I bought a house during the pandemic and regret everything. Here's what I learned so you can avoid my mistakes.

  • After getting outbid multiple times, Stella Guan finally scored a Los Angeles-area home — with toxic black mold.
  • Despite renovations, Guan was unable to rent it out or lure a new buyer. She sold to an iBuyer company out of desperation and only recouped 50% of what she spent. 
  • Guan shared her story and advice for navigating the current ultra-competitive housing market, which she feels can push aspiring homeowners into decisions they regret.
  • Visit Business Insider’s homepage for more stories.

Stella Guan had pandemic housing fever.

During the summer of 2020, it seemed like everyone was getting engaged, or adopting a puppy, or, yes, buying a house. Guan, who was living in a New Jersey apartment, decided she wanted in on the action.

She told Insider that the signs to buy a home cropped up everywhere, from the targeted real-estate ads that dotted her Instagram feed to emails touting record-low mortgage interest rates that bombarded her inbox.

Winter loomed. Guan, a graphic designer who started an online virtual design school, started to feel claustrophobic at the thought of spending yet another season locked down in a cramped condo.

A few months of frantic searching and bidding later, and Guan landed what she thought was her dream spread: a ranch-style home in a Los Angeles suburb. 

But the purchase was the biggest mistake of her life, costing her half her life savings. Guan told Insider her story, highlighting where she went wrong and what she would do differently next time.

Get familiar with the state of the current housing market

There years prior, Guan had bought a New Jersey condo with a view of the New York City skyline. That process, Guan told Business Insider, was painless. She had a good relationship with her realtor, her search was short, and she only put offers down on two properties before one was accepted. It lulled her into a false sense of security when it came to searching for a home this time around; she thought she knew what she was getting into.

The pandemic accelerated Guan’s move to Southern California. “I wanted to get things done fast,” said Guan, who wanted to  get settled and “focus on my actual business.” She had recently quit her graphic design job to venture out on her own and start a virtual design school, Path Unbound — which she realized she could do from anywhere. Why not somewhere with better weather?

Guan sold her New Jersey condo with views of the Manhattan skyline before moving to California in 2020.Stella Guan

But Guan was about to enter a housing market that is both pricey and cutthroat, especially in suburbs similar to the Los Angeles enclaves where she was hunting. Low inventory and high demand pushed home sales and prices up during the pandemic.

“A lower supply of houses available for sale, coupled with record-low mortgage rates, has kept prices on a consistent upward trend,” Thao Le, a professor of housing economics and real estate finance at Georgia State University, explained to WalletHub. The combination, Le said, makes for a more “competitive market for buyers.”

Many new homeowners are experiencing ‘buyer’s remorse’

That competition has driven potential buyers to commit to financial decisions they were unprepared to make. A late August survey conducted by LendEDU found that the majority of newly minted homeowners regretted their pandemic-fueled moves to purchase property. A whopping 55% of Americans who purchased homes during the summer of 2020 almost immediately reported buyer’s remorse — and roughly 30% of them cited financial reasons.

Guan is no exception.

She found the market to be as competitive as Le described. At first, she made offers on Los Angeles homes from her New Jersey condo. She didn’t get very far with any of the homes she bid on; she chalked it up to the remote house-hunt.

So she sold the condo and moved to Los Angeles search while on the ground. “I stayed in an Airbnb that was cockroach-infested,” she said. That experience added “fuel to the desire” to buy a home as quickly as possible. At one point, she said she put an offer on a house that received 18 other offers within three days, ultimately driving the price up more than $100,000 above asking price.

Guan walking into the home she bought — and would sell just months later after endless issues.Stella Guan

She made “seven or eight offers” before one was finally accepted — within a day. Guan said she thought she got lucky since there was “somehow no counter-offer.” Later, she viewed the lack of other offers on the house, which was in a less popular suburb of LA, to be a red flag.

“After all those previous offers, I got super burned out,” she said. “I just felt really relieved.”

