Choosing the right home is a mammoth decision, with ramifications for both your finances and lifestyle. It’s not a choice to be made hurriedly. But given the tight real estate market, many buyers are acting under pressure.
“The pandemic-driven feeding frenzy in the for-sale market added challenges for buyers,” says Manny Garcia, an analyst for Zillow, the national real estate company.
Though not all potential purchasers involved in recent bidding wars scored a property, many who did look back with some misgivings.
A Zillow survey of those who bought a home during the last two years found that 75% had at least one regret about the place they purchased. Common concerns include the post-move-in discovery that the place feels too small or that it needs more work than expected.
“This research suggests many of those buyers ended up with a home that was less than ideal,” Garcia says.
Of course, no home is perfect, and even buyers with minor regrets are often pleased to have beat out rival bidders in the current hyper-competitive seller’s market.
“It’s important to remember that even in a balanced market, most buyers have to make compromises to stay within their budget,” Garcia says
Richard Rosa, the owner of an independent real estate firm, says there are some compromises that should be deal-breakers for potential purchasers.
“It’s advisable to avoid a house that’s located on a busy road or next to a commercial space like a gas station. Also, watch out for an odd floor plan, like one where you have to walk through one bedroom to get to another. Such houses could be hard to sell in the future,” says Rosa, president of the National Association of Exclusive Buyer Agents (naeba.org).
Here are a few other pointers:
-- Try to keep your emotions under control when shaping a bid.
Granted, buying a home is currently a competitive activity in many neighborhoods. But every property should be evaluated on its merits, not on the number of people vying to own it.
Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies,” suggests buyers set a ceiling on how much they’re willing to pay for a property before making an opening bid, to avoid getting carried away in the heat of negotiation.
“Remember that sometimes the winner of an auction winds up the loser,” Tyson says.
-- Seek information from neighbors in an area you’ve targeted.
Your agent should be helpful in sorting through property listings, making sure you identify the most promising homes available.
But once you have your eye on a particular place, it could be the time to talk to those who know the community best: neighbors.
“Believe me, most neighbors will bend your ear about their neighborhood. For example, they’ll tell you if they like or hate the local schools, and the ages of kids who live in nearby homes,” Tyson says.
-- Visit enough properties to make an informed comparison.
Even if the first place you see looks perfect, you’ll want to ponder alternatives to make sure you have a basis of comparison, says Tyson, who recommends that home shoppers look at a minimum of six properties before they buy.
“Buyer’s remorse is much less likely if you’ve examined several options, even if you must do so in a single day,” he says.
-- Educate yourself on local property values.
If you’re uneasy about the price tag attached to a property you like, have your real estate agent show you several comparable homes that are also on the market, including those under contract, Tyson says.
Resourceful buyers might even go a step further by asking people who’ve recently bought into the neighborhood whether they would mind giving them a peek inside.
“Drop a little note in their mailbox telling them you’re interested in the neighborhood and leave your names and phone number in case they’ll let you come by,” Tyson says.
What’s the advantage of evaluating the price and quality of freshly sold homes? In areas where home prices are rising, the latest sales are the most telling, more so than transactions that occurred months ago, he says.
-- Don’t surrender your right to a home inspection.
Almost without exception, buyers are entitled to an inspection of a property once their offer is accepted by its sellers. But in hot markets, many buyers are now waiving this right, believing their bid will be more appealing to the sellers if they do so.
Tyson says he understands why some buyers voluntarily give up the right to an inspection, particularly if they’re trying to purchase a home in a strong seller's market. Still, he argues that an inspection could expose unseen defects, such as a heating system problem, that may not be apparent until after the move.
“No matter how hot the market, I would never advise buyers to forgo an inspection. If, for competitive reasons, you don’t want to have this right in your contract offer, at least you should ask the owners for the chance to do an inspection before you make a bid,” Tyson says.
(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)