How to Avoid Home Buyer's Remorse
Quantify, Read, and Resale: How to Always Paying the Right Price
Feb 28, 2007
Buyers remorse effects everyone. Most of the time it happens around the purchase of small consumer items like clothes and appliances. Imagine having that sinking feeling in the pit of your stomach a month after you move in to your new house. Here are a few tips to avoid regretting your real estate purchase.
Understand Yourself First
Read and do some personal reflection. When you think about a house, reflect on how you use it.
- If you don’t cook, don’t fret about a small kitchen.
- If you like to entertain, consider purchasing a house with a finished based or great room.
- If you plan on children, don’t just think about extra bedrooms, think about child friendly homes (fewer steps, more open space, backyard, etc.).
Consider the Resale Value
As you look at houses in an area, think about what all of the houses have in common. Most neighborhoods are built all at once by the same construction company; therefore, they will have similar floor plans and similar amenities (excluding possible owner upgrades). Before you consider buying the house with the most upgrades, consider whether or not you want to tackle a remodel. Don’t just consider the cost of the remodel, but also think about the amount of time and headache you can handle. No remodel goes smoothly! If a house with a newer kitchen cost $20,000 more than a house with an older kitchen, add $3,000 to $5,000 before you consider getting that older house. If it’s still worth it to you, go for it.
Quantify all the Upgrades
When you actually look at each house, keep a check list of the items that are most important to you and the items that you will want to change. Put a value on everything. Try to avoid saying things like, “That house has a great bathroom design.” Always quantify these upgrades by saying things like, “It looks like it cost about $5,000 to get something that nice.” This thinking helps you to avoid overvaluing upgrades and undervaluing items in disrepair. An average bathroom will probably need about the same work as an old bathroom, if you really want to make it shine. Therefore, these two should be the valued the same if you want to add all new bathrooms to a house. This will be very hard at first, but the more houses you see and the more you force yourself to do it, the easier it will get. Additionally, this really lowers the probability of buyer’s remorse because you are really taking emotion out of the purchase.
Finally, tally up the things you really like about the top five houses you are interested in. Once you compare and contrast these things, you should consider bidding on the one that is the best deal; meaning the house that is the lowest price after adding all of the necessary upgrades to make them comparable. While this may be the best house in the neighborhood, you might be surprise at what your analysis suggests. Remember, owning a house is a long term investment. Buying a house that is a littler older gives you the opportunity to make it your own. If you consider the rehab route, consider this article on upgrading your home.
Taking this step by step approach to purchasing a house takes some of the emotion out of it. Try to be as honest as you can with yourself. If you know that you don’t have the patience for a remodel add an additional $10,000 to the market cost of your remodels. No matter what, keep everything to the numbers. This one step will help you take personal feelings (#1 cause of buyer remorse) out of the equation.
