Trying to navigate the current seller’s market has been tricky for homebuyers over the past year. A combination of changes brought on by the pandemic, like working from home becoming commonplace and many millennials reaching an age to consider homeownership, has led to an increased, sustained demand for homes throughout the nation.
This demand led to the current seller’s market, where homebuyers faced harsh competition for the available inventory of houses on the market, often at a price well over the listing. Doing everything they could to secure a home, homebuyers would also waive protective contingencies from their offers to make their bid more attractive to the seller and allow the transition to move faster.
Buying a home is likely the largest single purchase that many people will ever make and often end up with a mortgage to be paid of over the next 15-30 years. For a purchase of this caliber, where has the frantic dash to become a homeowner left those who braved the seller’s market this past year?
Roughly two-thirds (67%) of Americans who recently purchased their home say they have regrets, according to an August NerdWallet survey conducted online by The Harris Poll among 450 homeowners who bought their home in the past five years. So, what is leading to this homebuyer’s remorse?
Too Much for Too Little
The limited stock and steep competition left many homebuyers in a difficult position to make tough choices. Homebuyers were required to find the few available homes on the market, which may not offer all the features that the homebuyer was ideally looking for, be prepared to pay above the listing price, and move swiftly during their transactions. Depending on their local real estate market, the competition and frenetic rush may have taken all their effort and focus on getting a deal done.
Another concession that homebuyers would make to accelerate their bid on a home was waiving their protective contingencies. There are numerous contingencies that homebuyers can utilize during their homebuying process, the most common being the home inspection contingency. This allows homebuyers the opportunity to get the property professionally inspected for any issues or health risks before the deal is closed.
Many offers were fast-tracked by waiving the home inspection and made the offer more appealing to the seller. While this was good news for sellers, it could quickly come back to haunt the homebuyer. The goal of the home inspection is to assess the condition of the home and catch any severe issues that would require costly repairs or replacements. These major defects are often ones that the average homebuyer is not privy to or can detect on a brief walkthrough: a roof or foundation past its working life, faulting plumbing or electrical system.
The home inspection contingency allows the homebuyer to negotiate these defects with the seller or walk away from the deal if any serious concerns are found. However, once the home inspection is waived and the purchasing agreement is signed, all issues fall on the new owner.
After living in their new homes for some time, homebuyers feel the reality of their new homes after the rush of the home buying process has gone away. According to the poll, the majority of these homeowners are not happy with their purchases. Maybe they waived the home inspection and now find themselves in a money pit with a long list of repairs that their homes need. Or perhaps the house they bought just ended up not being a good fit for their family and their needs.
Factors to Consider for Buyers Still in the Market
While the market still favors sellers and houses for sale can be difficult to find depending on your region, you may want to consider a few things while trying to find a home and avoid buyers’ remorse.
Becoming a Homeowner
Before getting caught up in a bidding war and increasing your offer, please take a moment to think about the home itself. Does it have all the features you need and want? Seeing the pictures on the listing and doing your walkthrough is one thing, but you’ll be living in it for the foreseeable future. Even if it has everything that you dreamed of, you’ll want to be firm on your budget as well. While final prices are often higher than the listing, you’ll want to account for that from the get-go and not start your search for a home at the far end of your budget. A home is a big purchase and a significant change to your living arrangement. Make sure you know what you’re getting into and that it’s the right fit for you.
No “Check Engine” Light
Unlike a car that tells you when something is going wrong, a home does not have that same feature. Things will break down and create a more significant issue before you notice them in many cases. If you can, before you buy, definitely get a home inspection to make sure there aren’t serious issues with the home and determine that it’s a sound investment. If you choose to waive your inspection, it’s still a smart idea to have the house professionally inspected after the purchase. It will give you a better idea of the state it’s in and alert you to any issues to potentially catching them earlier (when costs of repairs are lower).
Buying a home can be a long process with many steps involved, and it’s even trickier in today’s market. But becoming a homeowner can be a truly worthwhile endeavor for you and your family. Be sure you are taking the proper precautions and coming prepared for these situations so you can become a satisfied homeowner.