Obviously, it’s not nearly as bad as post-traumatic stress from a combat experience or a shocking medical diagnosis -- but homebuyers who’ve lost out in multiple bidding wars can still suffer significant bouts of anxiety.
“People who put in strong offers yet get rejected anyway feel shellshocked and pretty exhausted,” says veteran real estate agent Stacy Berman.
“Some renters who lose out in bidding wars become dispirited and simply surrender to signing another year’s lease, despite a big jump in their rent,” says Art Godi, the broker-owner of an independent realty firm.
But Godi, a past president of the National Association of Realtors (nar.realtor), says that for truly motivated buyers, retreating from the real estate market is often a self-defeating strategy, given that home prices are continuing to rise.
“Maybe you’re not priced out of the market yet, but that could happen in the future, considering current trends,” Godi says.
Even so, Berman says those feeling dejected in the aftermath of losing out in 2021 bidding wars can benefit from taking a brief break from the competition.
“Don’t go house-hunting again for another week or two, but then get back at it with an open mind and a fresh approach,” she says.
While on their brief break, Godi encourages buyers to reflect on some of the emotional barriers that could be preventing them from full participation in the market.
“Regrettably, some buyers take it way too personally when other bidders beat them out. They feel diminished and have to address their underlying fears before moving on toward their buying goal,” he says.
The fear of losing out to other bidders is just one worry that afflicts homebuyers. Here are a few other common fears, with pointers on how to address them:
-- Fear of embarrassment about your credit history.
“Going to the lender’s office for preapproval can be a big breakthrough. People are often pleasantly surprised by what the lender tells them,” Godi says.
Of course, many prospective homeowners have flaws on their credit reports that must be fixed before mortgage approval is possible. Still, as Godi says, mortgage brokers and lenders often prove much more supportive than loan applicants anticipate.
“Call it jaded, but mortgage lenders have seen it all when it comes to credit reports. They aren’t going to be shocked or surprised no matter what your credit history reveals,” he says.
Most mortgage lenders rely on commissions and don’t get paid unless their clients get approved. This gives them a strong incentive to take the time and effort required to help rectify their clients’ problems.
-- Fear of selecting a property without the support of family.
Many would-be first-time buyers are in their 20s or 30s. On financial matters, they still look to their elders for direction and, not infrequently, for cash subsidies as well.
“I can’t tell you how many times buyers crave the support of wise family members when it comes to buying their first home. It’s a new experience that can feel exciting yet incredibly scary,” says Merrill Ottwein, a Coldwell Banker broker.
There’s nothing inherently wrong with seeking help from relatives. But Ottwein says you should request their involvement early on, not when you’re about to sign the papers to buy a place.
“Your family could be caught off-guard by a late-stage request for guidance. They might be needlessly negative and counsel you against a particular purchase in an attempt to shield you from an error,” says Ottwein, a past president of the National Association of Exclusive Buyer Agents (naeba.org).
If you’re afraid to go forward without your relatives’ guidance, but don’t want them to mess up your plans, he suggests you bring them along on all your house-hunting trips. That way they can compare various alternatives and are likely to give you more objective advice.
-- Fear of coming up short on the funds to close a home deal.
Granted, it can be costly to make a housing change at any stage of your life. But many first-time buyers overestimate their need for cash to go through the transition. They fail to take into account the reality that there are a multitude of low-to-no-down-payment mortgage programs available to them.
Ottwein says first-time buyers are well advised to explore these options as soon as they decide to make a purchase, rather than waiting until their savings accounts are brimming with funds.
“Before you head into a huge savings campaign, call an experienced mortgage lender. It’s possible that you may not need as large a down payment as you imagine,” he says.
-- Fear you will suffer from “buyer’s remorse.”
Given the stakes, many wannabe first-time buyers become highly risk-averse, worrying they’ll select the wrong home.
“For beginners, there’s a strong tendency to over-research the market; to gather more and more facts before making a commitment,” Godi says. “Psychologically, it’s an easier, safer course to keep searching for additional information than to make a decision.”
But waiting for absolute certainty can have its penalties.
“Through the years, I’ve seen many offers by first-time buyers turned down by sellers because they procrastinated on a decision,” Godi says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)