Combat Buyer’s Remorse

So you did your research, you looked at model homes, you investigated neighborhoods and school districts, you made an offer, and—voila!—you’re a homeowner! This should be one of the happiest days of your life…so why do you feel like driving off a cliff ala Thelma and Louise? Did we pay too much? Did somebody pay off the inspector not to disclose the massive foundation damage and faulty wiring? Is this the true right house for us? How will we ever scrape up enough to pay the enormous mortgage payments? How can I get out of it?

Well, it’s called buyer’s remorse, and it’s as universal as the common cold. So take a deep breath, do a few yoga poses and relax. It’s going to be okay. Everyone goes through it. Statistics are on your side: 74 percent of first-time buyers say they like their new home better than their previous residence, and 67 percent of repeat buyers like theirs better.

And anyway, you legally have three days to change your mind and cancel the contract. Right?

Wrong! No such law exists. The only way you can cancel the contract is if cancellation rights are written in the contract. Generally, a buyer can cancel only for failure to qualify for mortgage financing after a diligent and good-faith effort, or based on the reasonable disapproval of some aspect of the home. What constitutes “reasonable disapproval of some aspect of the home”? Read on and find out.

l Notice of violations of building, zoning, fire or health laws.

l Flood hazard designation (resulting in the cost of flood hazard insurance).

l The title commitment report from the title company (which may indicate liens, unpaid taxes and easements restricting the use of the property).

l The Seller’s Property Disclosure Statement.

l Homeowners association disclosures (such as the restrictions contained in your community’s covenants, conditions and restrictions or other governing documents).

l Cost to repair any septic or other waste-disposal system.

l Swimming-pool-barrier law compliance.

l Lead-based paint information (for homes constructed prior to 1978).

l Termite- or wood-infestation reports.

l Damage to the home exceeding 10 percent of the purchase price (by fire, flood, earthquake or act of God).

l Information obtained from the home inspection and investigation (which may reveal adverse property conditions).

If a buyer tries to cancel the contract just because of cold feet, the buyer is in breach of contract. The seller is then entitled to request mediation, file a lawsuit, keep the buyer’s earnest money as damages, or ask a court to order the buyer to purchase the property.

You’re less likely to suffer from buyer’s remorse if you have a real estate agent you trust who can help you evaluate your housing needs. But the best way to prevent (or at least mitigate) buyer’s remorse is to prepare yourself in advance, long before you ever sign on the dotted line.

First, draw up a pro and con list. We’ve given you one to get you started below.

Advantages of Renting

l Usually costs less than buying l You can usually move more easily l Little responsibility for maintenance l No responsibility for repairs

Disadvantages of Renting

l No tax benefit l No investment in or from the property l No equity is building l Rent payment can increase frequently lPossibility of eviction

Advantages of Buying

l Greater stability l Usually good investment l Your equity builds l First home often leads to better home lGreater individuality in décor/space arrangement l Greater sense of security l Often fulfills the American dream.

Disadvantages of Buying

l You are responsible for property taxes l You are responsible for maintenance l You are responsible for repairs l Possibility of foreclosure l In foreclosure, loss of equity l Monthly housing usually costs more l Your cash is tied up l You can’t usually sell a house quickly l You have less mobility lPayment on some mortgage types can increase.

After you’ve looked over your list, compile the costs of buying a home, of which there are two types: upfront costs (down payment and closing costs) and ongoing costs (monthly mortgage payment, homeownership expenses, taxes, insurance, etc.)

So when buyer’s remorse hits, remind yourself why you wanted to buy a house in the first place. Now pop open the bubbly and congratulate yourself.