What Is Buyer's Remorse?

Felicia Oliver

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Felicia Oliver

May 24th, 2022
Updated May 24th, 2022

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Causes | Dealing with a purchase you regret | Avoiding buyer's remorse | Getting over buyer's remorse | Pandemic-era and millennials' remorse | FAQs

In real estate, buyer's remorse is a feeling of regret or anxiety after buying a home.

Buyer's remorse is common

In our survey of 1,000 homeowners, 60% felt some form of buyer's remorse. Of those, 30% said hidden homeownership costs were the leading causes of their buyer's remorse.

If you haven't closed, you may be able to get out of a home purchase you regret — though you'll likely forfeit your earnest money deposit.

But if you've already closed on the home, it's unlikely you can do anything about it (unless you're ready to resell).

The best way to avoid buyer's remorse is to work with an experienced local real estate agent who understands your priorities.

» Clever Real Estate can help you find a top buyer's agent near you and put thousands of dollars back in your pocket when you close. Get started today.

What causes buyers remorse?

Most homeowners (53%) admit they would have approached buying differently if they realized the actual cost of homeownership.

According to our research, the leading causes for buyer's remorse include:

Paying too much for a home

Money regrets rank high. First-time homeowners often don't realize the actual cost of buying a house isn't just a mortgage. The average homeowner pays an additional $15,405 each year.

Most homeowners surveyed were surprised about the true cost of owning a home: specifically, expensive monthly mortgage payments (28%), high interest rates (26%), and hidden costs (30%).

How much the average U.S. homeowner spends each year
Home improvements
$6,649
Homeowners insurance
$1,228
Maintenance and repairs
$2,676
Property taxes
$2,600

Hidden costs that add to the purchase price of a home include:

  • Closing fees, typically 3–5% of the purchase price
  • Higher utility costs due to additional square footage, with homeowners spending about $2,000 more every year on utilities than renters
  • Maintenance costs, which 39% of homeowners overlook

A National Association of Realtors survey shows nearly one-fifth of buyers (19%) waived a home inspection contingency to make their bid for a home more attractive. But forgoing an inspection can lead to unpleasant surprises once buyers move in.

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Buying in the wrong location

According to a Zillow study, 25% of home buyers mention bad location as a reason for buyer's remorse. They aren't comfortable with their new neighborhood because of:

  • Concerns about safety
  • Issues with neighbors (e.g., noisiness and other complaints)
  • Longer commute times

Make sure you understand the implications of where you buy. Working with a real estate agent who knows the area you want to buy in can be tremendously helpful.

Check local police statistics to see if the neighborhood is a high crime area. It's always good to visit the neighborhood at various times (especially at night) to see if there's a lot of noise and activity. And literally test drive your commute during rush hour before finalizing your home-buying decision.

Unhappy with the house

According to our survey, 32% of homeowners said they regret a feature of their house like size, a certain number of bedrooms or bathrooms, a yard, too many stairs, and so on.

Buyers almost always have to compromise on some of the features they want in a new home. So it's helpful to make — and stick to! — a list of must-haves and nice-to-haves to avoid regrets later. Unless you can afford major remodels, there's not much you can do to change the physical features of the house.

Too much time spent on maintenance

Homeowners from our survey report spending an average of 19 hours a month on home maintenance. That's almost 230 hours each year — and that time needed to DO the work is often underestimated.

Pandemics, millennials, and buyer's remorse

Our survey shows that nearly two-fifths (39%) of people who bought their home during COVID-19 feel remorse.

In a balanced market, most buyers have to make compromises to stay within their budget. This is even more the case during the explosive seller's market experienced during the pandemic.

According to Zillow research, 75% of those who bought a home in the past two years say they have at least one regret about the home they bought.

Our research reveals that 2020 home buyers were more than twice as likely to report feelings of anxiety and stress than home buyers who bought in the previous five years.

Before the pandemic, 20% of homeowners said they sometimes or often felt buyer's remorse. In 2022, that number is up to 45%.

Some millennials (25–40 years old) felt rushed into buying a home because of a competitive housing market.

Compared with just 24% of boomers, 42% of millennials expect to make snap decisions about purchasing a home, which can lead to choices they later regret.

Many millennials are willing to take risks to afford homeownership, including:

  • Buying a home sight unseen (90%)
  • Purchasing a fixer-upper that needs major repairs (82%)
  • Offering over asking price (80%). About 1 in 4 millennials who already own a home regret that their mortgage is too expensive.

They also realize too late that the home has expensive, unexpected, time--consuming repairs. A National Association of Realtors surveyshows that nearly one in five buyers (19%) waived a home inspection contingency. Being desperate to win a sales bid can lead to unpleasant surprises once the buyer moves in.

» READ: Millennial Home Buyer Report: 2022 Edition

How to deal with buyer's remorse if you're already under contract

If you've signed a contract, it's not necessarily too late to back out of it. Talk to your agent about your concerns.

Undisclosed serious issues with the home

Make a list of valid issues you have, particularly those that weren't disclosed by the seller. Your agent may be able to pull out of the contract and cancel the sale. Issues include:

  • Structural problems
  • Lead-based paint in homes built before 1978
  • Violent crime or death on the property
  • Reports of paranormal activity

However, you risk forfeiting your earnest money. For the average U.S. home, that could be as much as $22,700 — a lot of money to lose!

Contingencies in the contract

Most real estate contracts have contingency clauses. If one or more of the contingencies fall through, the contract can be terminated.

