Inspection Red Flags, New Tips For 2022 Bidding Wars, And…To Wait, Or Not to Wait?
First Time Home Buyer Tips For Handling The Speed Of The 2022 Housing MarketWhat is it like to be a buyer in 2022? It is fast, crazy and you are not going to like every aspect of how it goes down. It might be more frustrating than you ever imagined. It is what you want to read at the beginning of the show. It’s the truth time because I believe this was worth it and you can do this. Let’s prepare you for being a buyer in 2022 because nothing truly worthwhile is ever easy. Let’s go. What’s happening? I was talking to a How To Buy A Home team member who said that we should get some How To Buy A homie merch. She was suggesting those little dolls from the ‘90s. Do you remember the Little Homies? I looked them up and it turns out that they don’t make them anymore because law enforcement entities pressured retailers to stop selling Little Homies to big stores like Walmart and Safeway. I need to find a vendor who will make them for me. It doesn’t care what the man says. This is your warp speed 2022 crazy fast info to prepare you for the crazy fast 2022 housing market. The facts and data that you need so that you don’t go ballistic when you figure out how this is going down. Since the ‘90s or older ages, compare this market to the X-Files. If you think that you hear some story that seems too outlandish or insane to be true like the crazy out-of-this-world cases and X-Files, it’s probably true. Welcome to 2022 and you best open your mind because the lowest inventory ever has created a post-pandemic alien market that seems too wacky to be true but the truth is out there and it is freaking bananas. It’s posthumously fast and absurdly competitive. That’s the way it goes. Get used to it. It’s just this market and this may not be what you were hoping for or what you were dreaming of but like this show, if you learn to tolerate the sometimes bizarre circumstances, you are going to be rewarded. I’m not going to sugarcoat it. I’m not going to prop you up with sunshine, lollipops and ice cream. I’m going to keep it real and drop truth bombs. I’m doing this to help you because too many people, including me in my twenties, missed out on buying their first home because it can be overwhelming, confusing and scary. If you learn to tolerate bizarre circumstances, you’ll get rewards. Click To Tweet In 2022, you need an advocate because it’s a world of sellers out there that don’t give a crap about you. Why? It’s because they don’t need to. They have got a line of people outside their door waiting to pounce on their home. If you just discovered this show and hoping I’m going to pack all the detailed information on how to beat the 2022 markets in one show, I hate to burst your bubble but that’s impossible.
Should You Wait Or Not Wait?Keep reading. You are going to get a big summary. This will be a full picture but I do encourage you to do some more research because it’s a lot more than I could put in one show. Let’s go into this episode’s topics I’m going to talk about. Topic number one, this is utter insanity. A listener asked me, “Should I wait until it cools down if I can’t find what I want?” Topic number two, we are going to talk about inspection rent flags because in a rush, you got to make sure that you do take care of that part of buying a home and topic number three is the topic everyone wants to know about. We are going to get a little deeper into bidding wars. Let me mentally prepare you for this. The market is flying fast at supersonic speed. I decided what I’m going to do, which is a Lightning McQueen fast episode. I’m going to speed through some of the basics that you are going to need to be prepared for this market, so you don’t end up crying in a puddle in the corner. It is going to be rapid-fire info. I’m going to do go speed for the speedy market. I’m going to spit lots of summaries and mention where these things are discussed more in detail in the previous episode because the speed that’s happening in 2021 is like nothing I or anyone else in real estate has ever seen. The best way to be ready for you to make the quick decisions that are going to work in this market is to go ahead and read this crazy fast show and then you will be used to the speed of the way things are coming. I’m doing this so that you can be ready to be light, nimble, quick on your feet and make decisions that are going to help you take advantage of this. Prepare yourself, mind and heart for the bidding wars. There are crazy expectations on you as a buyer and prepare for being treated like a member of the chess club standing against the wall to prom and a bad high school movie. Prepare for compromise and, just like dating, lower your expectations. It is the seller’s way or no way. That’s the way it’s going, supply and demand. Be confident in your choices and be ready for some disappointment as you’re trying to move forward. Be ready of how the numbers benefit you in the long run so you can take all your lumps. Once you figure it out, those numbers are going to be good for you and you got an offering, be ready for those numbers to possibly shrink every single day that you don’t close on a home. It’s the harsh truth. I’m telling you this because no change happens without challenges. If you live by that, you are going to be fine. This is a good change and it will have challenges but it’s something that’s going to benefit you in the long run. If you are hoping for dumb luck, I always say