How to avoid buyer's remorse- President's Message
Like the ancient Greeks and Romans, we as Americans are also living in our own golden age: the golden age for home buyers, where incredibly low interest rates, discounted home prices and government incentives have combined to create buying opportunities of a lifetime. In fact, three fourths of Americans believe that now is a good time to buy a home, according to a recent National Association of Realtors survey.
But many would be buyers are still faced with uncertainty. "What if prices fall after I've bought a home?" "What if a better property comes available?" "What if I decide I don't like the home?"
As detailed by the New York Times in a recent article, today's buyers face a more psychologically demanding home buying process than their counterparts in the boom years. When real estate prices were skyrocketing, new homeowners could simply sell their property at a profit if they decided they didn't like it. Today's buyer has to make a firm commitment to any purchase, and experts say the uncertainties surrounding home values have left many would-be consumers in limbo.
"The herd mentality was influential in getting people to jump into the bubble, and it is the same keeping people out," Mary Gresham, a clinical psychologist in Atlanta who studies personal finance issues, told the New York Times. "Anxiety runs through a culture just like greed."
But perspective home buyers don't have to be trapped by anxiety. In fact, many of the regrets that could arise later on van be avoided with a bit of advance planning.
In a recent Wall Street Journal column, Douglas Heddings, founder of the Heddings Property Group, LLC at Charles Realty in Manhattan, gave consumers several tips for avoiding buyers remorse. Heddings first suggestion is that buyers conduct some research beforehand to avoid overpaying for a property. In his column, he advised buyers to work with their real estate agent to evaluate the prices of similar, comparable properties that have recently sold.
Heddings says limiting your comparisons to properties that have sold in the last two or three months or are currently under contract will provide you with the most up to date information, which will decrease the likelihood of overpaying. Heddings also stressed that it is important to use only properties that are truly comparable. For the most accurate assessment of market value, properties should be in the same neighborhood, built around the same time and have similar features.
Another way to avoid later regrets about a home purchase is by carefully examining your budget before shopping for a home. Buyers often have doubts or want to get out of their contracts when they realize they might be taking on too much of a financial commitment. Make the process easier on yourself by budgeting and talking with a loan officer about what you are comfortable borrowing and what you can comfortably afford to pay.
In a market where home prices have declined, another common concern is that prices will drop lower. For buyers who have found the right home and would like to buy now, it helps to consider both the price and the interest rate. Even if prices come down 10% in the next year, but interest rates rose 1%, you would still be making the same mortgage payment. Remember, as long as you are comfortable making the monthly payments, it doesn't matter whether surrounding home prices are going down or up.
Finally, determine your goals. Decide what you want from the house, and make a list of the features you have to have.That way you'll be able to objectively evaluate each house and know that it will meet your needs. Also, make sure that you are committed to staying in the house for a few years. As you stay longer, there will be more of a chance for home prices to increase and for you to gain equity.
Of course, even with the most diligent planning, there will still be uncertainties in the home buying process. For the best chance of success, make sure you are working with a local Reator!