DAVE RAMSEY

3 ways to survive the real estate gold rush and avoid homebuyer’s remorse

Oct 3, 2021, 5:45 AM
(Unsplash Photo)...
(Unsplash Photo)
(Unsplash Photo)

Everyone’s talking about the real estate gold rush. And buyers are doing some pretty crazy stuff to stay competitive, like offering way over the asking price and, in some cases, offering the naming rights to their firstborn child. Yikes!

This hype comes from some real factors influencing people to act quickly. Since the start of the pandemic, mortgage interest rates have reached all-time lows. We’re talking rates in the 2% range (and for reference, 3% was the gold standard for decades).

And with those low interest rates comes a lot of demand and not necessarily a whole lot of supply.

According to the National Association of Realtors, in June 2021 active inventory (aka houses for sale) was down 18.8% from the previous year, driving home prices up 23.4%. Look at it this way: A house that would have sold for $250,000 last year would sell for over $308,000 today!

All these numbers are making potential homebuyers feel anxious about affording a home in their lifetime. But this FOMO is also causing people to make some major money mistakes.

So, how do you survive the real estate gold rush and avoid homebuyer’s remorse? I’m glad you asked.

3 ways to avoid homebuyer’s remorse

I want you to own a home. I just don’t want the home to own you. To avoid a financial mess, you need to understand the housing market traps that are keeping people broke.

1. Avoid aggressively overpaying

In a recent study done by our team at Ramsey Solutions, 60% of people who bought a home in the last three months paid above asking price. Look, I know you’ve got to have a competitive offer in this market. I’m fine with you paying a few thousand dollars more to sweeten the deal. I just don’t want you paying $50,000 over on a $250,000 house, for example, just to beat out the competition.

Don’t get in a bidding war with money you don’t have. Adjust your expectations, not your budget.

2. Don’t skip the appraisals or inspections

According to that same research study, 3 in 4 home-buying hopefuls said they’d waive the inspection and appraisal to get the house. Think about this: Would you buy something on Amazon without checking the reviews first? Probably not. So why would you do it for a house worth hundreds of thousands of dollars?

The inspector’s report gives you the information you need to decide to buy the home as is or to negotiate with the seller to fix any problems or reduce the price. Skipping inspections and appraisals may get you the keys, but it could turn the home of your dreams into a giant, expensive house of your nightmares.

3. Budget for a house you can afford

That Ramsey Solutions research study also found that 75% of Americans worry they won’t be able to find a home in their budget. That tells me they’re not financially ready to buy a home. Juggling a mortgage, maintenance costs, taxes and homeowner’s insurance with no margin for anything else is a stressful way to live.

The best way to buy a house is to pay for it straight up with cash money. But I get it—few people are willing to wait that long for a house. So here’s the stress-free route I would take: save at least a 10% down payment; 20% down is even better to avoid private mortgage insurance. That’s a monthly fee you pay the bank to protect them in case you’re unable to pay them back.

And when it comes to the mortgage, only get a 15-year fixed-rate mortgage where your monthly payment isn’t more than 25% of your take-home pay. That way you’ll have enough margin in your budget to breathe and attack other money goals. And bonus: You’ll have a paid-for house in 15 years, max!

Patience is key

Listen, rushing into a house you can’t afford is going to keep you stressed and broke. The antidote here is simply patience.

As long as there’s demand, houses will keep being built.

Make smart decisions, even if it takes some sacrifice and time, and you’ll be in a great financial place (and home) later on!

Dave Ramsey

(Unsplash Photo)...
Dave Ramsey

Dave Ramsey says: Feed young teen’s desire for investing

There are lots of good lessons for a 13-year-old to learn in reconciling a bank statement, and the value of spending, saving and giving.
5 days ago
(Pexels Photo)...
Dave Ramsey

Dave Ramsey says: Make a budget line for fun money

Putting fun money in your budget isn’t a green light to forget your money goals, or go on a spending free-for-all. It’s actually part of sticking to your budget.
12 days ago
(Pexels Photo)...
Rachel Cruze

5 ways you can cut household costs in 2022

The new year is here. There’s no better time (after all that crazy Christmas spending) to get serious about saving money.
14 days ago
(Pexels Photo)...
Dave Ramsey

Dave Ramsey says: Contribute to ‘sinking fund’ for emergency use

All cars have one thing in common — they’ll need repairs at some point. Fixing your car is just a basic part of car ownership, and something every car owner should be prepared for.
19 days ago
(Unsplash Photo)...
Dave Ramsey

Dave Ramsey says: There’s going to be sacrifice to get family finances straight

When you're struggling to make ends meet, it's time to sit down and decide what's worth giving up and what isn't.
21 days ago
(Pexels Photo)...
Dave Ramsey

Dave Ramsey says: Teach children about giving, especially during holidays

How do we make sure our children learn the satisfaction of giving to others at an early age? Here are a few easy ideas.
26 days ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

HVAC upkeep in Arizona saves money, keeps families prepared in the long run

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
...
Sanderson Ford

Sanderson Ford offers cars and deals for all this holiday season

Sanderson Ford’s No! Vember Black Friday sale is giving an opportunity to purchase a new 2021 vehicle just in time for the holiday season.
...
DISC DESERT INSTITUTE FOR SPINE CARE

What you need to know about spine health

With 540 million people suffering from lower back pain, it remains the leading cause of long-term disability. That’s why World Spine Day on Oct. 16 will raise awareness about spinal health with its theme, BACK2BACK. “BACK2BACK will focus on highlighting ways in which people can help their spines by staying mobile, avoiding physical inactivity, not overloading […]
3 ways to survive the real estate gold rush and avoid homebuyer’s remorse