dumb luck is a dumb thing to expect. It’s a seller’s world. The sooner you get on it, the sooner you benefit while others keep driving up the values until it cools off. This is the beginning of your financial stability for you and your family. That’s going to be happening for you but here’s the reality. You are not going to get it at a discount. There are no deals and you won’t be paying a price that makes all your friends say crap. If you can get through this battle and make something happen, they will be saying that in 2023 like you would be saying when you read about all my buyers who listened to in 2019, 2020 or 2021 and they use this show to buy a house. If you read those prices, you would be like, “Crap,” but those deals were before. As I’ve been saying on this show, I’m going to say it again. I love you but I am not the warm and fuzzy teacher that lets you come late to class, chew gum and hang out. I’m the tough but goofy, more cringy teacher that you are not going to appreciate until you graduate college, get a job or have kids. If you take advantage of this day in 2022 and you battle it out, maybe you’ll be in a place someday where you are having buyers battle it out for your home. Before I go rapid-fire and get into my topic, here’s one tip on the 2022 market. You can’t get all the math and the knowledge you need to be prepared in this one quick episode. Even though it’s going to be a lot of information, this is still just one episode. You can’t get everything to be prepared for this in a top ten list or a TikTok video. To be prepared, listen and wrap your brain around the other detailed episodes, especially the 2022 episodes. I dropped two emergency shows in 2022 before Valentine’s day. If you are new to the show, here’s what I recommend you do. Are you reading this one? Cool. As soon as this is done, go back to 68 and then binge 69, 70, 71 up to this one. When you finish that, go to 57 and binge it up to 68. That’s going to give you the full detailed market analysis of what’s going on in 2022, so you are ready. First up, a listener commented, “I used to work overnights in a movie theater, doing maintenance. As I was cleaning up, I would put your show on. The job was to help save extra cash. Your show helped me out. I was able to buy a home in 2021.” He did it and you can do it too. Let’s go. Topic number one, “This sucks. I can’t buy a house. I’m going to wait until it cools off.” A listener wrote me this, “I’m trying to buy a home in Dallas and the competition is intense. I lost out on a home. I had 40 plus offers in the first weekend on the market. Is it smart to consider renting for another year until things settle down rather than moving to a home that I have to settle on and not one that I like?” Warning. The next words I’m about to say may seem super harsh. Remember, I love you. I have done the math and I have your best interests at heart. The thought process is logical but the reality is that the market is moving away from you and what you think you can afford or should be able to afford. Your version of settling may be what you can only afford. The math says that waiting for things to “settle down” in a year means you are going to be buying a lesser home for the same money in a higher monthly payment with a higher mortgage interest rate. Don’t shoot the messenger. I wish I could buy a Bentley but I could only afford a Honda CRV. Stop watching HGTV and start reading episodes 49, 53, 57, 68, 69, 70 and 73. 40 or 50 offers are happening everywhere in homes. If you are approved for $350,000 homes, stop looking at $350,000 homes. Everyone is overbidding. Start looking at $300,000 homes so you can offer over the list price. The market is moving fast. Look at the homes that are sold for $350,000 in the last weeks and that is what you can afford. Does that sting? Sorry. I don’t make the rules. I will just tell you how to beat the game. While you’re there, look at the prices of the home sold in the last weeks and then look at how much over the list price they sold. This is the reality. Is it stupid? Does it suck? Yes, but so does reality TV. You should have been prepared for that. It’s right there in the name, reality. No matter what get house inspections done for information purposes. Click To Tweet
Inspection Red FlagsTopic number two is inspection red flags. A listener hit me up with this urgent question, “My husband and I are about to make moves.” I almost flagged this comment for inappropriate content but I channeled my inner Ted Lasso and decided to be curious, not judgmental. It says, “My husband and I are about to make moves on a home we have had our eyes on.” That’s better. “The last two buyers fell out for undisclosed reasons.” Usually, the reason I’m talking at a regular speed is that I’m going to tell you what would happen in a regular market. In a regular market, if two buyers fall out for undisclosed reasons, unqualified buyers make offers all the time. If the seller wants to sell and those are the only offers out there, sometimes that’s all they got. They go on a contract with the buyers that might not be prepared to buy and don’t have their loan in order but that’s the only offer the seller has, so they go under contract and hope it works out. Once they get in there, the buyer finds out that they don’t have real approval to buy the home and they have to back out of the deal. It could mean there’s nothing wrong with the home, even if it happened twice like it did in this case. The deal sometimes doesn’t