The bidding war is over. Some of the decisions made are harder to undo. As an agent or broker, is it part of your professional obligation to discuss where the buyer might be in five years financially and family-wise? Probably, even if it might occasionally put them off a purchase.
A recent survey of 1,000 U.S. property owners found that 80% had at least one regret about their home, location or buying experience. Location bothered 45%, while 58% reported regrets about the home or homeownership itself.
For homeowners who bought during the pandemic frenzy, moving on can carry an added complication: the mortgage may be more attractive than the house.
A recent study in the Journal of Banking & Finance found that for every percentage-point increase between a homeowner’s fixed mortgage rate and current market rates, the probability of selling falls 18.1%. Researchers estimate mortgage lock-in was associated with 1.72 million fewer home sales between Q2 2022 and Q2 2024.
That pressure is particularly relevant now. The average 30-year mortgage rate reached 7.28% in early October, its highest level in nearly three years.
For Nick Nastos, a real estate broker and founder of Chicago’s Property Shop, that creates an unusual form of buyer’s remorse.
“You can regret the house and still have a mortgage you’d hate to give up,” he says. “That’s what makes these decisions difficult. Someone may know the home no longer fits their life, but replacing a 3% mortgage with today’s rate can completely change the math.”
Nastos gives five reasons a pandemic purchase may feel different now.
- The low mortgage rate is hard to give up. Moving could mean taking on a much higher monthly payment.
- Work and commuting needs changed. A location chosen for remote work may be less convenient now.
- The local market changed. Some areas that were highly competitive during the pandemic have cooled.
- Owning the home costs more. Insurance, repairs, taxes and maintenance may be higher than when the home was purchased.
- The home may no longer fit. More space, a different neighborhood or changing family needs can make the original choice feel less practical.
Nastos says regret alone should not determine whether someone sells.
“Start with what you would change about the house, then price out what changing homes would actually cost,” he says. “Sometimes the answer is to move. Sometimes that low mortgage makes improving the home you already own the better option.”
“Maxed out” before move-in?
Suzy Minken, a real estate advisor with Compass working out of Northern Virginia, said looking toward the future while purchasing a house today is key to avoiding buyer remorse.
“It’s not something that is talked about enough,” she says. “I’ve even had buyers speak to my architect (relationships are key) while touring the house to see if they could do an addition. The architect did a review of the property and said it could be done. The buyers submitted an offer (multiple bid situation) and bought the house. They proceeded with a two-story addition before they moved into the house.”
Minken stresses that there is a need to distinguish between buyer’s remorse and the frustration of having fewer options than originally anticipated.
“Consider the young family who purchased a starter home with the intention of moving to a larger home in five years,” she explains. “Perhaps they’ve welcomed another child and need an additional bedroom. But with higher home prices and mortgage rates, the move-up home they envisioned may no longer be financially practical.
“In many ways, today’s move-up buyer has become today’s renovation buyer. Rather than moving to a larger home, homeowners are looking for ways to make their existing homes accommodate their changing needs.”
But what happens when renovation isn’t an option either?
“When buyers fall in love with a home, I encourage them to think about whether it’s already ‘maxed out’ or has room to grow with their changing needs,” says Minken. “Is there room to expand? Could an unfinished basement become additional living space? Is there flexibility in the floor plan to accommodate a growing family?
“I also encourage buyers to look beyond the house itself. Why are the current owners selling? Did they outgrow the home after having another child? Is there something about the layout or the property that made adapting it difficult? These questions can reveal important clues about how a home might serve its next owners.”
Minken encourages buyers to think beyond what they need today and consider how their needs might change over time. That includes family circumstances, the need for additional space and even commuting considerations if their employer requires them to spend more time in the office.
“We can’t predict changes in interest rates, home prices or family circumstances,” she says. “But we can ask the right questions before they make one of the largest financial decisions of their lives. Sometimes the regret isn’t buying the wrong home. It’s discovering that the next step, whether moving to a bigger house or renovating, is no longer within reach.”
