Updated July 22nd, 2019
It’s a nasty feeling when you realize you may have bought the wrong home, or that perhaps you shouldn’t have purchased a home at all. While most consumer products are easy to return, houses aren’t one of them.
Buying a house is an exciting time, once the honeymoon period ends, sometimes you realize you may have gotten carried away with the idealism of being a homeowner, or that you purchased a house for the wrong reasons.
But before you freak out, remember that buyer’s remorse can also just be anxiety at the overwhelming new responsibility you have and can go away with time. It can also be a reaction you experience in the aftermath of the stress of moving and change.
If you’re struggling with buyer’s remorse, look at it rationally to figure out whether it’s warranted. There are signs to look out for so you can put it in perspective and decide whether the way you feel means you need to take action, or just wait it out and adjust to new circumstances.
If after reading this you find you need to sell, you can save money by using a low commission real estate agent to minimize any loss in investment.
Common Signs You May Have Bought the Wrong House
If you feel regret at buying a house, the first step is to investigate why you feel this way. It might relieve you a bit to know that buyer’s remorse is often a common and short-lived phenomenon that occurs from the stress of a big change. But how can you tell the difference?
There may be something wrong with the house itself, or there may be something wrong with your current living situation that you’re projecting onto the house. Here are some signs that can help you figure out whether you actually bought the wrong house and what you can do about it.
1. Structural Damage
If you’ve found structural damage to your newly purchased home, you may be able to do something about it. The first thing you need to do is contact your buyer’s agent and go over your documents, disclosures, and inspections to confirm that the seller either had no knowledge of the damage, or that they disclosed it and it was overlooked. If they disclosed it and it was just not seen, unfortunately, you’re on the hook for it.
If you think you’ve been wronged and want to sue those involved in the sale, you need to figure out if you have a case. To do that, you need to know which parties, if any, bear responsibility. Your first step here would be to contact a good real estate lawyer in your state and review the transaction to discover whether you can prove liability.
It can be difficult to prove that a seller knew there was damage and hid it. If any repairs had been done by the previous owners or any neighbors had witnessed repairs, you might prove the seller knew about the damage before the sale.
A seller’s agent’s liability is limited in some states, but if it can be proven that the listing agent failed to disclose problems they either observed or were informed of, you might have a case against the agent. If the home inspector missed problems that he or she should have been able to discern, the inspector may be liable and may even be insured.
If you determine you have a legal claim to damages, you may recover the cost of repairs via a demand letter from your attorney or through mediation and save court costs. You’ll want the advice of counsel on this to help you weigh the pros and cons of legal action.
2. Bad Location
If you feel your house is in a bad location, get clear on what you mean by that. Is the neighborhood not as safe as you thought? Is the commute to work a traffic-glutted nightmare? Is construction nearby keeping you up at night? The point is to determine if there is any way you can work with the situation.
For example, construction will have an eventual completion date, so perhaps patience is needed. If your commute to work is a nightmare, look at commuting alternatives or ask if perhaps you can work remotely several days a week to see if that makes a difference. If you discover that your neighborhood is unsafe and is experiencing increased crime, this may be a dealbreaker.
Whatever your reason for not being happy with your location, if you feel that it is absolutely intolerable, your best bet is to consider your options for how soon you can sell and get into a better location. Contact an expert seller’s agent who knows the local market like the back of their hand to get out of the house and into a better place, especially if you’re worried for your safety.
3. Crazy Neighbors
Bad neighbors can be a supreme downer. Luckily, crazy neighbors, depending on their behavior, may be something you can take action on. If they’re throwing wild parties late at night, trespassing, or otherwise encroaching on your privacy or causing damage to your property, you can file a report with the police. Worse comes to worst, you can file a restraining order.
If you find you just can’t deal with it any longer, the good news is that crazy neighbors aren’t something you have to disclose when selling the property so you have a better chance of getting out of that house and into a new one.
4. It’s Too Expensive
Sometimes we overestimate what we can handle when we carried away with the excitement of becoming a homeowner. Or perhaps life happens at just the wrong time and we suffer a loss of income. But if you’re just feeling the added pressure of a new mortgage payment, it could be something you just need to get used to.
