Why You Shouldn't Buy Your Forever Home

photo - White picket fence - copyright Erik Przekop This post may contain affiliate links.  Learn more by reading my disclosure.

photo - White picket fence - copyright Erik Przekop

This post may contain affiliate links.  Learn more by reading my disclosure.

OMG!  It’s Our Forever Home!

Recently, I overheard some friends talking about buying a new, bigger house.  The housing market is hot and many people think they need to get in on the action.  Perhaps it’s the fear of missing out (FOMO) that’s got so many people acting like ding-dongs when it comes to buying their next house or they’re just caught up in the hype of the latest real estate craze.

Whatever the reason, people are selling perfectly good houses so they can property-ladder up into their next home.  Property laddering, if you haven’t heard, is when you take the equity you’ve earned in one home and roll it into the next home so you can buy a bigger and more expensive property.  Some are convinced this is the American dream.  I’m not.

These friends mentioned that the house they saw was perfect and it was going to be their “forever home.”

From the outside looking in, I can see they’re making an emotional decision that will max them out financially.

The Emotional Trappings of the Forever Home

The problem with the “forever home” concept is it’s steeped with emotion, when it should be focused on financial.  It’s applying an indiscriminate emotion to an inanimate object. 

As consumers, we look at a potential house and say this is could be our “forever home” or it’s going to be our “dream home.” We tell ourselves and anyone who is willing to listen that this is where we will raise our family and spend our golden years.

It’s a beautiful sentiment, I agree, but it’s stupid when you’re negotiating.

I’m going to tell you something that you may never have heard, but this is essential when negotiating for anything:

Whoever wants it less, wins.

Stop and read that again. I've seen it over and over, in years of real estate transactions that once a person is emotionally involved, they've lost.

Think about your high school crush.  You were out of your mind for him or her, right?  Did they even know you existed?  Yet you spent every day thinking about them, dreaming of a future together.  When that crush finally noticed you, what happened?  More than likely you revealed yourself as a complete dork.  Why?  Because you wanted it more than they did.

In today’s real estate market, especially the residential market, emotions are the worst thing you can bring to the bargaining table.  When you show up and start throwing around terms like “forever home” or “dream home,” you are sunk.  Push your chips across the table. 

Immediately, you’ve given up the ability to negotiate with a calm, cool head.  Even when you have a real estate broker helping you, emotional negotiating is going to have you second-guessing everything your agent does.

- “Did the broker try hard enough?”
- “Did the broker pitch our deal to the seller’s agent or did they just email it to them?”
- “We could have done this ourselves.  The seller needs to know how much we really want to buy this house.  If they only knew that, they’d sell it to us!”

The idea of a forever home is kryptonite to reasoning.  Even though it shouldn’t be, purchasing a home is one of the most emotional experiences people go through.  We all must struggle for higher reasoning in moments like this.

That’s why there are long lines of people making over-priced offers on houses across the country right now and pushing their budgets to the limit.  They are battling the fear of missing out on their forever home.  Emotions have taken over.

Those buyers want it more than the sellers and, therefore, they’ve automatically lost.

The Justification a Forever Home Gives You

Here’s where the forever home concept really spins you out of reality.

If your house is really going to be forever, then you’re going to need plenty of room.  Who knows how your family may grow or how your interests may expand?  You must plan for various contingencies which leads to buying more than necessary.

It’s the idea of “my eyes are bigger than my stomach.”

At first, you start talking about a little extra land for some elbow room from your neighbors and soon you’re looking at ten acres on the edge of the county. Think that’s ridiculous?  My girlfriend and I were doing the very same thing last summer.  Why?  Because we thought we wanted it.  Ten acres for peace and quiet so we could throw a football around with the boy.  I can’t believe how quickly a conversation about having a little extra elbow room spiraled out of control.

A forever home also gives you the justification to over spend on personalizing the house.  Upgrading it in a manner that makes it feel truly special.  Adding expensive upgrades like an over-the-top kitchen remodel, a massive deck, or a huge warehouse-like shop are just a few items that will bust your budget in the pursuit of making your forever home feel like a one-of-a-kind opportunity.  When the time comes to part with your forever home (the time will come, by the way), all those cool upgrades won’t seem so cool when buyers are looking at them as detriments.

How are you going to pay for all the new happiness a “forever home” is supposed to bring you?  Buying a forever home puts you in the situation of purchasing all the house you can versus buying the house you should

You will more than likely stretch your budget to its limits.  There’s freedom in living within your means.  Are you willing to trade freedom for ‘forever’?

House versus Home

A house is a structure that you live in.  It will become a home while you are there.  When you move elsewhere, that structure becomes a house again.  You can live almost anywhere and make it a home.

