Real estate remorse
Considering there’s entire marketing lectures dedicated to the concept, it’s highly likely that I’m not alone in having suffered from buyer’s remorse. Buyer’s remorse is most common in big ticket purchases. You’re less likely to lament the purchase of a pair of socks than you are a $300,000 sports car for example. When you’re spending a lot, you tend to be more hesitant in agreeing to part with your cash, and property is in that category. It also means people are prepared to make what may otherwise be considered crazy financial decisions to avoid buyer’s remorse all together.
For example, I was reading just this week about an overseas real estate agent who had a customer walk away from a $250,000 deposit for a two-bedroom, two-bath apartment in a development after having signed the contract over a year ago. The reason being, she signed up for the apartment in a very different market to the one she’s facing now, and although she is yet to own the finished product, she anticipated that she has already lost around $700k on the initial expected value. For her, carrying on down the purchase path and overpaying by that much outweighed the quarter of a million she’s now lost by walking. This customer has gone on to buy another, better home but I guess the trade-off is she still essentially paid $250,000 more than the price tag.
In most markets, most buyers will believe they are overpaying, and that’s a key trigger for buyer’s remorse. When it comes to property, regretting your purchase is more likely to happen if you spend all your time looking at the numbers that are being flung about in relation to the property market than if you really understand the current market and how to apply that information to the property you are considering, or have already decided on.
Buying a home should be a fun, joyous experience so the last thing you want is to be questioning your decision and throwing yourself into a sea of doubt after the fact. Avoiding buyer’s remorse can be achieved through much the same process as smart buying – there are fundamental points to consider, and if you do, you’re much less likely to end up sobbing on the doorstep of your new home.
Firstly, be sensible and honest when assessing your financial situation. Look at how secure your job and your income are, and look at the money you already have. Think about interest rates in this regard too – if you’re stretching yourself already, what happens if interest rates rise?
Unless you can purchase your property outright, speak to a bank or a mortgage broker. The rules have changed quite a lot in recent times, and people who were considered eligible to borrow a great deal may no longer find themselves considered as such.
And importantly, decide if you really want to move! Think about if it really is the best decision for you right now, or should you be waiting a little longer?