As any real estate agent knows, the housing market regularly shifts and changes with changes in the wider economy. The housing market has begun softening lately, which has resulted in some home buyers second-guessing their purchases. As a real estate agent, you want to understand the different factors that can lead to this regret in home buyers and how you can talk to your clients as they make their big real estate decisions despite current real estate market corrections.
Why Some Clients Regret Their Home Purchases
Real estate prices in many areas have begun to drop. Some home buyers find that they may have also spent more than they initially intended to on their home. For example, REALTOR.com recently profiled a home buyer who felt pressured into making a high offer quickly on a home he liked to try and get ahead of the competition at the height of the pandemic when the market was very hot. This buyer went over the asking price and even opted to skip the inspection to try to win the bid. Now, however, he has learned that the cost of the repairs that the house needs will go over the preplanned budget. This home buyer feels as though he overpaid for the house.
These types of situations, where people accidentally went over their budget, or the softening real estate market means that their homes are no longer worth as much as they paid, have led to some home buyers expressing regret.
The Role of Bidding Wars
During the pandemic, large numbers of people wanted to move, which led to high demand for the homes that went on sale. This led to an increase in bidding wars among potential buyers, driving up the sales prices. Many buyers aggressively bid to try to beat the competition, which led to many paying more than they might have otherwise intended.
Home buyers need to account for these potential bidding wars and the higher prices that they can cause. Keeping this potential situation in mind can help home buyers account for price increases by more carefully considering which homes might be within their price range. Real estate agents can advise clients to take precautions, such as capping their overall budget and leaving themselves room when bidding so they do not have to go over inflated pricing.
The Impact of Interest Rates
Real estate agents and those interested in buying homes also need to note the importance of interest rates when considering housing costs. Although rates were low for a few years during the height of the pandemic buying period, they have now increased substantially. A higher interest rate means that recent home buyers will pay more for their mortgage on a home than someone who bought a house at the same price point just a few years ago.
Agents need to work with their clients to ensure they understand how the interest rate they secure for their mortgage will impact their monthly payments. They can use this insight to help them determine where they need to cap their price.
A home purchase is often the most significant purchase that a person will make. Therefore, those interested in buying a home should never rush the transaction. They should make sure they understand their final payment each month and how that payment fits into their overall budget.
However, even when homeowners believe that their mortgage is higher than they would have liked or that they paid more for their home than they should have, they must remember that each payment is money going towards homeownership. Owning a home continues to be a good long-term investment, even as home prices tend to rise and fall over time. While prices right now might not fit well with what they initially spent on the home, it can still potentially work out well for your clients in the long run.
Fortunately, even when people think they paid too much for their home, they still report feeling generally happy with their purchase. In fact, 4 out of 5 homeowners who made a purchase in the last two years say that they do not regret their decision.
Why It’s Important for Home Buyers to Work with Experienced Agents
Clients interested in buying a home want to work with a real estate agent who has their best interests in mind. Real estate agents, therefore, want to look for ways to keep learning more and more about the industry. They want to find strategies that will help them improve their business practices and the services they offer.
Those who take customer service to heart and want to build a business that keeps customers happy turn to continuing education.
With continuing education, you have the chance to learn more about industry trends and best practices. You will learn more about how to communicate with clients about buyer’s remorse and strategies for avoiding it while remaining competitive in a hot market. You will also learn more about how to help clients ensure that their home is a good investment, even if housing prices begin to retreat a bit.
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