So you did your research, you looked at condos, you investigated neighbourhoods and school districts, you made an offer, and—voila!—you’re a condo owner! This should be one of the happiest days of your life…so why do you feel like driving off a cliff ala Thelma and Louise? Did we pay too much? Did somebody pay off the inspector not to disclose some massive underlying damage and faulty wiring? Is this the true right condo for us? How will we ever scrape up enough to pay the mortgage payments? How can I get out of it?
Well, it’s called buyer’s remorse, and it’s as universal as the common cold. So take a deep breath, do a few yoga poses and relax. It’s going to be okay. Everyone goes through it. Statistics are on your side: 74 percent of first-time buyers say they like their new home better than their previous residence, and 67 percent of repeat buyers like theirs better.
And anyway, you legally have three days to change your mind and cancel the contract. Right?
Wrong! No such law exists. Generally, a buyer can cancel only for failure to qualify for mortgage financing after a diligent and good-faith effort, or based on the reasonable disapproval of some aspect of the home. What constitutes “reasonable disapproval of some aspect of the home”? Read on and find out.
Notice of violations of building, zoning, fire or health laws.
Flood hazard designation (resulting in the cost of flood hazard insurance).
The title commitment report from the title company (which may indicate liens, unpaid taxes and easements restricting the use of the property).
The Seller's Property Disclosure Statement.
Condo Corporation/Board disclosures (such as the restrictions contained in your community's covenants, conditions and restrictions or other governing documents).
Cost to repair any septic or other waste-disposal system.
Lead-based paint information (for condo constructed prior to 1978).
Wood-infestation reports.
Damage to the condo by fire, flood, earthquake or act of God.
Information obtained from the condo inspection and investigation (which may reveal adverse property conditions).
If a buyer tries to cancel the contract just because of cold feet, the buyer is in breach of the contract. The seller is then entitled to request mediation, file a lawsuit, keep the buyer's earnest money as damages or ask a court to order the buyer to purchase the condo.
You're less likely to suffer from buyer's remorse if you have a real estate agent you trust who can help you evaluate your housing needs. But the best way to prevent (or at least mitigate) buyer’s remorse is to prepare yourself in advance, long before you ever sign on the dotted line.
First, draw up a pro and con list. We’ve given you one to get you started below.
Advantages of Renting
Usually costs less than buying
You can usually move more easily
Little responsibility for maintenance
No responsibility for repairs
Disadvantages of Renting
No tax benefit
No investment in or from the property
No equity is building
Rent payment can increase frequently
Possibility of eviction
Advantages of Buying
Greater stability
Usually good investment
Your equity builds
First property often leads to better one
Greater individuality in décor/space arrangement
Greater sense of security
Disadvantages of Buying
You are responsible for property taxes
You are responsible for the maintenance (within your unit for condos)
You are responsible for repairs (within your unit for condos)
Possibility of foreclosure
In foreclosure, loss of equity
Monthly housing usually costs more
Your cash is tied up
You have less mobility
Payment on some mortgage types can increase.
After you’ve looked over your list, compile the costs of buying a condo, of which there are two types: upfront costs (down payment and closing costs) and ongoing costs (monthly mortgage payment, condo ownership expenses, taxes, insurance, etc.)
So when buyer’s remorse hits, remind yourself why you wanted to buy a condo in the first place. Now pop open the bubbly and congratulate yourself.