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Anyone familiar with the New York City real estate market knows how competitive it can be. As one of the most famous cities in the world to live in, there’s a constant demand for property and not enough inventory to meet those demands. New arrivals to the city are often shocked to see how fast the market can move. A listing that goes live on Monday could have at least five offers by Thursday. For this reason, real estate agents always try to impress their clients on the importance of making a fast offer. Time is not a luxury that most buyers can afford.
However, this need to act fast has a significant downside. If you don’t have enough time to assess a property before making an offer, there’s a good chance you’ll have some regrets by the time you’ve moved in. Homebuyer’s remorse is very common. According to one recent study, 70% of buyers have at least one regret. Below, we’ve outlined the top homebuyer regrets and how you can avoid them.
Paying Too MuchPaying Too Much
Buying a home is expensive, especially in NYC. With high competition, it’s almost inevitable that you’ll get caught up in a bidding war or a best and final offer situation. In their emotional rush to beat the competition, many buyers are willing to make large offers well above the initial asking price. So, no surprise that many later regret that decision. Out of all the homebuyer regrets, this is the most common one.
The best way to avoid this is by having a strict budget limit. Your budget must account for the purchasing price and closing costs, attorney fees, moving costs, repairs, renovations, or replacements. Try not to get tunnel vision or caught up in the desire to close on a property you’ve convinced yourself is The One. Also, try to stay away from properties listed at or near your maximum budget limit. The price may go up, and you’ll want to have some breathing room to account for that. Be sure to receive a detailed comparative market analysis from your buyer’s agent; this will bring meaning to the numbers so that you know if you are overpaying and approx by how much or getting it below fair value in some cases. Understanding fair value will also allow you to make a calculated decision.
Underestimating the Costs of HomeownershipUnderestimating the Costs of Homeownership
Homeownership involves looking after the home; you need to be ready for that. First-time buyers often underestimate how much it costs to be a homeowner. In addition to mortgage payments, homeowners’ insurance, and property taxes, there are also maintenance costs. While you can easily calculate the first three, maintenance and emergency repairs can be quite a shocker when they first hit. It’s almost inevitable that you’ll have to make repairs and maintenance every few months, whether it’s a boiler, HVAC and A/C unit that needs replacing, a stuck door, or plumbing issues.
This is why important that you set aside a sizeable reserve fund for maintenance. The general rule of thumb is to set aside 1-4% of the home’s value per year. For a $400,000 home, that would be $4,000-$16,000. Also, make sure you know what you’re buying. Get a home inspection and read the seller’s disclosure statement very carefully. It’s never a question of if but when something will need to be repaired or replaced.
Not Choosing the Right HomeNot Choosing the Right Home
While financial frustrations tend to top the list of homebuyer regrets, many buyers feel they chose the wrong home. Millennial buyers were the most likely to report not being happy with some of the home’s physical characteristics. Sometimes buyers think they need one thing above all else, perhaps a nice view or a spare bedroom, only to forget more important things like a good location, in a rush to make a fast offer.
You can better protect yourself against this scenario by having a clear sense before you start your home search of what you’re looking for. Make a distinction between your needs and wants. Ask homeowners’ family or friends for advice on choosing the right home. When you’re at an open house or private viewing, imagine living there, where you would put your things and what your daily routine would be like. The most important thing is that the home has good bones and a nice layout. Surface-level aesthetics can always be changed, but it’s a hassle to start ripping down walls and changing the home’s entire layout.
Not Getting the Best Mortgage RateNot Getting the Best Mortgage Rate
A surprising amount of people don’t do enough research on choosing a mortgage. They aren’t aware of all their loan options, don’t know how to compare different lenders, and are often surprised by hidden fees. As a result, they end up with a higher interest rate than they could have gotten and struggle to make their mortgage payments. At best, this will cut your savings and make it more challenging to rebuild your finances. At worst, it will lead to you falling behind on your mortgage payments and going into foreclosure.
All of this can be avoided by just taking some time to understand how the mortgage process works and what you can do to get the best rate. Research different loan options and determine which would suit you best. Try to boost your credit score as much as possible and increase your down payment. Shop around for the best mortgage rates and lenders until it’s time to make your application. Please read all the documents you are given or have your attorney explain them so you don’t miss hidden fees. When you take a proactive approach to secure a mortgage, you lay the foundations for a more prosperous financial future.
Not Working with a Buyer’s AgentNot Working with a Buyer’s Agent
Many of the regrets from homebuyers can be traced back to a lack of knowledge. They didn’t know how to properly assess a home during a viewing, were unsure when they were paying too much, and didn’t know how to handle renegotiations after an inspection report. It’s not surprising that most people only go through the homebuying process once every 10-20 years. By contrast, real estate agents go through the buying process daily. They know all the ins and outs of the entire process, whether a price is fair or over market value, how to handle negotiations, and whether any issues with the home should make the buyer reconsider their offer.
Therefore, it’s unsurprising to learn that when homeowners have many regrets about their purchase, they usually don’t seek representation from a qualified buyer’s agent. Hiring an experienced buyer’s agent can be one of the most important things you can do when entering the real estate market. They know the territory and can help you throughout the process while looking out for your best interests. When choosing an agent, make sure they understand what type of home you’re looking for and your long-term plans. They should also be familiar with the area you’re looking to buy in and be able to recommend other professionals such as home inspectors, contractors, and real estate attorneys.
Final ThoughtsFinal Thoughts
The NYC real estate market can be incredibly fierce, and you won’t often have a lot of time to think about what is likely the most significant financial decision of your life. Ultimately, it is normal to feel a bit of homebuyer’s remorse, and you shouldn’t dwell too much on the little things. But you can protect yourself against the worst regrets by adequately preparing for what’s ahead. Know what you’re looking for, your budget, and how to assess a property the first time you see it.
Your agent can provide invaluable advice to help your decision-making, but it will still be your final decision. It would be best to be confident in that decision, especially when you have a limited time window to make it.