states also have their own version of this cooling-off rule.
Unfortunately for homebuyers, the FTC rule does not include real estate transactions. It’s possible that a state law might allow you to get out of the purchase agreement within the first three days — but you might forfeit your earnest money deposit in doing so. And no rule will automatically apply after closing on a home.
Other legal options
As a homebuyer, you may have a claim against a seller if you can prove that the seller knew about a pre-existing problem and deliberately failed to disclose it. The value of the claim will usually equal the cost of repairing the defect, according to the Wagner, Falconer & Judd law firm, which has offices in Minnesota, Wisconsin and Montana.
Tips for avoiding homebuyer’s remorse
Buyer’s remorse is a natural part of the homebuying process, because such a big investment is involved. But there are ways you can manage your expectations to limit feelings of regret.
1. Get preapproved for a mortgage
Besides being an important part of making an offer on a home, going through the preapproval process before you start house-hunting can help avoid financial questions by giving you a hard number that a lender is willing to loan you. You can base your homebuying budget on that preapproved loan amount. But resist the urge to spend the full amount just because you can.
2. Slow down your search
The biggest mistake new buyers make is rushing the purchase process. It can be tough nowadays, with a lack of inventory making available homes more scarce. But homes are staying on the market longer now than they did at the height of the pandemic real estate frenzy, so take your time, and don’t be afraid to ask questions. As they say, buy in haste, and you’re more likely to repent in leisure.
3. Work with a real estate agent
A knowledgeable local real estate agent can be your best friend on your homebuying journey, both in finding a house and in avoiding buyer’s remorse. Agents are licensed experts who understand what’s available in the area that meets your criteria and budget — and they can let you know if you’re making a rash or costly decision that you might regret. (On the flip side, remember too that agents don’t get paid unless you buy, so don’t let an agent push you to purchase against your better instincts.)
4. Get a home inspection
A professional home inspector performs an in-person evaluation of a home’s condition. Their findings can help you avoid pricey surprises — if repairs are needed, you can budget for them or ask the seller to help cover the cost. If you have an inspection contingency in your contract, major problems can even be an excuse to back out of the deal.
5. Negotiate your contract carefully
Make sure your real estate agent or attorney includes contingency clauses in your contract. These can allow you to cancel the purchase if certain circumstances are not met. Be sure you understand exactly what fixtures come with the home as well, and identify each item that you want specifically. Any costs you’d like the seller to cover should be spelled out in the contract, too.
Final word on buyer’s remorse
It’s OK to experience some level of buyer’s remorse when you’re buying a home. After all, it might be the single biggest purchase of your lifetime, and you’re taking on a huge amount of responsibility. So second thoughts are natural. But if you plan carefully and enlist the right help, your homebuyer’s remorse can be no more than a fleeting regret.