Now that you bought your house, the market has slowed down. The prices of houses have dropped in your neighborhood. You see houses which are bigger and with more lot selling for cheaper than yours. You start getting buyers remorse. You say to yourself that you should have waited for the market to fall and buy a house which is cheaper and with more land.
All buyers say this to themselves when the market slows down. The housing market always goes up and down. Its the law of supply and demand. What goes up must come down. The government tries to help this law by changing interest rates and trying to control inflation. Its basic economics.
I think the media and people in general look at the market always in a negative attitude. You always see negative headlines or outrageous ones. The market is taking a dive! Watch out! Don’t buy now! Don’t sell now! It doesn’t matter what they say they always try to put a negative swing on things.
I live in the real world and yes some people pay too much for a house. Usually it is in a situation where people are paying 40% over market value. Ok I made that up. You get where I’m coming from. In a hot market you might get into a bidding war and over pay on a house. I know it happens and its not that bad unless you are paying a ridiculous amount over asking price; every situation is different.
Here are some things to consider when you are thinking you got into a house too fast:
Interest Rates: Yes the prices are cheaper now but you got your mortgage at a lower rate. Ask your mortgage broker to compare rates and how much difference that really is. When you calculate percentage points compared to how much you paid, you should come out ahead. This is true in most cases even if you paid higher than asking price for your house.
Selling price: You bought high and sold high. In most cases it evens itself out. Don’t be greedy. People always think negatively in this situation. Sellers always think they should make a ton of money on the sale of their house. Yes you want to make money but sometimes you must close the deal rather than wait for a higher bidder. The Seller always thinks they should have waited for more money when selling their house. My advice is to sell the house, make your money and close the deal. Don’t turn down a good offer in the hopes that another one might come. A better offer might not come and now you have to give a discount because your new house is closing soon. Don’t let your ego get in the way of a good deal.
Real Estate Goes Up: In the GTA Real Estate value goes up. It always does. Yes it goes up and down but over time it is on an upward trend. You must look at the long term stats. Do not look over 2 to 3 years, look at 5 to 10 years. Even if it goes down over a couple years, if you keep the house long enough the property will go up. You will be able to breath after your equity and value catches up to your need to win a house in the bidding competition.
Life Lesson: You will learn a life lesson which could possibly change your life. You will learn to be a little more patient and you will also learn to let go of your need to win. Sometimes it is ok to walk away. Walking away from a house is not the worst thing in the world. I know you have invested time and thoughts thinking about this house. You have dreamed about living in this house, thinking how your furniture will fit in the family room. Then you get into a heated bidding war. You call your agent and tell them to take away all conditions and bid 30 grand over asking. Then you find out that the roof is leaky and a few months later the same model house down the street sold for 5% less than asking and it has a pool with a new roof.
It happens to us all in some form or another. I have done it myself and its okay; you will live. You will be very cautious the next time you buy a house. My advice is to enjoy your house to the max and be thankful that you got what you wanted. Don’t let people discourage you from your purchase. You could look at the purchase another way, buying another house for the right price might not be what you want but it is economical. Just because it is economical you might not enjoy the house. I believe value is different to different people. It is the reason why two different appraisers can give similar but different values to a house.
I believe that using a Real Estate agent who is looking after your best interests should be the cooler head here. I take a step back and say to my clients in heated situations, “Are you going to be okay with paying 20k more than asking and the possibility of the market dropping 5k below this asking price?” Usually when I say that to my clients they cool down a bit.
Be positive about your purchase. Why would you want to live your life saying to yourself everyday, “I got the house I wanted but I overpaid for the house”. The better thing to say is, “I found a house I loved, and I paid what I thought it was worth. I’m so glad I did instead of buying a house I don’t like!”
I hope you have a great week and remember when you are in a heated negotiation, take a step back and say to yourself, “If I wasn’t in this bidding war, would I pay this amount for this house and is it worth it to me!”