fall out because the buyer found something wrong with the home. A lot of times, the buyers can’t perform. That was the one offer that came in and the seller had to give it a go. A lot of times, in those situations, I’ll tell buyers, “We could jump on this. This home could be perfectly fine.” After my buyer stopped giggling because I said someone couldn’t perform, we usually move forward. Not necessarily see a huge red flag there because a buyer, in this case, backed out of the deal. It might’ve been financing. How does that play in the present? This is 2022. You got to know the game player. Things are moving fast. Multiple offers are coming in in the first weekend. If a seller gets 38 offers in the 1st weekend, do you think they are choosing the one that doesn’t look prepared or approved? The same beggars can’t be choosers. Reverse that. Sellers can be chosen. If not one, then who carefully selected buyers chosen from a pile of offers thicker than a phone book? We don’t use those anymore. It’s a pile taller than the glass of wine used poured to deal with this market. If the best two buyers from that huge pile of offers both bail on the home, that’s a red flag warning because they had time to look through all those offers and figure out who’s prepared and ready to go. They pick the best two and those people bailed. That probably means maybe something’s wrong with the home. She goes on to ask, “The inspection was done last week and we are only able to use that for our loan process.” What that means is the inspection is for information purposes only. The seller has told them there’s going to be no repairs or credits given for whatever they find. The seller gives no craps about you because you are one of 38, 52 or 75 other offers. She then says, “The only thing is I have no idea what any of these red flags mean. I would like to get an opinion on some of the red flags in the spectrum report.” She goes through a list of a whole bunch of things. I’m not going to do that with you. I told her real quick, “I can’t, in good conscience, respond to a few sentences you wrote on social media. That’s so little info. I have no idea. I haven’t seen the inspection doing anything.” Let me think of an analogy for that. That’s like choosing a date from a new Tinder app but the app only shows you the name and the gender identification of the person. You flip on your phone, open the app and it says, “David Sidoni.” That’s it. How can you swipe either way with a little info? I can tell you something about the situation but there’s no way you can ask a question with a couple of sentences on social media. I can help you decide that this home is a swipe left or right based on a few sentences. When it comes to inspections, because people are asking you to wave them, I do not recommend that. No matter what, at least get them done for information purposes only. Make sure that you have time to back out of the deal and you don’t waive the inspection the day that you sign it. I don’t advise that. It can be very bad for you. No matter how badly you’re getting crushed by the competition, you want to get into the home. Things are moving fast but fast doesn’t mean dumb. People are asking you to wave them to big risk. That’s my take. What do you do if it is for informational purposes and you do get a few days to take a look at it? Once you look at it, you cannot ask for any repairs or credits. First of all, expect that. That’s probably going to be happening. If the listening agent doesn’t even use that phrase or doesn’t say it for informational purposes, expect that’s what’s going to happen. If you do an inspection and ask for even a $10 door handle, they are probably going to say no because that’s the Fast and Furious world of 2020. Here’s what you do. You have to rely on a realtor to help you dig deep before you swipe left or right. Your biggest decision is not what house to buy but what realtor to help you in the crazy 2022 market. That decision happens long before you ever see a home. Number two, before you put in any offers, have your realtor ready with professional vendors, roofers, plumbers, electricians, foundation people, sewer septic tanks, all those guys and have them review the inspection as soon as you get it. Here’s the secret. All home inspections are scary. Every single home inspection that I have ever read is going to make any first-time buyer poop their pants. The home inspectors’ butts are aline. They’re the number two most sued people in real estate. Guess who’s number one? Realtors. They go nuts and markdown every single little thing that’s wrong with the home so that they can protect their butts, telling you a lot of times they do find something wrong. “We found something wrong here but I’m not an expert in the roof. Make sure you get another opinion from a certified, licensed roofer.” “What? I’m getting a home inspection. I thought I hired an expert.” You did. You hired a general expert. They figure out what they need to do to CTA cover their booties. With a liability phrase, you are going to see it throughout your inspection. It’s going to say that something shows signs of something bad, wrong or broken. We recommend a qualified, licensed professional to inspect whatever before the contingency condition or option period is up. What did you do in 2020? Hire the best advocate and then have them prep some other experts ready to help you out. Take a look at your inspection and decide if this is a normal issue or a money pit waiting to happen.
