How to move past home buyer’s remorse
Jan Stapleton - 2023 NETAR President
A wave of buyer regret was predictable after the last three years of an unsustainable housing market turned upside down by the pandemic. During that time some buyers allowed themselves to be pushed to their limit – and sometimes beyond. Others used technology to buy a property sight unseen. It was convenient and a way to stay ahead of the competition, but not the best example of consumer due diligence. And many others waived a home inspection and other contingencies to seal the deal.
But now that the market is resetting and headed toward more balanced conditions, buyer’s remorse is increasing among some new owners. Realtor Magazine recently drew on two surveys to get unhappy buyers’ pulse.
The first was by the home insurance group Hippo. According to the survey, the top reason for new owners with regrets is the feeling they overspent. They accounted for 30% of all responses.
A separate survey from Clever Real Estate said 26% of the unhappy buyers they surveyed felt they had rushed the process.
Here are some of the other responses cited in the article.
- My new home requires too much maintenance, 25%
- I bought a fixer-upper, 24%
- I was pressured to make an offer, 21%
- I bought sight-unseen, 17%
- I don’t like my new home’s location, 15%
- I don’t like my neighbors, 15%
- I don’t like my new home
Other standout complaints in the Hippo survey are the new owners have decided that homeownership is more expensive than they had thought it would be, that there’s too much maintenance and upkeep, and that they compromised too much for their new home. Those regrets were expressed by almost half of the survey’s respondents.
There’s evidence of the economic stress among Tri-Cities homeowners. According to the most current Census data, local residents who are spending more than the recommended percentage of their income on housing has increased from 20.3% before the pandemic to 27.2%. The recommended percentage of an individual’s or family’s income for housing is 25% to 30%. Anything more, and the owners are in what’s called a housing-burdened situation.
Some of that cost shock is likely caused by owners who didn’t remember that they should budget 1% to 2% of the purchase price of their home for annual upkeep and maintenance. And when economic stress sets in maintenance is often neglected. That may offer some short-term relief, but in the long run, maintenance costs increase the longer the neglect continues. It also eats away at a property’s resale value.
For most new owners, there’s no quick, easy solution to buyer’s remorse. Those who bought in the super hot market haven’t been in their home long enough to build up enough equity to relocate.
The best long-term solution is to set a realistic budget to squeeze the maximum benefit from every monthly mortgage payment. The next step is to find and develop a relationship with a professional local Realtor® who – over time – can help identify strategies and opportunities for a better solution. The importance of that relationship and the owner’s commitment to a long-term strategy can’t be overemphasized. It’s crucial for both the financial and psychological aspects to resolving the issue.
While the local market is restructuring, home prices will not likely see the substantial declines that the media is talking about. It’s not likely because most of what you read about in the mass media is focused on major metro markets. Conditions in smaller regional markets – like the Tri-Cities – are usually quite different. In the Tri-Cities cases, the prices are expected to be stickier than what most metro areas will experience this year.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us