As real estate markets continue to improve, and the neighborhood you’ve had your eye on is suddenly the “hot spot” on the map, there’s a real risk you could end up paying too much for your next house. Seller’s market? Multiple offers? As a buyer, you can’t control these things.
But there is one thing you can control – a little phenomenon called “bidding burnout.”
There’s a serious emotional roller coaster associated with finding the right home, putting in an offer, discovering you’re in a competing offer situation, and then losing the home to someone who’s willing to pay more, or can squeak through on an all-cash deal. The highs and lows can take a real toll. Just when you’ve imagined what it will be like to put the hunt behind you, you feel like you’re back to zero.
When it happens once, it’s a hassle. When it happens five times? It’s downright traumatizing!
Bidding burnout sets in when you find yourself too fatigued to hold firm on what you’re willing to spend, and you begin making major financial decisions based on the desire to simply “be done with it.” You may have been pre-approved for $500,000, but had been planning to only spend $390,000. Suddenly you find yourself itching to pull the trigger on your full pre-approval, even though a little voice is telling you paying the premium will cost you in the long run.
In addition to paying too much, bidding burnout often leads to compromises in other areas. Before long, you’re looking beyond the borders of the neighborhood you’d wanted. Rationalization sets in: “What’s an extra 20 minutes added to my commute?” And: “Maybe it’s not that big a deal to settle for a different school district.” Full fever sets in when you find you’re far, far away from all of the qualities you told yourself were “must haves” for your next home.
While there are times where spending a little more may be justified, it can be wise to regroup and cool off before chasing the next listing. A professional agent will understand if you need to sit out a few rounds and see what develops. A great agent is also willing to help talk you through your priorities for the home again and see which, if any, compromises should be made first.
And when you’re ready to put in that next bid, your agent should be prepared to work with you to make your offer as attractive as it can be, without overpaying.