Buying a house is about the most stressful purchase we ever make. While the broker community is, obviously, very engaged in the buying and selling of property, it should always be front of mind that for clients, this is the biggest thing that they have ever bought. In such a stressful situation, a little bit of home buyer regret is to be expected.
Whether it be interest rates that are different to what they thought they would get, a market that moves so fast that they think that they haven’t got the very best deal possible or the general buyer’s remorse that comes with such a large purchase, brokers need to be alive to the idea that their clients might have doubts about their new home.
With that in mind, we’ve put together a guide to managing home buyer regret, containing everything that brokers need to know about it, and everything that buyers can expect to feel when they make that vital purchase.
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The short answer, obviously, is that buyer’s regret is the feeling that comes over after making a new purchase on a home. It’s to be expected: buying property is so complicated and involves such a huge investment of cash on the behalf of the purchaser that they’re likely to have second thoughts.
The number of unforeseen costs is a major cause of regret: this is already a massive amount of cash to stump up, and then it gets larger and larger with every step of the process.
Again, brokers go through these sorts of transactions all the time, so are used to the process, but the majority of home buyers do it once a decade or so, and a significant proportion have never done it ever before, so need coaching through the process.
Whenever we buy expensive things, we‘re susceptible to buyer’s remorse. In that sense, it isn’t a surprise to hear that regrets after buying a house are quite common. Instead, it is incumbent on the broker to walk their client through the whole loan approval and home purchase process – and that includes the aftercare that comes with managing home buyer regret.
Buyer’s regret is a particular problem with young people, including the millennial cohort. Simply put, the majority of millennials have long thought that home ownership was something that happened to other people and thus are in two minds about whether they should have bothered with the whole process in the first place.
This is particularly true for rentvesters, one of the fastest growing sectors of the Australian mortgage market, who buy a home in a place where they never intend to live and perhaps have never so much as visited.
For these people, buyer’s regret can be a major issue. They go through the extended, stressful process of buying a home and then transition immediately to being a landlord and having to learn about rental yield, capital gains and other grown-up stuff the second that they get their purchase done and find a tenant. Until that cash starts rolling in, they might be wondering whether it was worth the effort.
So how do you steer your clients away from buyer’s regret? Combatting second thoughts is hard, and largely goes back to the personal touch that only a broker can provide.
The easiest way to get around buyer’s regret is to avoid the loan part of the purchase. When taking a loan, the buyer is not only making a very expensive purchase on the house, but also putting up a significant amount of collateral in the process – which can only add to the stress, as well as the potential for buyer’s regret.
Brokers exist to get their clients the best possible deal, making them also the best person to reassure a client that a loan is a good way to finance such large outlays – but if the client has the wherewithal to buy outright in cash, that is a good route to take, as it avoids interest.
This should be a no-brainer for every broker. When your client has made that big buy, then let them sit on it for a day or two before they complete the purchase. It’s likely the most expensive thing that they’ve ever bought, and even the slightest bit of thinking time goes a long way.
That means keep them from taking the photo with the sold sign and the keys for a day or two before the whole world knows, and more importantly, give them time to develop buyer’s regret before they have even got the purchase over the line. That way, they can get through the difficult part, realise that the new house is exactly what they wanted all along and then get it done.
It goes without saying that a buyer should compare what the options on the market are before they go through with their new home. It’s the broker’s job to present all the best options for a loan – that’s what Best Interest Duty is for – and thus put themselves in the best position to be able to tell a client that they have not made a mistake and their buyer’s regret is misplace.
While buying a house is a huge amount of money, it is important to quantify just how much that is ahead of time. The client who knows what they are buying and how much they are spending on it is the least likely to get remorse about what they buy – so the best way to combat buyer’s regret is to reassure your client that they are well within budget and have got a good deal.