Keep an eye out for deals that seem too good to be true

Then the home inspector arrived — and suspected mold. Cost: $500. For another $500, a specialist was brought in to confirm the first inspector’s hunch. Within a week, Guan learned her new home had toxic black mold. After paying more than $1,000 to confirm the home had problems, she decided she was in too deep to back out.

Those extra fees were chump change compared to the larger-than-normal down payment she had already tendered on the house due to being self-employed. Guan decided to carry on.

She budgeted $30,000 to fix up the property, but ended up paying upwards of $50,000 to overhaul the house. While Guan had planned to update the home to her tastes, she said, “I spent all my money on repair and not renovation.” The finished product wasn’t her style; it wasn’t even in a neighborhood she loved. 

Guan in the backyard of the home. She had planned to renovate the space to her taste, but ultimately ran out of money after upgrading the basics.Stella GuanEven though she knew the health risks had been abated, she couldn’t bring herself to be excited. “I hated the house,” she said, “even though it shined like new.” She couldn’t stomach living there because she associated it so closely with the trouble it caused her. “I needed to get out,” she said. 

Guan should have tried to rent out the house, but tried to resell it instead

The best option for someone like Guan — who hates their new property — is to rent it out at first, according to Ilyce Glink, the CEO of Best Money Moves, and Samuel J. Tamkin, a real estate attorney, who penned a Washington Post advice column on the topic. That way, they said, the home can appreciate in value and sell later for a higher price. But amid the pandemic, with vacancies soaring and rents dropping as city dwellers fled and first-time landlords struggling to secure tenants who paid rent in full and on time, renting seemed financially risky to Guan.

She decided to try and resell the house. But after 20 showings without a single offer, Guan got nervous. “I needed another option than selling it myself or renting it out,” she said. She felt underwater, like she was losing more money with each passing minute.

At last, she turned to an iBuyer to take it off her hands for cheap and in cash

As a last resort, she looked for a company that would buy the home in cash. Companies that do this, which are known as iBuyers, include Zillow, Redfin, and Opendoor. Each aim to maximize potential profit by buying homes quickly in all-cash deals, renovating them, and selling them for higher prices, all while charging hefty fees to the original owner.

“With iBuying, you’re typically selling your home at a discount, but what you’re getting in return is speed and certainty,” Rob Barber, the CEO of ATTOM Data Solutions, told Realtor.com. “You’re getting a guarantee that the deal will close.”

After months of stress, a guaranteed sale at a sub-optimal price was enough to Guan.

Guan in the kitchen of the home she sold for cash to an iBuyer.Stella Guan“I think it was a good choice for me, who needed to get out,” Guan said. Through the iBuyer deal, she recouped 50% of the money she had sunk into the home. But that still meant her savings were half of their pre-pandemic value.

Lesson learned: don’t rush into buying

Guan said if she were to do it all over again, she would follow “the conventional wisdom,” which is to rent somewhere before buying and really take the time to find the right property. Had she been more patient, or walked away from the mold-infested house, she added, she could have saved thousands.

Guan’s cautionary tale is illustrative for other potential pandemic buyers. Even if a real estate purchase seems like a good deal, you should carefully weigh the pros, the cons, and your other options.

“The trajectory of the pandemic, and thus the economy, is still very much unpredictable,” Le, the Georgia State University professor, said. “Aspiring buyers should evaluate their financial situation and job security carefully before committing” to homeownership, she added.

Guan is now happily settled in Los Angeles and ready to buy another property, armed with more information.Stella GuanIn hindsight, Guan agreed. If this process taught her anything, she said, it’s that you should always expect to spend more than you budgeted for.

While Guan is taking the misadventures of 2020 as a learning experience, she’s not afraid to dip a toe back into real estate, armed with her new knowledge.

“I’m not discouraged,” said. Guan, who is currently renting an apartment in Los Angeles’ trendy Koreatown neighborhood. “I’m still going to buy a house in the future, but this time I’m going to be much more careful.”

 

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