Yesterday, I had the pleasure of visiting a couple who are some of my favorite clients. Not because they buy and sell often (I sold them one property in two years and "consulted" with them on the sale of their last property–to their neighbor) but more because they are just really good, solid, and honest people. They’re a lot of fun too!
They are still in the process of settling down in their new space and are finding themselves not as happy as they had hoped with the property. The space is phenomenal, but the light and views pale in comparison to the stunning midtown views they had in their previous apartment. They are also still in the process of decorating, furnishing, and generally making the space their own.
But there is no denying that buyer’s remorse has defintely set in.
So what to do? Well, I myself had buyer’s remorse for at least two months in 2000 when my wife and I purchased a two bedroom co-op. I was feeling that we were paying way too much for 1,200 square feet. The combination of an insanely paced real estate market, the co-op application process (it was brutal!) and the fact that I didn’t feel like I "got a deal" even though I was in the industry was incredibly depressing.
After a few months when the last boxes were unpacked, family photos were displayed, everything was painted and all our furniture had arrrived, the apartment felt more like home and the remorse passed. I wish that had been my only experience. In 2003, we purchased our current apartment and were involved in a bidding war that was covered in a two-page spread in the New York Post entitled "Buyer Shootout!"
The angle of the story was that even someone with many years experience in the real estate industry is subject to the same rules of bidding in an insane market. Now fortunately, my knowledge paid off and we "won" the bidding war, but I am here to tell you that it didn’t feel like I "won" anything!
The remorse set in immediately after our offer was accepted and continued for months after we closed on the property. But again, it eventually passed as we settled in and made the space our home. I’m certain that the remorse would have been less likely to pass had our apartment not appreciated so much in such a short time which leads me to those who have buyer’s remorse in today’s market.
With latest stats reporting appreciation of roughly 6% for 2006, most are still watching the value of their homes increase but certainly not at the pace that we have seen over the past several years. And of course, some who bought in the summer lull of 2006 actually got decent "deals" on their homes much like the couple I begain this post speaking about. They purchased their home from a divorced couple with literally billions of dollars who had already moved out and just wanted the place sold ASAP. My buyers were the beneficiaries of this situation and purchased the home for at least 7-10% below market in my opinion (not a regular occurance at all).
That said, when I informed them yesterday that I thought they could sell for about 10-12% above their purchase price, some of that remorse seemed to dissipate immediately. I also informed them that if they were going to sell (and I DON’T think they should), they should begin marketing immediately as the first 3-6 months of 2007 are likely to procure the best buyer at the highest price. The summer months typically slow a bit when it comes to the larger family apartments and I think they would be less likely to get the same price then. My advice to them… move in completely, paint, furnish, and decorate to their liking and re-evaluate once they have made the home "theirs." Then if they want to sell, the place will be aesthetically more appealing anyway and their design taste (very neutral) will only serve to improve the value of their home. I sincerely hope they end up loving the place because that is always my objective.
I would love to hear stories from TrueGotham readers of buyer’s remorse and hopefully the passing of that horrible feeling.