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Financial stress is a huge factor when it comes to making decisions about where to spend money. It turns out that when you’re stressed, you’re far more likely to make a bad decision.

When the decisions are about homebuying, or selling, or even homeownership, the consequences of bad decision-making can be financially disastrous.

Over the many years we’ve been writing this column, and in Sam’s real estate law practice, we’ve watched thousands of home buyers make mistake after mistake simply because they were financially stressed.

Timing mistakes happen because homeowners think they can buy and sell exactly when they want. Financing mistakes happen because some homebuyers misunderstand the relationship between interest rates and credit scores, and rush to get approved without taking the time to assess, fix and raise their credit score.

Other mistakes happen because sellers are getting divorced or non-romantic partners are splitting and they decide they “need” a certain amount out of the sale, so they put on a pie-in-the-sky price regardless of whether the market can support it. Or, they’re so mad at each other that they keep fighting, hoping to wound the other party financially. Often, they are successful, even as they stab themselves in their own wallet.

One of Sam’s clients has bought and sold many houses over the past 20 years. They’ve lost money on just about each of them. Why? Sometimes they decided to sell even though they didn’t need to and the market was slow. A few times they were looking at open houses for fun, fell in love with a house or a piece of land, and made an offer even though they hadn’t even listed their current home. A different client once bought a home in a flood plain because they “had to have” something and liked the house. Other clients get caught up in bidding wars and wind up overpaying for the property.

When you lose money in real estate, the losses can often be measured in the hundreds of thousands of dollars. You can overpay in a bidding war. Then, if you don’t take the time to push up your credit score, you’ll overpay with a higher interest rate. If you sell in a hurry, for whatever reason, you might even take a loss, especially after you factor in the cost of the agent, transfer taxes, and other costs of sale.

Real estate is a long-term move. Financial stress makes people pull the trigger before they’re really ready, and that can cause even more financial stress. So, how do you avoid making these real estate money mistakes?

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)

©2025 Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency, LLC.