Imagine this scenario, your millennial client has come to you after saving up enough money after years of living in their parents' house. You help them find a home and they make an accepted offer. The time comes when they move in and everything seems perfect. A few months later, they experienced their first unexpected expense as a homeowner. The furnace breaks and it’s going to cost thousands of dollars to replace it. You then receive a call from the client, and they tell you they are experiencing regret regarding their recent home purchase...
by Shelby O'Hare
Maybe the above scenario has happened to you or not, but buyer’s remorse is very common among American homeowners and according to a recent Bankrate survey, it’s hitting millennials harder than any other generation. Almost half (44%) of Americans experience remorse following the purchase of a new home. Broken down further, nearly two-thirds (63%) of millennials experience buyer’s remorse, which is almost double the amount of baby boomers (35%).
So, why are millennials having bigger regrets compared to other generations? According to the survey, unexpected costs for maintenance and repairs are the top reason for remorse in 18 percent of all homeowners, and 25 percent of millennials. This number is higher than older generations likely because millennials tend to be in the first-time home buyer category. It’s possible that this is the first time in their life that millennials won’t be renting or living with their parents. The reality is, a homeowner can’t just wait for someone else to notice, fix it, or call their landlord to take care of it. If there’s something wrong with the house, the homeowner is the one that is responsible for fixing it or paying someone else to do so.
While the survey provides interesting insight into the difference between baby boomers and millennials, it seems only logical that these generations are experiencing different amounts of remorse. More than likely, millennials are first-time home buyers while baby boomers are on house number two, three, or even four. While it’s possible that some of the baby boomers that responded to this survey are first-time home buyers, baby boomers have the benefit of experience.
Due to the inexperience, millennials might not know exactly what they’re doing when it comes to purchasing a home for themselves and they may be making compromises on things that they don’t think are important, until they move in and realize they are. However, those who’ve gone through it before, know there are a lot of things that require careful research, consideration, and a lot of that information and help they get from a Realtor®.
Helping your clients avoid buyer’s remorse:
Having conversations about whether your clients have started or plan to start a savings account dedicated to paying for unexpected home repairs, can be very important. According to Bankrate, home buyers should be setting aside one percent of their purchase price every year to help cover the cost of maintenance and home repairs. With more obstacles and financial expectations that come with purchasing a home, this could be a difficult ask for your clients, and they may be hesitant to do so. However, you can use this opportunity to outline the different costs that are associated with owning a home and advise against taking on a higher mortgage payment. These will serve as important measures that will prepare your clients so there are no surprises that could cause remorse after the purchase is made.
Try to plan for remorse. While recommending a home inspection is a what you most likely do with every client, use this opportunity to educate your client on buyer’s remorse and the common reasons why so many homeowners experience it. So, if they do end up experiencing some regret, they will understand that it’s a common feeling and many other homeowners feel, or have felt, the exact same way.