How Do You Win A Bidding War?Move right along topic number three. How do I win a bidding war? I talked about this a lot. Why? If one wants to know about it, here’s the new topic for bidding wars. Do you think buying a home is all about price? Do you think you win a bidding war because you’re the highest offer? Wrong. Learn this word, terms, to understand how to use these effectively to make your offer look more attractive than an airbrushed filter Instagram model. You should consider more than just price when you write an offer. Listing agents underprice homes to get cycle auctions in a matter of hours. Click To Tweet Use the terms to make your offer look super rad. I know I said the ‘90s were all their age but I’m a child of the ‘80s. I still think that’s rad and cooler than getting jiggy with it. Terms are rad. Do you know what else is rad? Math. Do you hate math? Too bad. Many of these terms mean some advanced mathematics that benefits the seller’s bottom line without changing the sales price. That means math. You can buy a $400,000 house and be paying $425,000 to the seller. It all depends on the terms. Details on the terms and other things to help you with bidding wars are in episode 46 and some other ideas in 39 and 41. It’s got even crazier out there since those episodes dropped. Let me give you a few extras. First things first and this is not a terms thing. Be ready to overbid. This is just the price. End of story. In 2022, I had $800,000 to $1 million buyers, putting in offers a $50,000, $75,000 and $125,000 over list price. They didn’t even get a counter. One of the listing agents responded to us and told us they had 48 offers on an $875,000 home. Our offer was $1,080,000. That’s $205,000 over the list price and we had a $500,000 down payment. Out of those 48 offers, we didn’t even make the top offers and get a counteroffer. It’s this because I suck at my job? No. It’s because the market is insane. Listing agents are underpricing homes to get cycle auctions in a matter of hours with a home being on the market because the inventory is stupid, redonkulous and mind-blowingly low. That’s why it’s happening. If you are thinking, “What are you talking about? I can never afford a $1million home. I want some guidance for me.” I’m telling you this because I have been doing this for many years. The entry-level homes, the homes that are cheaper than the million-dollar homes, the regular first-time buyer homes are always more in demand in these luxury price homes. This is happening in luxury price homes. That means it’s even more insane for first-time buyers. It’s not just happening here. I have been hearing this from buyers all over the United States and Canada. Here’s something. It’s not a term. You need cash or money. Be prepared to have your down payment, plus 1% to 2% for closing. Beg your mom and dad for some more extra money because you might have to do all kinds of weird things or that you might recover in appraisal gap, in case you have to waive that contingency or condition to get your offer accepted. It happens. Appraisals are part of buying a home if you are using a loan. Often, buyers are offering above what could be the appraised value of the home. Since the market is bananas, that’s what they’re offering. The buyers know the home’s going to be worth more in a few months or weeks. The appraisal is a part of buying a home if you are using a loan. Often buyers are offering above what they think could be the appraised value of the home. Since the market sells bananas, the buyers know the home is going to be worth more than a few months or weeks. That means they’re going to offer over and know that the home is going to be worth that value but that doesn’t mean the appraisal that you get when you are buying the home is going to be the full value of your offer because you are thinking of something in a couple of weeks or months. What are the sellers doing? They are looking for a buyer that can pay the difference out of their pocket at the closing cash homey over and above your down payment and closing costs. Cash is king. Some people out there are using escalated clauses in their counteroffers but I have been using something I call an appraisal gap clause. Let’s say a home is offered $300,000. The last one was offered at $299,000 and it got 52 offers. Why do you know that? It’s because you were one of them and you didn’t get the house. You offered $325,000 on that $299,000 housing. You didn’t get a sniff. You confidently decide to offer $350,000 on this $300,000 home, even though it’s way over the list