You may need to take an honest look at your budget and get clear on where your money is going. Are there areas where you can trim the fat in your expenses? Some places to look where you can stop the bleeding have to do with lifestyle. Sometimes you don’t need all the things we think we do. A change in mindset may help you live more frugally and make it easier to make that mortgage payment.
If you’re paying recurring monthly subscription fees for cable channels, have a gym membership, a huge lease payment on a car you don’t need, or a cell phone contract that is ripping you off, these are things you can do something about to free up income. It may be hard to get used to losing lifestyle amenities at first, but you can and you’ll be glad you did in the long run.
If you’re carrying a lot of credit card debt, look at balance transfer cards or refinancing with a personal loan to lower your payments. It’s important to get a grip on this sooner than later. The last place you want to be after buying a new house is late on payments and threatened with foreclosure.
Another option to consider is renting out a room to help offset your mortgage payments.
Finally, if you know for certain there is no way you can continue with mortgage payments, especially if you’re experiencing health issues or a loss of employment it’s best to sell the house before you go under your mortgage and your only options are a short sale or foreclosure. Contact a discount flat-fee agent, so you can save money on commission.
5. Domestic Issues
This can be a tough one. Sometimes, couples make decisions they think will save a marriage only to realize that you can’t put a bandaid on certain problems. Other times, life happens and you realize it’s just not working out.
Whatever the reason, the best thing you can do if you’re having problems with a significant other, or you’re looking at divorce and you’re in on a house together is to sit down and talk rationally about your financial obligations as something separate from your relationship.
Try to be objective and keep your emotions out of it. Consider counseling if you think a third party will help with communication. If things are really bad, consult with an attorney to look at your options and how ending a relationship would affect your finances.
Domestic issues are highly subjective. It’s up to you to decide whether you can hang in there or you need to bail. If you’re suffering physical or emotional abuse for a house, get help immediately. Your health and well-being are more important.
What to Do If You Bought a House You Can’t Afford
The first thing you need to do if you bought a house you think you can’t afford is to list all of your outgoing payments. You need to determine whether you bought a house you can’t afford, or you’re spending money on a lifestyle you can no longer afford with a mortgage.
First priorities will always be food, utilities, a roof over your head, and your ability to get to work. Second are secured debts. Secured debts are those like your mortgage where the lender can take something away from you if you’re in default. The last thing on the list is unsecured consumer debt like credit cards and personal loans. Look into rolling unsecured consumer debt into a lower payment refinance plan to take the pressure off.
If there are other payments you’re making solely for lifestyle, you need to get rid of them. It may sound hard not to have cable TV, piano lessons for your kids, or your monthly subscriptions, but it will be a lot harder having your house foreclosed on. Credit cards and personal loans will only damage your credit, but you can catch up later. Losing your house to foreclosure will stay on your record a lot longer.
If after you’ve looked at your budget with the cold eye of a surgeon’s scalpel you still believe you cannot afford your house, you need to obtain the services of a top agent and get it on the market as soon as possible. You’ll save money in realtor commissions if you use a discount flat-fee agent who is an expert in their local market and can sell your house quickly for you.
Can You Sell a House You Just Bought?
Yes, you can sell a house you just bought, but chances are that if you aren’t in your home for several years, you incur a big loss. Also, there may be tax implications depending on your circumstances.
Unless you’re able to sell for more than you owe on your mortgage and the amount of your down payment, you’ll take a loss. Also, though you may be in a hurry to get off a new home, you’ll want to make sure you’re selling at the right time so you can at least break even on your investment.
Don’t forget that there are large transaction fees associated with selling a home like the 6% realtor’s commission fee. The good news is that you can save money on commission fees by using a full-service flat-fee agent who knows how to time the market and sell your house for the highest price possible.
If you need to get out of a newly purchased house, your goal is to get the highest price possible and sell quickly. This is why you need an expert agent who knows their local market and its trends. You’re in a position where you need to save as much on commission as you can without sacrificing service. This is where Clever can help.
Clever Partner Agents are the best in the local market and come from high-end well known brokers who don’t sacrifice on service. Clever Partner Agents can save you thousands in commission fees and give the best service possible. Find out how a Clever Partner Agent can help you sell your newly purchased house today.
