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6 Reasons Not To Buy That House

6 Reasons Not To Buy That HouseHome buyers, we’re here to help! If you’re suffering from a case of buyer’s remorse at any stage before your contingencies are removed, list out the things that come to mind when you fantasize about backing out of the deal. If your list contains any of the following items, express your concerns to your spouse and your agent. Then, consult with your mind and your heart about whether you’re ready to move forward – or not. 

1. It’s too expensive. If you’re buying a house in 2013, it’s completely understandable to have a moment of panic at the sound of the price you’re paying or the sight of all those zeros. It’s a big purchase you’re making, possibly the biggest one you ever will, and those who enter into it with not even the slightest twinge of being nervous might not be taking it as seriously as they should.

Fears that a home are too expensive face-to-face the other recently sold homes in the neighborhood or the town’s market and future appreciation prospects in general are worth exploring and evaluating before you decide on your offer price or sign a final counter-offer. Your agent can help you understand the complex interacting factors you should consider, including the likelihood of the home to appraise at a given price point and the historical data on sales and home value trends in your area.

2. It’s too expensive for you. For years, I’ve heard buyers express concerns about being ‘house poor,’ meaning that they spend so much on their monthly mortgage payments that they are too broke to do much else. Unless you’re fortunate enough to live in one of those parts of the country in which it is less expensive to own than to rent a home, it’s almost inevitable that there will be some sort of lifestyle revision you’ll need to make post-homeownership.

Most people who have been renting for a long time will find themselves having to make some sacrifices after they buy, in terms of eating out less, going out less, splurging on vacations, clothes and other discretionary spending – this is just par for the course, sensible, and not a good reason not to buy.

3. The location is not quite right. I’d probably rank location choice right up there in the top 3 home selection regrets I hear after the fact from home owners. Clearly, the location you can live in is limited by your budget – you can’t expect to live in Beverly Hills on $100K. But I’m talking more about the various location choices and judgments every buyer has to make within their price range:

  • Between a home in the city, near work, or a home in the quiet suburbs where you get much more space – and a much longer commute,
  • Near shops and conveniences, or off the beaten path
  • Next door to a school or at the end of a quiet cul-de-sac
  • In a row of townhomes with shared walls and an HOA or in an older neighborhood with lots of land
  • between homes.

Location compromises should be made carefully and consciously. If that electrical pole in the front yard really bothers you and you talk yourself out of that concern, ask yourself: are you going to end up hating to drive up to your house every night? The neighbors who seem to take a lot less care with their yards now might become a real thorn in your side over time. That extra 20 minutes of commute time might not be as minor a lifestyle change as you can talk yourself into believing – in fact, researchers have found that the longer commutes lower overall happiness, so don’t lengthen yours without serious consideration.

 4. You have qualms about the future of your job. I’ve known people who felt a need to fast forward their home buying plans when they get wind of changes coming down the pike at their companies. This happens a lot for buyers who have been house hunting for a long time and are concerned that a layoff would render them unable to qualify for their mortgage. 

This is likely. And that’s unfortunate. But what’s more unfortunate is to proceed with buying a home, taking on a mortgage obligation and depleting your savings for the down payment, then having an interruption of income because you get laid off or – worse – being forced to sell quickly because of a job transfer out of the area. If you’re confident you can get work at another company or you have sufficient cushion to handle a temporary interruption in income, go for it. But if you have serious concerns about the short-term stability of your job, think long and hard before buying a home without a well thought-out financial plan in place.

5. You and your co-buyer are at odds. Whether or not you are legally married to your co-buyer, you will effectively be legally bound by your real estate and mortgage obligations if you buy a home together. If you are having intense, intractable conflicts about the sort of home to purchase, how much to spend, when to buy, where to buy or even whether to buy, think twice, thrice, pause and rethink once more before you sign on the dotted line.

6. You think you’ll be okay – so long as you can sell at a profit or refi in the next 12 months.

Are you a professional contractor or investor? A real estate professional that can buy and sell with very low costs? Do you have so much cash to burn that you could sell at a loss and not sweat it? 

If your answer to these questions is no, you should not buy a home planning to refi or sell it in a super-short time frame. In fact, this was one of the ways people got into trouble at the top of the market during the last cycle – buying homes so pricey they couldn’t afford them after attractive short-term financing terms changed, on the assumption they’d be able to refinance before they ever had to truly pay the piper. 

If the house you’re buying doesn’t seem likely to be able to work for your life and your family for at least 5 to 7 years, and you are pretty certain you’ll need to sell it sooner than that, consider:

(a) Whether a different type of home might be a better, long-term choice, or 

(b) Whether it makes sense for you to buy a home at this stage of your life. 

This time frame gives you a good bit of space to ride out shifts in the direction of the market, if you need to, minimizing the chances of living in a home that no longer meets your needs and being unable to sell it.

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