One day, you buy a house. You’re so excited, so thrilled, so delighted. You say to yourself, “Finally, I can stop throwing money away in rent! I actually own a home!”
Then, the reality of homeownership hits. You learn that your monthly mortgage payments are going to be significantly higher than your rental payments. 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.
The next thing you know, you’re thinking, “What was I thinking?”
This is what it’s like to have buyer’s remorse.
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 car or a house.
Buyer’s remorse is particularly common among home or house buyers, especially first-time ones. 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. Small wonder that a 2022 Clever Real Estate survey of homeowners found that a majority — 60 percent — have experienced buyer’s remorse over their housing purchases for various reasons.
What causes homebuyer’s remorse?
Buyer’s remorse occurs for any number of reasons. But for homeowners, it’s triggered by certain second thoughts in particular. If you’re feeling it with your new home, 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 home buyer at or right before the closing, when they see laid out in black and white in a single statement all the closing costs they’re going to incur, plus the ongoing expenses (mortgage payments, property taxes) they’ve obligated themselves to pay. Or maybe you got caught up in a bidding war and, in the flush of victory, didn’t realize how much over budget you’d gone. (Getting into a bidding war is always a bad idea.)
You didn’t buy the home you really wanted. It’s rare that a house ticks every item on your checklist — that you didn’t compromise on something. 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 rear its head. 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 at the time, but the area lacks a lot of 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 home’s maintenance too much. This one often hits a homeowner later rather than sooner, though it can come up fairly quickly, if there are things that were not disclosed by the seller, are not as expected, or that break down shortly after the move. Whether sudden repairs or ongoing chores, the upkeep just overwhelms you, either in time or money or both. All your income seems to be going into the home, making you feel house poor.
Sometimes the source of your remorse has nothing to do with the new house, but nostalgia for the old neighborhood or lifestyle. Don’t underestimate critical comments by friends and relations too.
What is the FTC’s Cooling-Off Rule?
Coping with buyer’s remorse can be more complicated with home buying, not just because of the sums involved, but because of the lack of legal recourses.
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, which applies to any contractual agreement.
Unfortunately for homebuyers, the FTC’s rule does not include housing or 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 any earnest money or deposit. And no rule will automatically apply after closing on a home. Often the only way to cancel the purchase is to find something significantly wrong with the property that wasn’t disclosed.
How to avoid homebuyer’s remorse
There is no way to avoid buyer’s remorse. It’s a natural part of the home buying process because such a big investment is involved. But there are ways you can manage your expectations and close that deal to limit feelings of regret.
1. Get pre-approved with your mortgage
Going through a lender’s pre-approval process prior to starting house hunting works to alleviate stress and anxiety by relieving you of having to seek financing each time you visit a home you like. When your pre-approval documents come, read them — so you have a good sense of what you can afford and what all the financing costs of home purchase will be. Sleep on it a couple of days and ask yourself do you still want to take this on? Also, resist the urge to borrow more than you need for a home, even if you’re approved for a larger sum.
2. Slow down your search
The biggest mistake new buyers make is rushing the purchase process. It’s tough to avoid nowadays, given the pandemic-induced frenzy in residential real estate. But buy in haste, and you’re more likely to repent in leisure. Don’t miss moments to negotiate with sellers or to consider other properties. And don’t be afraid to ask questions: Posing the right ones can be the savior for you and your wallet.
3. Work with a real estate agent
A real estate agent can be your best friend, both in finding a house and in avoiding buyer’s remorse. Real estate agents can assess you based on your criteria, time frame and budget — and talk you down off the ledge if you’re tempted to make a rash or costly decision that’ll lead to buyer’s remorse later on. On the flip side, remember agents don’t get paid unless you buy, so don’t let them push you to purchase against your better instincts.
4. Do a home inspection
A professional home inspector will give you an in-person evaluation of the home’s condition. Your findings can alleviate disappointment, excessive repairs or pricey surprises. Doing inspections will help you pinpoint issues, and if fixes are warranted, you can budget for them or ask the seller to cover them. If an inspection hints at major problems, spring for a home engineer, who’ll do a deeper investigation and give a more thorough analysis of the home’s condition. Major problems can be an excuse to back out of the deal (see below).
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 for certain causes. Most contracts have an objection or cooling-off period built in, during which the buyer can back within a certain time frame, as well — and even recoup their earnest money, if they cancel due to a contingency issue. Make sure you understand exactly what fixtures come with the home — they should be enumerated, and identify each item that you want specifically. . Any costs you’d like the seller to cover should be spelled out in the purchase agreement, too.
Final word on buyer’s remorse
Final word on buyer’s remorse
If you’re purchasing a home, it’s normal to experience buyer’s remorse. After all, you’re making a major buy, maybe the biggest of your lifetime. You’re taking on a huge amount of responsibility and financial obligations. You’re making an investment in your financial and personal future.
So of course there’s pressure — and second thoughts naturally come. But plan carefully, and your buyer’s remorse will be at best a fleeting regret.