Homebuyers' remorse can hit up to 80% of purchasers in some markets, with auctions the greatest driver of "instant regret".
That's the estimate of co-founder of the Abodey homebuying app and former real estate agent Jo Agresta.
Ms Agresta told the Savings Tip Jar podcast that Australia's housing shortage is contributing to high levels of buyers' remorse as people are made to feel they'll miss out if they don't act fast.
"Because there's not enough stock on market, buyers are now making this hasty decision to purchase quickly, to just snap up a deal," Ms Agresta said.
"And then what's happening post-purchase, whether they bought at auction - and auction is the highest time I see this regret happen - it's instant regret."
She said often buyers win the property they wanted at auction, but not at the price they'd wanted.
See also: What are the benefits and drawbacks of buying at auction?
Tinder for real estate
Ms Agresta and her business partner have come up with Abodey, an app designed to make property searching easier - much like Tinder, except matching homes to prospective buyers.
Abodey uses AI technology to find available homes according to buyer preferences and market trends, as well as connecting users to trusted experts such as mortgage brokers, building and pest inspectors, and conveyancers.
Ms Agresta said identifying right-priced properties in the first place and keeping emotions in check are major steps in avoiding buyer regret.
"Buying a home often starts with an emotional decision," she conceded.
"[But] the first thing you do is start with a broker or finance professional talking you through what you can afford because this is going to stop you from getting emotionally attached to what you see online."
'Back-to-front' homebuying peak time for mistakes
Falling in love with a home you don't know if you can afford is a real danger, Ms Agresta said.
She recommends the best strategy to avoid regret is starting with home loan pre-approval so buyers understand what they can afford before they get into the market.
"Then you can actually make a decision with confidence to say: 'Hey, I found a property. I like it. It ticks all the boxes. I'm going to put in an offer, or I'm going to attend the auction'," she said.
"Doing the whole process back-to-front is where I see the most overwhelmed, the most stress, the most mistakes, always."
How to avoid auction regret
Ms Agresta said the key to auctions is to "put in an offer that you're happy to win at and you're happy to lose at".
"What I mean is that it's the perfect number for you, that if an agent came in and said: 'Hey, we're taking an offer. What's your offer?'"
"If, for a $600,000 home, it's $580,000 and the agent came back and said: 'hey you didn't get it. We sold it for $582,000', would you regret that you didn't go the extra two grand?"
She said if the answer is yes, then increase your price, but if it's no, that it's still too high, then that's the "right number" for you.
Due diligence failure another driver of regret
Another major source of longer-term buyer regret is not researching the property or having professional building and pest inspections done before it's purchased.
"They haven't done their due diligence, and they weren't planning to buy that day but they had the finance in place, win the property at auction, [they're] happy, move in, then six months later, they have a massive storm," Ms Agresta said.
She cited the case of a client who had basement flooding, only to find $150,000 in damages wasn't covered by insurance because of previous renovations that were poorly done.
"So, when you're going to auction, you should be paying for a building and pest inspection before you purchase," she said.
"The reality is, if she [the client] got a building and pest inspection, she would have saved herself a massive headache and massive regret on that home, and it set her back quite a bit."
Overpaying at auction by suburb
Ms Agresta said suburbs where auctions typically perform well can also be hotspots for buyer remorse.
Such places account for her estimate of 80% of home purchases triggering buyer regret.
She gave the example of Tarneit in Melbourne's west, highly popular with first homebuyers where large numbers of people typically attend and bid at auctions.
"These are standard first-time buyer homes, [but] you get a lot of emotions around those options and [buyers] are overpaying," she said.
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