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How To Overcome The Hardest Type Of Desire


Some people desire a gorgeous partner. While others desire so much fame they can never walk around in peace. However, real estate might be the most desirable thing of them all since we are spending so much time at home. As a result, real estate FOMO could also be the hardest type of desire to overcome.

Real estate is obviously more desirable than stocks partly because it’s harder to buy real estate. Anybody can buy a share or a fractional share of any stock. But not everybody can buy any real estate.

When it’s harder to get what we want, we tend to experience FOMO. Therefore, real estate FOMO is even more intense than stock FOMO, vacation FOMO, or even six-pack abs FOMO.

In Search For A Nicer Home

With mortgage rates rising I decided to aggressively explore new real estate opportunities in San Francisco. I didn’t expect great deals, but I did expect the bidding wars to die down. Maybe, there would be another forever home out there I could buy.

You see, in mid-2020, I didn’t actually buy my true forever home. Instead, I bought a remodeled home that was about 20% nicer than the previous home we lived in once its remodel was complete.

With a growing family, I just didn’t want to have to wait and live through the remodeling process. I had a feeling it would take much longer than expected. So I found a completely done house of similar size with a better layout.

This is a therapeutic post about how I found my true forever home and let it slip away. I will also attempt to address how to overcome real estate FOMO if you’ve been experiencing an extensive desire to own a nicer home as well.

Writing is therapy! So let’s get to it.

Responsibility Of A Father: Provide A Safe And Wonderful Home

Ever since I became a father in 2017, the value of living in a nicer primary residence has gone way up. No longer was I just living for myself and my wife. I was living for people who depended on us to take care of them.

The best time to own the nicest house you can afford is when your children are at home. This way, the cost of the house gets amortized across more heartbeats. It’s rare to want to upgrade to an even bigger home once they leave the nest.

As I was looking online for housing deals, I stumbled upon an incredible home on a 9,300 useable lot. For comparison, the average lot size in San Francisco is around 2,500 square feet.

I took both kids to see the house and they immediately loved it. They ran around the front yard with glee and giggles for 30 minutes. Seeing them so happy triggered an intense desire in me to buy the home, even though we had just bought our current home in 2020.

As a parent, all you want is for your children to be safe and happy. With a front yard that could be enclosed with a gate, I started dreaming about all the get-togethers we would throw with their friends.

I was willing to pay big bucks for the property. There was just one big problem, I didn’t have the money!

Nicest And Most Expensive Home On The Block

Besides not having enough money to buy the home with cash, it also happened to be the most expensive home on the block. With a growing concern the real estate market could fade over the next 1-3 years, it didn’t seem prudent to leverage up at what could be the top of the cycle.

To overcome my rational investor brain which is always focused on maximum returns instead of maximum lifestyle, I told myself several things in an attempt to convince myself to buy:

  • I’m entering decumulation mode. Therefore, there’s no better way to decumulate my wealth than by buying a more expensive property. Money is best spent on having a better lifestyle today. Otherwise, I might die with too much.
  • I plan to own the property for 16 years until our daughter goes to college. Therefore, the property’s value will probably turn out fine, even if it does lose some value over the next three years.
  • To manage risk exposure, I can always sell my other rental properties. Not only would I be reducing risk, but I would also be improving the quality of my life by having to manage fewer rentals. The negative would be that my passive rental income would decrease.
  • Another property like this with such a huge lot for this price is unlikely going to come up again. If I don’t buy this house, years from now, I might lament about the one that got away.

As a father, my #1 goal is to provide for my family. Despite this house being 70% more expensive than our existing house, it still fell within my 30/30/3-5 house-buying guideline, albeit at the maximum limit.

With other people to care for, I no longer wanted to be so frugal, even though we were comfortable. Instead, I wanted to live it up!

Couldn’t Get The Right Financing In Time

Alas, in order to purchase successfully the home, I felt I had to make a 100% cash offer. The home already had two existing offers, one of which was all cash for a slightly higher than asking price. The other offer was at an even higher price, but it had a loan contingency.

I spoke to the listing agent and proposed a dual agency, where she would represent me to save her client from paying the 2.5% commission to the buyer’s agent. I have done dual agency purchases for the past three homes to great success.

