When I bought my home, I was elated. I felt a huge sense of accomplishment, and the thrill of having my own space brought me joy in the present moment and excitement for the future—that is, until a pipe burst a week after I moved in.
A plumber came and fixed the pipe, but I was about $700 poorer just a few days after forking over tens of thousands of dollars for a down payment and closing costs. I can’t recall for certain, but I am willing to bet I ate ramen for dinner that night.
Fortunately, I had set aside a bit of money for repairs. Even more fortunately, I haven’t had any major home repair issues since. Although that pipe was a hiccup (knock on wood!), I still feel satisfied and happy overall with my decision to purchase a home. However, compared with others in my age group, I’m in the minority.
According to a recent Bankrate survey, 63% of millennials had regrets about their home purchase. This demographic showed the highest rate of discontent, but across all homeowners, 44% had regrets. Most respondents who had regrets cited unexpected maintenance or hidden costs as the most problematic, according to the study.
Having experienced this personally, I can attest to the shock of paying huge amounts of money to get the house only to have to pay more for maintenance. The study’s other top reasons for regret in descending order were: too small of a house size, bad location, not a good investment, too high of a mortgage payment, too high of a mortgage rate, and too big of a house size.
So, are roughly half of all homebuyers doomed to regret their decision? Nope. There’s plenty you can do to combat homebuyer’s remorse. While the study showed regret among millennials, the majority of homebuyers in other age demographics didn’t have remorse.
Homebuyers who have owned before understand the benefits and costs of homeownership, and they value stability and certainty. Perhaps millennials think more about the immediate and not about the impact the purchase several years down the road.
All homebuyers—and millennials in particular—can help combat remorse by asking themselves, “Will this neighborhood/home still be the best place for me to call home 7–10 years from now?”
When snapping up a property under the assumption it will appreciate in value, many people have regrets. Don’t just rely on a blind assumption that ‘the area is hot,’ or that ‘all property goes up in value.’ A wise homebuyer will require evidence of price-appreciation trends on that specific type of home in that specific area.
In other words: do your homework.
The Other Side of Homebuyer’s Remorse
I have also encountered other types of remorse, including buying at the top of the market. Consider your long-term outlook when buying a property at a historically maxed-out price for the area.
When prices begin to cool, a buyer may often be left feeling resentful that they overpaid and now have a 30-year mortgage. However, most common is homebuyers underestimating operating costs and maintenance expenses, something that can be coupled with being overly optimistic about financial projections.
Just because you can make the math work in terms of the monthly mortgage, it doesn’t mean you’ll be able to handle all of the other ancillary expenses. If just about everything must go ‘right’ with your home purchase for the numbers to work out, you should keep away.
Another type of regret I’ve seen involves homebuyers wishing a property was closer to work or wishing the boundary lines sent their kids to a different school. Still, when most people hear the term “buyer’s remorse,” they’re thinking about something they bought. It’s also important to consider “reverse buyer’s remorse”—regret for not buying something.
I’ve had people know that everything about a home was right for them, but then they didn’t make a timely decision because they needed to think about it more, get a second opinion, or they just wanted to see more options. They delayed their decision, and they ended up losing out on the home they really wanted.
In all, avoiding homebuyer’s remorse comes down to understanding the homebuying process and feeling confident in your decision so you can make it in a timely fashion. It’s also important to understand several myths about homeownership and the hidden costs of homeownership.
5 Tips for Preventing Homebuyer’s Remorse
Here are more tips on how to avoid any regrets about your new home:
1. KNOW YOUR FINANCIAL SITUATION
Talk to multiple lenders, and go through a thorough qualifying process with them so you know exactly what you can afford and exactly what payments you are comfortable with.
2. RETHINK “DREAM HOME” FOR THE “RIGHT HOME”
When you understand your financial picture, you may learn that you can actually buy your dream home and the payments will be in your comfort level.
Vice versa, you may learn that you have to change your search parameters. Stop looking for the dream home that isn’t possible, and instead, look for the right home that isn’t going to have you stressed out every month about whether or not you can make the mortgage payment and keep the lights on.
3. DON’T FORGET ABOUT FIX-ITS
Understand maintenance issues will come up, and you are responsible for fixing them when they occur. This goes back to knowing your financial situation.
4. LOCATION, LOCATION, LOCATION
Noting that another common reason for remorse is a great house in a not-so-great area, before you get sucked in by looking at professional photographs of homes for sale, learn the area and the neighborhood first. Not just the actual neighborhood of surrounding homes, but drive around the outskirts of the community, go to the stores you would if you lived there, and even visit the schools if you have or plan on having kids.
5. THINK LONG-TERM
Don’t look at your home purchase with a short view and think you can always move in a year and make money in the process. It’s OK to outgrow a home, or perhaps a situation happens where you need a different place to live—that’s part of life. But you never want to be stuck because you weren’t prepared or you rushed into a decision.