How to prevent buyer's remorse when purchasing a home in a seller's market

Many homes for sale right now are receiving numerous offers, meaning that buyers have to be aggressive with their offers if they want to have a chance.

With home prices up more than 16% in Metro Detroit and inventories low, it's easy to end up paying more than you initially planned, but there are ways to avoid buyer's remorse when making such a large purchase. 

RELATED: What is a seller's market and what is causing a house shortage in Metro Detroit?

When heading into the homebuying process, it is important to know how much you can afford and how much you are willing to spend. Having a pre-approval for a mortgage will not only make your offers stronger -- it will help you understand how much you may be able to borrow before you start seeing homes and making offers.

Many potential homebuyers are also waiving inspections. While this may seem like a good way to make your offer stand out, consider how much this decision could cost you if the house has a major issue that would have been uncovered during an inspection.

If you are a contractor, know what to look for, or are going into the purchase knowing there are problems that need to be fixed, then this may be an option that won't harm you much. However, if you aren't willing or ready to dump money into repairs, foregoing the inspection may be a bad choice. 

Also, some buyers are adding an appraisal guarantee. This means that if the house appraises for less than offered, the buyer will make up some of the difference in cash. So, if a house appraises for $145,000 but the buyer offered $150,000 with a $5,000 appraisal guarantee, the buyer will pay the extra $5,000.

Jeanette Schneider, of Remax of Southeastern Michigan, said that buyers need to consider how much money they are spending when purchasing right now and if they are comfortable with that decision.

"If you have the means and you have the money and this is a long-term place, that may still be OK for you, but for a lot of folks, you really need to sit back and ask yourself, 'Am I OK with overextending myself potentially? Am I OK with making these big financial decisions and not having buyers remorse a couple months down the road?'" she said.

Buying a house is possible right now, but being prepared financially is key to making sure you do not make a purchase you will quickly regret.