price but you know, “In the last one, we had 52 offers. This one’s going to go way up.” What about the appraisal? If you are approved up to $350,000, you get chosen for this home and the home comes in at a $340,000 appraisal, you got to come up with an extra $10,000 out of pocket. If you have got that, you believe in the numbers and you want this home, you take your $350,000 offer. You don’t waive the appraisal because if it comes in at $325,000, you are not going to have the money to make that happen but if you would come in at $340,000, you could pull it off. You want to offer up to $350,000 but you are not sure if it’s going to appraise. You figured out that you have got $10,000 cash to cover your appraisal gap. Offer $350,000 or up to $10,000 over the appraised price, whichever is higher. That means your offer goes in. If the house appraises for $340,000, they are going to get it for $350,000. If it appraises at $350,000, then they are going to get it for $360,000. You are getting a little incentive on that side. You are offering a very fair market price for the home and upping your offer without putting yourself in any jeopardy because you have got yourself covered. You got $10,000 and that’s all you offer. In the worst case, you are only paying $10,000 over the appraised value for a home that’s going to be worth $10,000 more in a few weeks. The alternative is not to get the home and then you pay $20,000, $30,000 or $40,000 when you finally get an offer accepted in a couple of weeks. The best way to be flexible is to have extra cash to have options in closing the deal. Click To Tweet “Sidoni, you are freaking out and talking all fast. What about the terms? You say terms 50 times. I thought the terms were rad. Where in terms you were talking about?” It’s term time. If you want to up your offer without raising the price and then that would keep you from running into an appraisal problem, write your offer and agree to pay for things the seller would usually pay for. Those are some of the terms. By giving them this discount, they are effectively getting a higher price because they are getting him a bigger net without the actual price on the contract going up and making you being concerned about the appraisal. The price stays at the same spot. One of the terms you can change is you can pay for their closing costs. That’s a big difference in their net profit if you pay for it instead of them and your purchase price doesn’t go up for the appraiser or my favorite new way to up the price without using a ton of extra cash is offering them a leaseback or rent back for free. This is a great trick to offer them a net profit way over other competing offers with the same purchase price without being a higher offer on the purchase price on paper and potentially running into those appraisal problems. It sounds weird, crazy and confusing. I know. Welcome to 2022. Here’s how you do it. You offer a short escrow, another term. Get them their money instantly. That’s what they want and then you let them stay in the place for free for 1, 2 or 3 months. That’s a big buck to them if they don’t have to pay the mortgage. It means that they won’t be stressed out while they are thinking they are going to be homeless because they are going to be out there trying to do this as well, buying a home in this crazy market. Time is their friend. If you give it to them for free, you up to their profit and give them peace of mind but you have also kept your actual purchase price in the same place. It’s terms, not price. Here’s the kicker. If you’re doing the math and you’re thinking, “That means in maybe 1, 2 or 3 months, we are going to be paying double rent. I don’t know if we can do that.” Don’t worry about it. You don’t have to have that money until the day you make the offer. You make the offer with the rent back. When I got a 30-day escrow, then you got 30 days to make it, that’s 60 days for you to make money to double up when you are doing the double things. You only need some of it. You only have to use 1, 2 or 3 months that you are going to have to do the double payment. It seems crazy but if you work the numbers in the market, you are going to realize that these little extra payments that you are going to get are probably going to make that up equity. While you are renting it to them, the house is going to be going up in price. You get instant equity when you move in. There is some more cool math about how you don’t pay the first month of a mortgage until you own the home for up to three weeks. There’s more time to make money and save.