Financially speaking, the house you live in is your biggest liability.  Robert Kiyosaki talks about it in Rich Dad, Poor Dad and I fully embrace the concept.  Your house doesn’t put money in your pocket.  It only pulls money out with a long, slow, sucking sound until the exact moment you sell it.  Hopefully, you make some money.  Sometimes you don’t. 

Accepting that your property is just a house, and removing the emotional ties to it, frees you to make bigger and better decisions for your family.

“Is this best use of our available capital?”

“Should we upgrade a room or is that money better invested elsewhere?”

We need to learn to separate the emotion of “home” from the financial aspect of our “house.”

You (and your family) are what makes it a home.  The structure you live inside just keeps the elements at bay.

It’s a tough concept to grasp, but you’d likely tease a friend for tying his identity to his European sports car.  Why don’t you look at your house through the same lens?

What Can Derail a Forever Home?

Okay, so you’ve heard my advice and you are choosing to ignore it.  That’s your prerogative.  Feel free to say, “He’s got it all wrong.  I’m going to buy my dream house and make it my forever home.  Nothing is going to stop me.”

That’s cool.  I get it.

However, let me just give you seven simple reasons that might derail your concept of a forever home.  After you read this list, I’ll bet you can even come up with a few of your own.

#1.  Divorce

I’m sure you’re reading this saying, “I’ll never get divorced” and I hope that’s true.  Nobody gets married thinking someday they’ll be sitting at an attorney’s office arguing over how to keep the lawn furniture. 

However, a considerable amount of all marriages end in divorce.  Some reports say it’s as high as 50% with the rate higher for subsequent marriages.

A divorce ends the concept of a forever home very quickly.

#2.  Age

Did you buy a home that will accommodate you as you age?  Someday (if you are lucky) you will be 70, 80 or older.  A house with a lot of stairs and lawn maintenance is not exactly a ticket to happiness.

Also, you may want a 3,000 sq. ft. home today because you have a houseful of children.  Twenty years from now when it’s just you and your spouse, 3,000 sq. ft. is a lot of space to keep clean and maintain.

Age and forever are mutually exclusive concepts.  In other words, it ain’t going to happen, folks. 

#3.  Death

None of us likes to think about it but someday each of us is going to die.  Or worse, a loved one is going to die.  That may change the dynamic of the forever home so much you will no longer want to live there.

Not to be morbid, but death is less than forever.  It’s simple math.

#4.  Loss of Employment

You don’t buy your forever home thinking you’re going to be laid off or fired.  Guess what?  It happens.  All the time.  Even in a good economy.

If you purchased your forever home at the edge of your economic bubble, a loss of income may cause something to burst.

The bank won’t care that it was your forever home when they post the foreclosure notice.

#5.  Relocation for Employment / Opportunity

This is a happy one.  You’ve got a great opportunity but it’s going to require you to relocate away from your forever home.  How can you do this when you have a big mortgage that’s stretching your finances to the limit?  Your forever home may become an albatross around your neck.

The boss isn’t going to care that you can’t take the promotion due to your forever home.  They’ll move on to the next person in line.             

#6.  Change of Neighborhood Demographics

I’m sure you’ve seen this in your own city.  A neighborhood can decline over time.  Once proud neighborhoods have been reduced to boarded up zombie homes in the span of thirty-years.  Clearly, a forever home should withstand a thirty year period of time.

Are you buying your forever home in an area of town that is in decline or growth?  How can you tell?  Even positive growth can turn the best forever home into something you might want to escape. You can buy a home on the edge of town where no one is around, but twenty-five years later the city has grown past you.

Your forever home might stand the test of time, but the neighborhood might deteriorate around it.

#7.  Change of Taste

You bought a house today that you love and fulfills your every desire.  Perhaps it’s a mid-century modern.  All those sharp lines and cool architectural features really speaks to the person you are today.

Can you guarantee you’ll still love that style of house thirty years from now?

What spoke to me as a twenty-four year old guy doesn’t hold much allure to me now as a forty-eight year old man.

My tastes have changed, including the type of home I live in.

You better hope your taste in forever homes is better than your fashion sense in high school.  Look at some old high school photos and realize how much your tastes have changed in fifteen, twenty or thirty years.

Your Words Matter

I’m trying to wake us all up to the added weight we put ourselves under by labeling something as “forever” or our “dream.”

Nothing on this earth is forever.  That’s okay.  It’s how life works and let’s be realistic.

Don’t put yourself into an inferior negotiating position by overselling yourself on a certain property by labeling it “forever.”

Don’t put added weight on your finances by trying to stretch for the “dream” home when something more affordable makes sense.

You’ll make better decisions for you and your family when you embrace the concept that a house is just wood, nails and other materials.  It’s just a thing.  A really big, expensive thing.

Your home is where you and your family are at any moment.

And that will change over time.

What do you think?
Do you believe in the concept of a forever home?
Or do you think it's emotional quicksand while you're negotiating?