Why Home Sales Historically Bounce Back After Presidential Elections

Our brains can sometimes trick us into a buying a home that doesn't fit our needs. Following these tips could help minimize buyer's remorse. If you’ve ever made an impulse purchase, you know what it feels like to have your brain seize up and focus only on the shiny thing in front of you that you absolutely must have. If the shiny thing is a coat you can’t afford, the consequences of overspending to buy it are probably pretty small. If it’s a home, however, you could end up spending a lot of money on a place that doesn’t fit your needs. It’s one reason why it’s important to be aware of some of the psychological traps that can drive decisions that defy logic when viewed strictly through a lens of rationality. Those traps can lead to buyer’s remorse, which is surprisingly common among home buyers. According to a Zillow® survey of buyers in 2022, 75% of those who had successfully purchased a home in the past two years had at least one regret about the home they bought. Those regrets ranged from underestimating the amount of yard work, to failing to consider the location of bedrooms. Here are some common traps and tips for avoiding them. 1) Overconfidence You find a home online that seems perfect, and spend an hour lingering over the photos and the 3D Home® tour. By the time you arrive for the in-person tour, you’re already in love, so much so that you start minimizing obvious problems. The crack in the foundation? It looks pretty small. The water marks on the bedroom ceiling? Probably just an old leak. And so on. You utter the words “We can fix that, easy” so often that your partner starts to worry. If that’s you — and you’re not a contractor — you’ve fallen into the trap of overconfidence: being so optimistic that you downplay the possibility that anything negative could happen from buying a home that needs more work than you can reasonably pay for or tackle yourself. How to avoid this trap Get a great inspector who can find significant problems in the home, and give you an idea of what it will cost to fix them. Your agent may also have a stable of experts they can call to give you an idea of what might be involved in repairing problems. 2) Neglecting the future you Let’s say you’re a newly married couple buying your first home. You don’t have kids or pets or a bunch of stuff, so you focus your search on homes that fit your current lifestyle. In doing so, you discount the future, giving more importance to your current needs than what you might need in five years or so. How to avoid this trap Think about “future you” and what your life is likely to look like in five years. If pets and/or kids are in the plans, or if a relative will be living with you at some point, factor them into your thinking now unless your plan is to move again to accommodate expected changes in your life. 3) Failing to negotiate When homeowners list their homes for sale, the listing price typically reflects what they hope and expect to get in the current market. As a buyer, that’s the first number you see and it may determine whether you’ll even consider the home. This trap is called anchoring — a tendency to use the first number or piece of information as the baseline for decision-making. But in certain markets and during certain times of year, it may be possible to negotiate a lower price. In the fall home shopping season, for example, the market is slower and sellers tend to cut prices on homes that have lingered on the market. How to avoid this trap Lean into your agent’s local expertise to find out whether price cuts are common in your market. You also can explore whether a seller might be willing to discount the price in exchange for something else they value, such as a rent-back agreement that will give them breathing room to shop for their next home. 4) Acting impulsively When competition for homes is fierce, buyers need to be prepared to act quickly to make an offer on a home they like. But acting quickly when you’ve worked out your buying budget, determined what’s important in a home, and obtained pre-approval from a lender is not the same as acting out of a sense of urgency solely because homes are in short supply. How to avoid this trap Do the groundwork for buying, starting with getting your credit in good shape. Work with your agent and loan officer to understand the market, what you can afford and what home features will best suit your needs. 5) Ignoring information that challenges our beliefs This is known as confirmation bias, and it involves ignoring information that doesn’t conform with our existing beliefs or putting greater weight on information that confirms what we already believe. For example, if you held firm to a belief that interest rates would drop dramatically this year, and put off buying a home based on that belief, you would be paying an even higher rate today. How to avoid this trap Stay up to date on market trends and tap your agent’s expertise. Even experts can’t time the market or say with certainty what’s going to happen to interest rates or home prices. Instead of discounting information that challenges your beliefs, seek it out and factor it into your decisions. 6) Getting stuck in the past Imagine you’re shopping for a home, and your fond childhood memories are so powerful they prevent you from even considering a different style of home than the one you grew up in. You spend hours in search of the perfect replica, ignoring your partners’ pleas to compromise and at least tour some other homes. How to avoid this trap Think about how you want to feel in your home and what you can do to evoke those feelings. It may be that certain paint colors or tile or the layout of a home will be enough to recreate the nostalgia you’re seeking. 7) Fixating on one thing, and losing sight of the big picture Many of us know the feeling of getting so attached to something that we ignore or minimize some obvious red flags. For instance, you may fall hard for an outdoor kitchen in a home that has a yard requiring a ton of upkeep. You hate yard work, but buy the home anyway, thinking the yard won’t be a big deal — and then find yourself mowing for an hour every weekend. Or maybe you get so fixated on the thought of your kids or your pets having a yard to roam in that you might not fully consider what it might feel like to commute an hour to and from work. How to avoid this trap Make a list of what you want — and do not want — in a home before you start shopping, and stick with it. Having a cool outdoor pizza oven or a big yard isn’t going to make you suddenly love yard work or commuting long distances. 8) Moving ahead with a purchase because of the money and time you’ve spent finding it It can be crushing to find a home, and discover after you’ve written the offer, applied for the loan and ordered the inspections that the home has a flaw that cannot be easily remedied. You may even think that you’ll never find another home after looking for so long. How to avoid this trap Take the long view. Imagine living in the home five, 10 or even 14 years from now. Is the flaw going to drive you up the wall? If the flaw is expensive to fix, think about the other things you’ll be giving up to fix it. Emotions and logic Home buying can be a struggle at times because it requires us to reconcile our heart and our mind. Giving yourself guardrails and accessing good information can make reconciling both easier. The great thing about making decisions is that, ultimately, you’re the only person who can know what’s right for you. Trust your gut. If you’ve done all the work — asked the right questions, relied on correct facts, listened to trusted advisors and determined the degree of risk involved — chances are you’re well on your way to moving forward to the next chapter in your life.