In the US, housing inventory rates at a 12-year low, and it's a strong seller's market.
According to US real estate Trulia.com, 75 per cent of US consumers say it's better to buy a home now than it will be a year from now. Whilst only 1 in 3 consumers (32 per cent) think it's better to sell now than a year from now.
The website calls it a “hot market” with massive competition among buyers, that can lead to unconsidered or rash decision-making. And thus regrets…
So a new Trulia report, based on a survey of consumers, reveals five key pieces of advice from agents, helping buyers make decisions they feel good about in the long run. With thanks to Trulia, here is an edited version of their report:
1. Get realistic and be aggressive.
Time is of the essence. The process of successfully buying a home on a market like today's is laden with points at which every buyer must face the pain of some hard-to-swallow truths:
Truth: It might take longer to buy than you thought.
Truth: You'll very possibly lose a few homes you love before you are successful.
Truth: Your home-buying dollar might not afford you the mini-manse of your fantasies.
Truth: You might have to offer more than the asking price and compete with other buyers in order to make your home buying visions a reality.
The buyers who face these truths head on are those who position themselves to make reality-based, aggressive home buying moves like house hunting in a slightly lower price range so they can offer more than asking without blowing their budget.
Of course, every market is different - this is why it's essential that you work with a local agent to understand the realities of your market and how you can optimize your house hunt for them.
2. Buy a home that will work for you 5 or 10 years down the road.
When buying a home it can to visualize the life you want to live in the home you're preparing to buy. This is all about creating a vision for every area of your life, from your work (and how you get there every day), to your family and cohabitants, your activities, how much time to spend there and and how your spend your time (entertaining, pottering etc.)
This exercise helps avoid the number two most common real estate regret uncovered in the study: 34 per cent of respondents said they wished they had chosen a larger home. It helps you plan your space needs around the living and activities you'll want to be able to do in the home, not just the sleeping areas you'll need for individual family members. It also helps you take a longer-term view of family and space planning to anticipate issues like whether you'll want to take in an aging parent, allow for children to stay for a while, or have space for a nanny or tenant.
3. Be honest with yourself about your interest and ability to fix a home up, before you buy.
Typically, if a new homeowner doesn't make the fixes they plan within the first year after closing, chances are they won't make them for many years - maybe even until they are planning to sell the place again! Obviously, there are exceptions - there are the folks who have a 15-year roadmap for home improvements in place before escrow even closes, and who execute it meticulously but 27 per cent of survey respondents said they wish they would have done more renovations and updates to the property when they bought it.
Trulia suggest the way to avoid this regret is two-fold. First, you can make sure that you have a budget and a firm plan of action for the home upgrades you want before you close the deal, versus a vague sense that you need to "do something" with the kitchen. This includes getting estimates from builders and even having some or all of your desired work done after closing and before you actually move in, to maximize both your chances of actually following through on your home improvement plans and the enjoyment you get out of the upgrades.
The other way to avoid this regret is to simply be honest with yourself. If you're not the type to follow through on a fixer-upper plan of action, take this into account when you choose your home so as not to end up in a place you'll regret not fixing. Find a place, instead, in a condition you can live with, even if you don't do much (or any) work to it, after you buy.
4. Ask every question - then ask a few more.
And read everything you are given. Twenty-two per cent of homeowners surveyed said they wish they had more information about their home before they decided to buy it. The fact is, much of the information homeowners regret not having is actually at every home buyer's disposal - though it might take some work to get it.
For example, some homeowners wish they'd known more about their neighbors and neighborhood, which can be collected during the house hunt by knocking on doors, meeting the neighbors, google-searching and investigating the neighborhood online and even visiting the home and surrounding area at different times of day and days of the week/weekend.
Others might wish they'd known more about the property itself, or the Homeowner's Association. Buyers miss out on valuable property information when they don't attend their home inspections in person, or when they fail to fully read, understand, ask questions about or follow up on their home, pest, roof and specialty inspection reports.
For instance, your home inspector might be willing or able to show you how to operate certain systems or use your emergency gas and water shut-offs if you are onsite during the inspection - things you might wish you knew later on.
Also, they can often verbalize valuable insight and nuance to the property issues they find, if you're onsite during the inspection - you miss this information if you don't attend. And if you fail to actually obtain any follow-up inspections the general home inspector recommends (e.g. plumbing or electrical inspections) you can be in for an un-fun surprise over the long run.
So read your reports and your HOA disclosures, even though they are long, tedious and some might say, border on boring. And be aggressive about asking your agent and your inspectors to help you understand how you can gather the information that's important to you. There is more available than you might guess.
5. Focus your spring workouts on whipping your money matters into shape.
The final two real estate regrets articulated by survey respondents were related: 18 per cent wish they had put down a larger down payment on their home, and 16 per cent wish they had been more financially secure before they bought a home.
So much of what we talk about in terms of financial preparations for home buying is about doing the bare minimum to qualify for the sort of home we want, in terms of saving up the minimum down payment that will allow us to afford to buy at our desired purchase price, getting our credit together and making sure we have all our documents lined up. But none of these things actually solve for the regrets these former buyers express. The only path to avoid these later issues is to view home-buying as an opportunity to take a concerted deep dive into your finances and give them a healthcheck.