In this case, the listing agent would earn 0.3% more commission on top of her already guaranteed 2.5% commission and I could save 1.1% off the asking price. The remaining 1.1% would go to the seller. This way, we’d all win.

The listing agent said if I did a 14-day close, all cash, I had a good chance of winning if I submitted an offer $40,000 under the asking price. If my offer was accepted, I estimated it would be about $100,000 below the competing all-cash offer. That felt great!

The problem, however, was that I didn’t want to sell a ton of stock to pay for this house. The S&P 500 was down about 18.5% at the time and I also didn’t want to pay capital gains tax. Keeping my desired ~30% of net worth in stocks as part of my ideal net worth asset allocation was important.

It is wise to do what billionaires do by borrowing against their assets at an affordable rate. However, given time was of the essence, I couldn’t get a loan from the bank in time.

Finally, I didn’t want to borrow money from a friend as that might create complications.

Lesson learned. Anticipate your desire for things. The more you want, the more cash or access to liquidity you need. The less you want, the simpler your life!

If you’re serious about buying a new home, at the very least, you need to get preapproved for a mortgage. Otherwise, you will be uncompetitive in the bidding process.

Why Not Get My Financing Down Beforehand?

The obvious question you might be wondering is why I didn’t get my financing down before finding the home. Wouldn’t that have been a much smarter decision to conquer my real estate FOMO?

The first reason was that I didn’t expect to find a new dream home so quickly. As a real estate investor, I’m always observing new listings on the market to get a proper estimate of my holdings. However, very rarely do homes pop up that elicit so much desire. You tend to get less emotional with real estate over time.

The second reason was that I was expecting the home to not get offers at its asking price. Since the S&P 500 was flirting with bear market territory and the NASDAQ was already well into a bear market, I didn’t expect the home to get offers so quickly. But by the 12th day on the market, the listing agent decided to set an offer deadline due to the interest.

My hope was the deadline would pass with no offers, the house would sit on the market for a month, and THEN I could swoop in and purchase the home for 5-10% below its original asking price.

I had seen this happen to several other not-as-nice homes recently, where the listing agent shot too high. Unfortunately, this property was too hot for such a thing to occur.

Of the past four real estate purchases I’ve made, I paid below asking for each one. To pay asking in this market after a huge run-up didn’t feel right. So I told myself I would only buy if I could get a discount. Discipline was in order!

Dealing With The House That Got Away

The house is currently pending and I feel sad to have missed my opportunity. Sure, maybe the house will fall out of escrow and I’ll be given another chance. But mentally, it’s important to move on and appreciate what I already have.

What’s interesting is I had these exact same emotions back in April 2020 when I was considering buying the house I’m currently living in. I daydreamed about what it would be like to raise my family. I imagined the joy on my kids’ faces as they ran around the deck and played hide and seek in the many new rooms.

Only with our current house, I actually succeeded in sealing the deal. When I asked my son which house he preferred, he said our current house. And when I asked him why, he said it was because of all the toys. In other words, he doesn’t really care if the new house is bigger and nicer. He just cared about what was inside the house.

Meanwhile, more importantly, my wife wasn’t enthusiastic about moving after only two years in our existing house. She liked the coziness of our house and didn’t want to deal with all the minutiae of moving. Things such as getting cable, wifi, furniture, window treatments, and setting up the security system are a PITA.

Why change if things aren’t broken right?

Controlling Your Real Estate FOMO

I allowed real estate FOMO to get to me because I’m a real estate addict. The thrill of a good real estate negotiation is more fun than any roller coaster ride! However, I also feel a little bit ashamed for letting desire get the most of me. I thought I was better than this.

Missing out on living in a nicer house made me appreciate our current house less. It’s similar to seeing your neighbor driving a nicer car or going on a fabulous vacation. Suddenly, the things you have and your experiences don’t seem as wonderful. Hedonic adaptation is so sad!

If you want to feel poor, the easiest thing you can do is look at real estate listings. There seems to be an unlimited number of real estate levels you can buy.