» MORE: What Are Contingencies in Real Estate?

Some common contingencies allow the buyer to back out if there is an issue:

  • Appraisal — the fair market value of the home is less than the seller’s asking price.
  • Financing — the buyer can't secure a mortgage or other financing for the property
  • Homeowners association (HOA) — the buyer's unwilling to abide by the rules, fees or any aspect of the HOA that oversees the home.
  • Inspection — the inspector finds an issue that the seller isn't willing to fix

Quick Tip

Let's say you want to back out of a purchase contract because the home is too far from your ideal location. The rules, fees, and any other aspect of the HOA that oversees the home essentially act as contingencies for residence. You may be able to cite your unwillingness to abide by your HOA's rules to get out of the sale. The seller can threaten to sue, but you can ultimately back out without any legal action.

» LEARN: When Can a Buyer Terminate a Contract in Real Estate?

How to deal with buyer's remorse if you've closed on a home

If you've already closed on the property, signed the paperwork, and received the deed, your options are limited.

File a lawsuit to reverse the sale

You may still be able to reverse the sale if you discover that the buyer failed to disclose serious defectsin the home, such as:

  • Cracks in the structure
  • Renovations that don’t meet code

However, you'll probably need to file a lawsuit, which will be time-consuming and costly — and there's no guarantee that you'll win.

Sell or rent out the house

Although you could try reselling your house, you won't have any equity and will likely lose money on the deal. You'll also have expenses like additional closing costs, attorney's fees, and the like.

To come away from a hot seller's market in good shape, you'd have to sell your house for more than you owe on your mortgage — plus your down payment.

» READ: How Long Should You Live in a House Before Selling?

Another option is to rent out the house. In addition to the time and expense you'll have finding a tenant, you'll also have to find somewhere else to live — which means renting or buying another home.

How to avoid home buyer's remorse

We recommend working with a reputable realtor you trust to avoid making a decision you'll regret. A good real estate agent can help you:

  • Set a realistic budget
  • Protect your purchase with a strong contract
  • Avoid rushing into a decision
  • Make sure the house is in good shape
  • Figure out what you need versus want

✅ DO work with an experienced realtor

Working with an agent you trust is crucial if you're a first time home buyer. Make sure you know what you're looking for and that you communicate that to your agent. They can walk you through checklists, contract contingencies, and other tools you'll need to find the home you want and protect yourself from buyer's remorse.

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✅ DO make a realistic budget — and stick to it

Financial experts generally recommend spending no more than 28% of your gross monthly income on a mortgage and no more than 36% on total debt.

Determine how much you can afford to make as a down payment and monthly payments (including property taxes and home insurance). Bidding wars in a hot seller's market may tempt you to go beyond what you've decided you can spend, but will likely lead to regrets and remorse later.

» READ: How Much House Can You REALLY Afford on $48,000 a Year?

✅ DO protect yourself with a good contract

Make sure your agent or attorney includes contingency clauses.

Most contracts have an objection or consideration period built in, during which the buyer can back out of the deal. If it's due to a contingency issue, there's no penalty. Without a contingency, you can still change your mind up until the final walk-through, but you'll likely lose your earnest money — typically 1–2% of the home price.

While some contingency language could turn off a seller (requiring the escrow fee be returned regardless of circumstances, etc.), a cooling-off period is the norm.

✅ DO have a checklist of "must haves" and "do withouts"

Make a list of the features you MUST have in your new home, and what things would be nice to have but that you can live WITHOUT. Features to consider include:

  • Number of bedrooms
  • Number of bathrooms
  • A finished basement
  • A backyard

Decide where you're willing to compromise and what's a deal breaker for you before shopping. Don't fall in love with a house and let reason go out the window.

❌ DON'T skip the inspection

Have a qualified professional inspector check out your home. If you don't, you can't be 100% certain that everything is okay with the home.

In a seller's market, buyers may waive the inspection for fear of losing out on a bid against other takers.

If you decide to waive a professional inspection, at least do a visual inspection — if all else fails, take a look at any available photos of the home.

» LEARN: 7 Must-Know Home Inspection Tips for Buyers

❌ DON'T make hasty decisions

This is easier said than done in a seller's market, when homes are snapped up quickly. If you feel panicky or desperate, consider taking a break from home shopping and clearing your head.

How to get over buyer's remorse

If it's too late to change your mind about your new home, you can still ease your remorseful feelings.

Trust your research

Review your list of what you wanted in a home. You'll likely find your new home has many of the features you were looking for. It may not be perfect, but trust that you went with the best available option.

Stop shopping

If you keep looking, you'll probably see a house that you like more than the one you have. Save yourself the heartache — unsubscribe to all emails, texts, and alerts about homes for sale, open houses, and tours.

Focus on what you love about the home you have

Decorate and do what you can to make it feel like home. Remodel and fix what you can, and don't dwell on the things you can't change like location, structure, and features.

Finally, consider the purchase a lesson learned

Take note of what you could have done differently. Let it inform your decision on your next home purchase.

Frequently asked questions about buyer's remorse

Yes, buyer's remorse is common. A survey of 1,000 home buyers showed 60% have some degree of buyer's remorse.

Homebuyers who regret their purchase frequently cite paying too much for a home, buying in the wrong location, and spending too much time on maintenance.

Many millennials felt rushed into making big life decisions because of a competitive housing market. They were willing to take risks like buying a home sight unseen, in need of major repairs, or over asking price.

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