Over the past year, the growing imbalance between supply and demand has pushed buyers to the limit. Auction wars and seller-friendly concessions have become the norm as buyers compete for the chance of owning a home, even if it is far from what they originally hoped for.
Although the bidding wars are slowing down and asking prices leveling off, Nerdwallet’s latest market analysis shows that buyers are still feeling the pressure to do whatever it takes to buy a home, which, unsurprisingly, is can lead to dissatisfaction and regret.
“There are many reasons why a buyer may regret their home purchase, or some aspect of it,” the report says. “And in 2021, even more than over the past five years as a whole, the risk of buyer’s remorse is high. The sharply tilted seller’s market means that most buyers make sacrifices in order to successfully close a home.
Here are a few ways to make sure your customers don’t regret the day they bought their home.
Encourage buyers to separate wants from needs
The first problem for homebuyers, Nerdwallet said, is the frenetic pace of homes being snapped up. Prior to June 2020, the five-year average of days in the market was 41 days. However, that average has dropped to just 18 days, as low interest rates keep buyers on the ground.
To avoid wasting time when looking for a home, Nerdwallet suggests that buyers take extra time to calculate a reasonable purchasing budget and create a list of wants and needs, so that they can quickly identify the house that has everything they need, although some bells and whistles are missing.
“Be specific: know what features you are willing to compromise on and what is off limits when it comes to [the] selling price, ”the report says. “Make decisions like ‘Do we really need a third bedroom? Or “Can we afford $ 50,000 more?” On the fly is risky at best.
Don’t sacrifice everything
While it is important to analyze the difference between a buyer’s wants and needs, Nerdwallet noted that the best way to avoid regrets is to resist the urge to throw everything on the list of good ones. to have.
“The number of homes on the market has fallen by around 55% from September 2019, when it was last peaked, according to realtor.com residential ad data,” the report notes. “The supply of homes offered for sale is insignificant, so buyers are unlikely to find one that meets their wishlist.”
“Being flexible is a must in this market, but sacrificing too much could leave [buyers] with a house that is far from that [they] considered, ”he added.
Ask buyers what their most important wants and needs are, and be prepared to look longer or even put the home buying process on hold if you anticipate a more suitable inventory in the coming months.
Step back on exorbitant offers and forgo the unexpected
The past year has been an exceptionally strong sellers’ market where buyers are fighting even for clearly overpriced homes. When it wasn’t enough to offer four or five figures above the asking price, some buyers have resorted to contingency waivers – a decision that can come back biting.
“When faced with a cash offer for a asking price or more, buyers who have to borrow might try to lure the seller by taking dangerous risks, such as forgoing a home inspection,” the report said. “But 10 percent of homeowners who have bought in the past five years regret not having done a pre-purchase inspection of their home, and 13 percent of these recent buyers say they regret finding out their home was in trouble. important in need of repair. “
Before making an offer, Nerdwallet said, it’s important to know your buyers’ buying threshold and be prepared to forgo a deal that could cause serious headaches in the future. “Winning isn’t everything. Don’t let the competition push you to forgo important protections or exceed your budget, ”the report adds.
Prevent buyers from stretching their budget to the maximum
Many homebuyers, especially newcomers, don’t understand that just because they’ve been pre-approved for a certain loan amount doesn’t automatically mean they can afford it. While they can afford a monthly mortgage, the additional costs of home ownership such as appliance repairs and purchases, regular maintenance, and insurance could easily push them to the limit.
“Five years ago, in July 2016, homes were selling for $ 245,100, or $ 278,100 in today’s dollars, according to data from the National Association of Realtors,” the report said. “Now the typical selling price is $ 360,000, which is almost $ 82,000 more. [and] income did not follow.
“What this means is that a buyer’s money won’t go that far today,” he added. “Add to that the ongoing costs of home ownership, and it’s clear how quickly homebuyers can gain the upper hand.”
To avoid regrets and possible foreclosure, help buyers create an overall budget that takes into account their mortgage and the costs of maintaining their home on a monthly and yearly basis. This will give them a more realistic idea of how far they can go to get the house they want.
Email Marian McPherson