Once you think you made it buying a $1 million home, you peak over at the $3 million listings and start thinking yours isn’t so nice anymore. Just when you’re comfortable living in a $3 million home, you search for $6 million homes with more land and a view. Here in San Francisco, there are $50 – $100 million homes as well!

In real estate, there’s always a nicer home to aspire to own. Whereas with stocks, it’s not like owning 100X more of the stock makes you feel that much better. As an owner with one share, you still own the company. You also still get to participate in the annual shareholder meeting.

How To Overcome Real Estate FOMO

To overcome your real estate FOMO you must learn to feel grateful for the home you currently own. Here are some thoughts on how to feel more grateful.

1) Think back to the time right before you submitted an offer on your existing home. Remember the excitement you were feeling. Also remember the difficulty of going through the entire preapproval process as well as the anxiety of not knowing whether you would win or not.

2) If you want to appreciate your current home more, give it a good clean and declutter. When you’re looking at new homes, they are often spotless and staged. It’s an unfair comparison that can often make you feel less good about your house.

3) Buy new fixtures and appliances. You’ll be amazed what buying new faucets, door handles, light fixtures, or a new dishwasher can do to spruce up your home. Changing your refrigerator and range will also help a lot. However, the removal and installation are much more difficult.

4) Paint and landscape. Painting the interior and/or exterior of your house is one of the easiest ways to freshen up your house. You can also paint accent walls or experiment with unique colors. Landscaping is also a fun way to spruce up your house as well with new plants, mulch, borders, and trees.

5) Think about all the money you’ll save by not buying a nicer house. You will save on annual property taxes and monthly mortgage payments, if you take out a loan. Think about what else you could do with the money. You can reinvest more of your cash flow into passive real estate investments to live more free. Further, think about the benefits of having a lower cash burn to better handle any economic environment.

6) Appreciate a simpler life. Part of the reason why we suffer so much is because we keep on desiring more. By staying in your existing home you save a tremendous amount of time and headache. You also won’t need to sell any assets, including your existing home, to afford your more expensive home.

7) Your happiness likely won’t increase much. Unless you live in a total dump with rowdy neighbors and incessant noise pollution, buying a nicer house likely won’t make you happier for very long. You may experience a temporary one point bump in happiness. But thanks to hedonic adaption, you’ll likely revert to your baseline level of happiness.

8) Stop surfing the listings. Given real estate listings are endless, you will eventually stumble upon an amazing home you’ll want. But if you focus your attention elsewhere, you won’t want what you don’t know. Alcoholics don’t visit bars for a reason. My problem is that going to Sunday open houses has been a hobby of mine for over 10 years. It provides for good exercise, market insights, and design ideas.

Enjoy Your Existing Home More

If you’re suffering from tremendous real estate desire, I feel you. It’s such a weird feeling to want a nicer home despite already being comfortable.

Although I am sad to have missed out on a forever home, I’m also happy to have gone through this experience of self-discovery.

It’s like window shopping at a very expensive mall. You want to splurge on a luxury watch, handbag, or piece of clothing because there’s an emotional calling. However, when you don’t, you breathe a sigh of relief thanks to all the money you ended up saving.

I’m surprised about how strong of a desire I had to leverage up to buy a much more expensive home only two years after purchasing our existing one. I thought I had my Desire Demons under better control. Alas, I’ve still got a lot of work to do to manage my wants.

The one positive about this experience is that I realize I’m absolutely serious about entering the decumulation phase of my life. Having kids accelerates time. As a result, I’m more cognizant of my mortality and will spend the time I have left more purposefully.

Related posts:

After writing this post, I realized I’ve been trying to beat back real estate FOMO for years now. Below are a couple more examples when I was still focused on generating as much passive income as possible.

Don’t Let Ego Make You Buy A More Expensive Home Than You Can Afford

How A Big Expensive Home Could Ruin Your Life

Readers, have you ever experienced real estate FOMO? If so, how did you overcome it? Is there any type of FOMO that’s worse than real estate FOMO? Perhaps education FOMO or family FOMO?

To read about more of life’s common financial dilemmas, pick up a hard copy of my latest book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. The book will provide you a framework to build more wealth and make more optimal decisions.

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