By Amy Hoak, MarketWatch
RISMEDIA, March 16, 2007-(MarketWatch)-Most people have experienced buyer's remorse in some form, whether it's feeling guilty over the price paid for a new pair of shoes or a jab of regret after splurging on some unneeded tech gizmo.
But when it comes to one of the most expensive purchases in a consumer's life, a home, feelings of remorse can be a lot more intense, easily rattling otherwise confident home buyers and causing them to second-guess what they liked about a house in the first place.
Luckily, many local real estate markets today are buyer's markets; there's lots of inventory to look at and often ample time to negotiate on price, said Eric Cunliffe, senior vice president of RealEstate.com. Those factors greatly decrease the chances of buyers completely changing their minds-and wishing they'd gone for a different house-after the fact.
"In 2005, people felt desperate to get out there and get there first and make their offer," added Nancy Riley, president of the Florida Association of Realtors. "Now they do have the luxury of being able to negotiate."
That said, buyer's remorse often pops up regardless of what the real-estate market is like, especially for first-time buyers. Unless someone is "particularly unemotional" or has gone through the process of buying a home many times, it's very normal to second guess a home-purchase decision, Cunliffe said.
In fact, a buyer's market can introduce additional feelings of remorse when an interested buyer shops extensively, finds a home of interest but waits too long to make an offer, said psychologist David W. Stewart, a professor of marketing at the University of Southern California. Stewart's area of focus is consumer psychology.
"You might think that buyer's remorse could be prevented if people spent more time shopping … but there's also a nonbuyer's remorse as well," he said.
A client of real estate agent Kristy Ryan understands that concept well. The prospective buyer wouldn't budge on his offering price, fearing he would overpay, and another buyer scooped the place up, said the Realtor with Re/Max Fine Properties in Scottsdale, Arizona.
"Now, we can't find him anything remotely as good … and (the prices) are substantially higher," she said.
Also playing in the background of a home buyer's mind is the news they hear about the health of local housing markets. When they hear that prices are falling and there's an oversupply, "that tends to paralyze some people," Stewart said. The news could also cause them to second-guess their recent purchase, fearing that they could have bought for less.
But there are ways to beat buyer's remorse before it sets in, as well as knock down those pangs of regret if they do happen to invade a buyer's psyche. Here are five of them:
1. Do all the homework
It's essential for buyers to know what they want — both in terms of housing needs and the neighborhood, Cunliffe said. That means being satisfied with such factors as the distance from work and the quality of the schools before settling on a home.
"The more work they do on that up front, the less likely they are to make a mistake," he said.
The more buyers shop around, the more educated they will be on a particular market, Ryan added, so look around and learn about how far a real estate dollar will stretch in the area. Prospective buyers often pay attention to news stories about the real estate market, but it's important to also be aware of the longer-term trends in the local area, she added.
"I think a lot of buyers in times like this, when markets are soft … they absolutely sit on the sidelines and wait or they keep shopping until they find a screaming deal," Ryan said. She reminds people that the Phoenix market, which she serves, is a growth market that is "not going to stay in the doldrums forever."
2. Get preapproved for a mortgage
Getting preapproved for a mortgage before house hunting will remove another fear that buyers commonly have before or after committing to a particular property — that they won't be able to afford the monthly payments, Cunliffe said.
In fact, Ryan won't take a client to showings without a preapproval. Once a professional lender has "done the math," buyers can be more confident in what they can afford, she said.
3. Call for reinforcements
If fears start to creep up after the paperwork is finalized, enlist the ears of friends, parents or peers who can reinforce the decision to buy, Stewart said. A realty agent can also help out by reminding a client of why the home was originally a favorite or reassuring the buyer that a good price was secured for the property.
One of Ryan's clients bought a home and witnessed a nicer home on the same block sell for less several months later. Her advice: Sit tight, wait until the market gets better and enjoy the house without worrying about the neighbors.
"I especially tell people 'This is not the market we flip in. You need to sit tight for three years, maybe even four,'" she said.
4. Personalize your new space
To feel more connected to the new home, make it your own, Ryan said. Paint the walls or change the carpets. Decorate the walls. The changes don't have to be expensive, but if it reflects you and your attitudes, the home will start to feel more like your own.
The process of individualizing the home will help create a sense of ownership, Stewart said. "You're less likely to feel remorse because it's yours," he said.
5. Don't dwell on it
Finally, those who fear they've bought the wrong home need to remember that they made an educated, thoughtful decision when they signed the paperwork. There's also not much they can legally do to get out of it if they change their mind after the contract is finalized.
"People really need to remind themselves of what they knew at the time they made the decision," Stewart said. "It's not productive for people to dwell on what might have been."
Remember, when many markets were peaking, it may have made sense for buyers to worry they were paying too much, Cunliffe said. Now, that concern has lessened in many places as prices have come down and have begun to stabilize. At any time, however, "trying to time the market doesn't really make a lot of sense," added Stewart.
Regret may also dissipate somewhat when an unhappy buyer realizes the alternative — buying and selling all over again, Stewart said.
Amy Hoak is a MarketWatch reporter based in Chicago.