Top FAQs About Buying the Wrong House
1. How long do you need to live in a house before selling?
You can sell your house anytime you want, but you could lose money or be on the hook for taxes if you sell it too soon. There are several factors that could dictate how long you should live in a house before selling. These are taxes, your mortgage, the housing market, and selling costs.
When you live in a house for less than two years out of five prior to the sale, any profit you make from the sale can be subject to federal capital gains tax. If you’ve owned the home less than 12 months, you’ll be subject to short-term capital gains on the sale which will be taxed at ordinary income rates. If you’ve owned the home longer than 12 months but haven’t owned and lived in it for two years, you’ll be taxed at long-term capital gains rates (saving you money) depending on your income bracket.
When you have a mortgage, your first few years of payments are applied more to the interest than to the principal. This means you have less equity in the house which makes it difficult to make money on a sale if you’ve owned a house less than five years. You build equity when you pay off the principal of your mortgage or when you make renovations that increase the value of the house.
Real estate markets have highs and lows. If you purchased your house during a low and sell it when the market is strong, you may do well. Conversely, if you bought your house during a strong housing market, selling it too soon could lose your money.
Even if the market value of your house has appreciated, you need to consider selling costs. To get the most for your house, you’ll want the services of a seller agent who is a pro in their local market. To minimize selling costs, look into using a full-service discount seller agent.
2. What’s the best month to sell a house?
In most housing markets, the best month to sell a house is the first half of May. This is because most homebuyers who have families need to finish a move before school starts. However, this rule varies depending on the location.
In some states, the summer months bring intense weather, unbearable heat, tornadoes, and hurricanes that can affect the local housing market. Winter also has its downsides in cold areas. The exception to this is resort towns that are warm in the winter and ski resorts.
Take into consideration your local housing market and geography when timing your house sale. An expert local realtor can save you thousands by helping you time the market right for your local area.
3. What taxes do I have to pay when I sell my house?
The taxes you have to pay when you sell a house depends on if you make money on the sale, how long you’ve owned the house, and how long you’ve lived in the house as your primary residence.
Generally, if you’ve owned and lived in your home for two of the five years before the sale, up to $250,000 of the profit you make on the house is tax free. If you’re married and filing a joint return, this doubles to $500,000.
However, if you don’t meet these requirements, you can take a partial exclusion if the reason you’re selling your house meets certain definitions that relate to work, health, death, divorce, active duty, or another unusual event laid out by the IRS.
If you’ve owned the home less than 12 months and sold it for a profit, you could be subject to short-term capital gains taxes. If you’ve owned the home longer than 12 months and lived in it for less than two years, you could be subject to long-term capital gains taxes. Ultimately, your specific situation will dictate whether you have to pay taxes and what types of taxes you have to pay.
4. Can I rent out a house I just bought?
If you purchased your home with cash, you can legally rent it out. But if you obtained financing, your lender assumed that the property would be “owner-occupied.” Owner-occupied mortgages differ because they have a lower down payment and a lower interest rate than non-owner occupied mortgages.
If you signed the mortgage documents stating your intention to occupy the home as your primary residence, and you get caught renting it out right away, it would constitute mortgage fraud which could result in a felony charge and a demand for full repayment.
That being said, most lenders only require that you live in the house for one year prior to renting it out. Look at the fine print on your mortgage documents and also get up to speed on the laws in your state so you understand your legal obligations before making your decision.
5. How do you get rid of a house you can’t sell?
If your house has been on the market for a long time with no movement, you have several options depending on your situation. Your house may be overpriced, poorly marketed, or you may be trying to sell at a bad time. If you’re a FSBO seller, consider using a flat-fee discount agent to sell your house professionally for less.
If you’re already using the services of a realtor, you might need a new realtor. A good realtor knows market trends, how to market a house for the most exposure to buyers, and how to price a house to sell. If your house isn’t moving, there is a reason.
Another option you might try is to offer it as a lease option sale or rent to own. This can be lucrative in the short-term and could lead to a sale in the long-term. Finally, if the housing market is just not amenable to sellers, consider renting it out until the housing market improves so you can profit from passive income.