We all make a few mistakes along life’s journey. Most of us would do things a little differently if we had the opportunity — perhaps chosen a different career, traveled more or spent more time with our families. The process of buying a home is no exception. Global marketing and research firm Ipsos recently published its survey finding of the most common mistakes homebuyers make. The Zillow sponsored survey found that 50 percent of homebuyers wish they had done things differently and listed their biggest mistakes.
It’s not surprising that so many homebuyers admitted they made some mistakes. We see much clearer looking back than looking forward. We all make decisions based upon the information we have on hand at the time and our particular circumstances. As an example, although it may have looked like the right decision at the time, anyone who purchased a home at the peak of the real estate market would likely say they purchased at the wrong time or paid too high a price. Many homebuyers sincerely believed an adjustable rate mortgage was a wise decision or extracting equity through a cash-out refinancing made good economic sense. After all, California real estate always appreciated.
Buying a home is also an emotional decision. Often our feelings tend to override our analytical decision making. Buyers will often make hasty decisions or pay more than they had budgeted. There is a big difference in previewing a perfectly staged, decorated and spotless model home and real life. The infatuation fades after the moving boxes are unpacked.
“Pressured to make a decision” was a common complaint found among homebuyers who wished they could do things over again. Often they got caught up in a bidding situation and paid more or waved inspections or financing contingencies. Some became frustrated not finding a home that met their requirements and so gave up and settled for less. Others felt they were pressured to make a quick decision because there were few homes in their price range or available in the neighborhood or school district they wanted. Regardless of the reasons for the mistakes they made, here are the most common.
The most frequent mistake was the size or floor plan. The home was too small or the design didn’t work for their family. They discovered their kitchen was too small, the furniture was too big for the room size and there was not enough storage space. The formal dining room seemed like a nice feature at the time of their offer but was rarely used. The living room was isolated from the kitchen.
Families usually outgrow a home more quickly than they anticipate. The tidy, cozy, cute cottage can become a cramped maze of furniture, toys and clothes. When making a decision between size and condition, size matters. A home’s condition can generally be improved upon but increasing its size my not be as economically feasible.
Forty percent of homeowners with regrets said they either paid too much or should have put more money down. Two-thirds were surprised at how much it cost to maintain their new home and 20 percent were surprised by the amount of the closing costs.
I suspect when property values increase we congratulate ourselves on making such an informed brilliant decision. We were skilled negotiators who recognized the opportunity. But when property values decline we kick ourselves for paying too much.
Despite the endless data and printed pages of mandated government disclosures, the mortgage process and associated “junk” or “garbage” (mortgage vernacular for closing costs) remain a mystery. Having saved for their down payment, homebuyers are often surprised to discover that closing costs may add up to 3 percent of their loan amount.
More than a quarter of the homeowners with regrets said they ended up not liking the neighbors or the neighborhood. There was too much traffic, loud neighbors, too many kids or not any, barking dogs, homeowners associations that were too restrictive, others that didn’t enforce the rules, criminal or vandalism activity and nosey or uncaring neighbors.
The location of a home will often dictate its value, therefore checking out the neighborhood is as important as conducting a whole house inspection. The Internet is a huge advantage for buyers who can find information on crime statistics, school rankings and church bake sales. Buyers should also drive the neighborhood in the evening and on weekends and talk to the neighbors.
Only 10 percent of homeowners said they should have purchased a home closer to work. The distance didn’t seem too far when they previewed the home during the week or on a weekend but the morning and evening rush hour traffic was more than they anticipated.
One in four homeowners had regrets about their yard. Twelve percent said they should have purchased a home with a bigger yard and 12 percent said they wished their yards were easier to maintain.
Beautiful lush landscaping can be very deceiving to a buyer who hasn’t any gardening experience. It’s lovely to look at upon previewing a home but most buyers have no idea as to the time or cost required to maintain. “We love the landscaping” becomes “We haven’t time for anything else.”
How about you? Any regrets about your home or what you would have done differently? If you have an unusual story, e-mail it to me.
Kern Calhoon is a real estate broker in El Dorado County. He can be reached at [email protected]