13 Reasons First-Time Homebuyers May Regret Their Big Purchase
Compared to previous generations, millennials are delaying many life milestones, including buying a home. Those who have taken the plunge are already feeling the pangs of buyer’s remorse: A survey by Bank of the West found that nearly 70% of millennial homeowners regret their purchase.
Survey respondents cited overspending on the down payment, underestimating ongoing costs and settling for a home that wasn’t quite right as the major reasons for this regret. The experts at Forbes Real Estate Council agree that these mistakes, among others, are common among first-time homebuyers, and often lead to dissatisfaction with their purchase. According to 13 members, here’s why some homebuyers wind up in such regretful situations.
1. They Focused On Investing, Not Living
Too many people look at their home as an investment and make their purchase decision on that basis. If they instead focused on finding a place they would truly love to live for the next 10 years or more, they’d be far happier, and still enjoy the two best benefits of home ownership: not worrying about being asked to leave, and using a 30-year fixed mortgage to never have a rent increase. – Sean O’Toole, PropertyRadar
2. They’d Rather Have Experiences Over Mortgages
Millennials have different priorities than their parents and grandparents. Home ownership was once the ultimate symbol of achievement, but now that people are getting married later and delaying having children, putting down roots is not as much a priority. Younger generations would rather spend extra cash on experiences, not mortgages. The key is finding a situation that allows for both. – Elizabeth Ann Stribling-Kivlan, Stribling & Associates
3. They Didn’t Know How The Process Works
I think most people buy a house without knowing what they are doing. They don’t know how the loan works, what values are or the expenses they will have. They trust the agent, the lender and the title company. If someone learns what is involved in buying a house, they can get a good deal and make a great investment, instead of just going with the flow. – Mark Ferguson, InvestFourMore
4. They Bought Out Of FOMO
I believe millennials are experiencing FOMO (fear of missing out) and reacting to that when spending their money on a mortgage payment. Adjusting to a new budget, especially after draining your bank account of the savings used for your down payment, doesn’t feel like fun. In the end, investing in property will pay off, so I believe the FOMO is only a temporary buyer’s remorse. – Beatrice de Jong, Open Listings (YC W15)
5. They Didn’t Run The Numbers Before They Bought
Purchasing and maintaining a home can be more expensive than expected. Many first-time buyers don’t take into account all of the expenses involved in maintaining a home once it’s purchased. Prospective buyers should estimate all costs on a monthly basis prior to moving in, and then practice living with that budget to make sure that you can afford the property you want to purchase. – Lisa Fettner, ReferralExchange
6. They Were Looking For Instant Results
In this day and age, some buyers expect instant returns on their home purchase. They check their home’s Zestimate on a daily basis and continue to scan the MLS for comparable homes for sale or recently sold to help justify their purchase. The key is to stop looking at your home like a short-term stock, but something tangible that you can enjoy and reap the long-term benefits of. – Brad Le, Climb Real Estate
7. They Underestimated The Work Involved
Home ownership is not easy; it requires work. Maintenance, upkeep, taxes and cost of ownership all are important factors. Millennials, who are used to a fast-paced, always-plugged-in lifestyle will likely have a better experience buying something that is new and turnkey, and less likely to need repairs and constant attention that older homes may require. Less work equates to more enjoyment. – Ridaa Murad, BREAKFORM | RE
8. They Didn’t Do Their Homework
I advise first-time buyers to carefully choose their property online to select a few choices and write a pros and cons list to determine the best possible purchase candidate. Buyers shouldn’t borrow money for a down payment, and should budget monthly carrying costs and select the best possible property. Use a property inspector and do the punch list inspection with an additional walkthrough before closing. – Elliot Bogod, Broadway Realty
9. They Felt Tied Down To One Location After Buying
Millennials move often. We live in a world that is open to many opportunities and I’d assume that millennials feel very tied down when owning a property. I’m on my third property at 28 years old, and I wish I would have understood my finances better when applying for the first mortgage. Secondly, I would have studied homebuying education courses before buying. – Joshua Fraser, Data Nerds
10. The Home Didn’t Fit Their Lifestyle
Buyer’s remorse can be the result of a bad fit. Some regret buying too small for their lifestyle or too far away from their work, friends and family. Still, others say too much home, financially speaking, forced them to give up dining out or travel to pay for it. It’s important to understand your wants and needs as well as what you can afford, then look with an agent who understands your needs. – Blake Plumley, Capital Pursuits LLC
11. They Didn’t Have Sufficient Education From An Agent
The millennial generation is able to more easily access information, but it can often be bad information. They see people “do it themselves” all over TV and the internet. The reality of those TV homebuying experiences is not brought to light in 30 minutes or less. The job of an agent is to educate people about real estate transactions and then help them gather information to make their best decisions. – Michelle Ames, HorsePower Team Texas/Independent Realty
12. They Made One Or More Common Homebuying Mistakes
After the tax benefits, think twice if you can rent for less than the cost of buying. Buy where you want to live, and do not bank on appreciation. Put down at least 20% to have a cushion in case the market goes down, and don’t be “house poor.” Buy what you feel comfortable paying for. Make sure to budget for renovations and get your own appraisal. – Holly Williams, MQ Ventures, LLC
13. It Didn’t “Feel Like Home”
A common reason for regret when buying a first home is not finding the desired “feeling of home.” Making a house a home can take a lot of physical work, but more than that. It’s about your neighborhood and the community created within it. There should be a sense of pride in where they live. That intangible offers great value to a house — or anywhere you choose to live — and helps make it a home. – Benjamin Pleat, Doorbell Communities
This article originally appeared in Forbes.
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