Haunted By Ghost House

Dear Pat,
Last year we set out to buy our first house. Our agent showed us a wonderful house on our first day looking. It had everything we wanted at the right price. We wrote a purchase agreement, but we lost in a multiple offer situation. Now we understand we should have bid higher, but it came up so fast that we simply weren’t prepared. Months later we’ve seen many more houses and nothing can compare to the one we lost. Our agent gave up on us so we go to open houses on our own, but it all seems like a waste of time. Is it hopeless?
---Haunted

Dear Haunted,
Your “ghost” house is keeping you from seeing reality. Fortunately, most buyers who have been similarly afflicted go on to find a home that makes them happy—but it’ll take a conscious attitude adjustment, and may take a larger financial commitment. Here’s some concrete advice to help you stop grieving, get realistic, and start over:

1. Stop grieving. Challenge the superiority of that “wonderful” house. No house is perfect, and your lost dream house probably had its share of flaws. Drive over there again, lurk about—is it really large enough? Is the roof OK? Concrete need repair? Enough kids on the block, or too many? Maybe the street’s a little busier than you remembered. Ask yourself, in the light of all the houses you’ve seen since, why was this house priced so low? And since the house was bid up in multiple offers, make an effort to find out its actual sale price. A house selling for ten or twenty thousand over the asking price may ultimately seem rather average, in comparison to others in that more rarified price range. Remember, your task here is to throw a few well-researched sour grapes at the fairy tale bubble you’ve created. Burst it, and move on.

2. Get realistic. Consider spending more to get a lot more house. Carefully look into your finance options to see how much you can afford to spend. An additional $30,000 in mortgage debt would cost you less than $170 month at today’s rates. Use your new-found realism to evaluate your chances of earning that much more over the next few months or years. New programs and lending instruments are created all the time allowing buyers to own more house than ever before. My advice to all buyers in our rising market is to buy at the top of your comfort level—it just makes good investment sense. If it helps exorcise your ghost house, all the better.

3. Start over. You’ve got a new attitude, and a whole new market to explore. Work with a savvy, ghost-busting agent. Expand your search to include not only more expensive houses, but lesser-priced houses of great potential often passed over by first-time buyers (see last month’s article “Picking the Bones” reprinted at www.riverrealty.net). There’s a learning curve here, but with intelligent expenditure and hard work you can create equity and a worthy home.

And finally, Haunted, please remember that whatever house you wisely chose you’ll likely sell within five years, and you’ll probably make a pile of money to apply toward your next, even-better home. That’s the statistical cycle of home ownership—don’t let a ghost house keep you stuck behind.