Terms: Don’t Nickel And DimeIf you don’t understand what I’m talking about, ask your mortgage pro about this. Tell them to explain to you rent forward, mortgage backward. I don’t have time to explain it but you pretty much get about full anywhere from 4 to 6 weeks where you don’t have a mortgage payment. Ask your lender about it. They’ll explain what it means. Moving on, terms. Don’t ask for appliances or termite work. Don’t ask them to pay off a solar lease panel. Don’t do anything to nickel and dime them. Reverse it. UNO style. You pay for the things. I always recommend getting a home warranty. Usually, the seller pays for it but in this market, don’t ask them to pay for it. You pay yourself. Anything the seller usually pays for in your state, ask your realtor to add it up for you, then put the cash aside for yourself. Don’t ask the seller to pay for it and you pay for it. Here’s the harsh truth. Bomb alert coming. Don’t nickel and dime them but do expect them to nickel and dime you. They have 3, 4 or 13 backup offers calling them every day, dying to find out if you are getting greedy and you are going to figure out a way to lose the deal. Don’t think that your mad negotiating skills and tactics will get you a little extra deal or something. Don’t ask for the TV mounts, the patio furniture or anything extra. You need to stand out as the smooth, simple transition to make it go through. I wish you were the head cheerleader and you got to choose all the hunks in the school for your prom date. In 2022, you are the nerdy freshmen who don’t like to shower with bad fashion sense until your realtor helps you with an offer make-over to make all the boys look at you. How about that? That was not only condescending and sexist. It was wildly shallow all at once. More tips coming at you to stand out like you are Cinderella after those creepy mice got done with her. Forget the heartstrings letter to the seller. Don’t go for the bush. Show them the money, have your lender do a full approval for you and ask for more than a pre-approval letter. Get whatever your lenders got. Show them your accounts with your money. They need to see that. Be sure you black out all your numbers but it does have to have the name on there, so they know that it’s your bank account. You are just not screenshotting your uncle’s stuff. Show them credit scores. Have your lender show them your full application status. Maybe even an underwriter approval. Have the lender call the listing agents and tell them how dope you are. Get the offer in, have the lender call. My lender sends a video by email to show that he’s not only awesome but he’s a real human. Promise them you are going to close on time. Something that my lender is doing with me is we offer per diem for every day after the contract to date that we don’t close. We are going to pay them money. Let your lender know that you are doing that. Don’t just write it in the contract and tell them. You can shorten your inspection, contingency and condition periods to be reasonable but quick periods. Be prepared to take sick days to make this work. If you have only got 5, 6 or 7-day periods, you better be ready to drop everything. Be flexible. The best way to be flexible is to have extra cash, which gives you all the amount of options to try to make you close the deal. You are on your treadmill screaming, “It is stellar advice. Have more cash? If I could do that, I totally would.” Do you want to get more cash when you’re a buyer? Restructure your deal. Go back and read my episodes on how much money to put down. Run a plan with a unicorn lender to perhaps reduce your down payment so you can be more liquid and have more cash to cover. In case an offer comes in well below the appraised value, fine. You have got extra cash. The 20% becomes a 15% down payment. 10% becomes 5%. It can be done. The math is not as scary as it seems. Don’t freak out and tell me it’s a bad idea unless you can spit all the numbers for both options like an Excel spreadsheet. If you can’t do that, then why are you telling yourself it’s bad? That’s like saying sushi sucks when you have never eaten it. How do you know sushi sucks? You are freaked out because someone told you that. You can take your time figuring things out, but once you start looking at homes, you’re in for a fast ride. Click To Tweet What are some other ways you can get some more cash so you can cover the down payment and closing costs? Read the episodes on diversifying your portfolio by using your retirement to boost your cash. Speaking of using your retirement, which I know is making some of you clench your butt cheeks but I will bet those of you clenching your butt cheeks treat your retirement like a wishing. You toss your money in there every month with no clue how it works. It makes you happy because you know that you threw down the well and it’s safe. One day when you’re wrinkling, old and you quit your job, you’re going to have a pile of money in a well. I agree with you. You will. If you don’t know the numbers, then please don’t tell me that I’m risky, my advice is not prudent or that army balding and slightly overweight man for my size. Only one of those is an accurate depiction of me. I know the numbers. Your home is likely to be your biggest investment. You can keep throwing money in a well while you try to save money in the market. It keeps going up while your rents keep going up as well or you can diversify. Know your numbers. Read the episodes on this before you call me risky and aggressive. I’m advising you the same way I advised against Dave Ramsey’s saved 20% in episode 69. He was playing it too safe. Over the last years, he’s cost his followers tens to hundreds of thousands of dollars while they waited and didn’t get into the market because they were trying to save up to 20% down payment just to be safe while we’re sitting in a rising market with low-interest rates.
Play It Regular SafeMy suggestions in the past decade were to take a good look at the numbers. Instead of playing it ultra-safe and costing yourself hundreds of thousands of dollars, I advise my people to play it a regular amount of safe. In this case, with your retirement and throwing it in like it’s a wishing well, that’s ultra-safe. I’m advising that in this market, it’s running away from all of us, perhaps dig into the well, buy a house and consider that another retirement investment vehicle. Once you’ve got it, if you want to have a well, you can dig one in your backyard. Do whatever you want. You own that place. If the payment for your new approval is too high for you, if you go and figure out, “This is great. I can do it. That payment’s too much. Forget it. I can’t buy a house,” I have got more sad news for you from the math department. In 2022, while you are trying to save and lower your loan amount with a bigger down payment so that you can get a lower monthly payment, prices keep going up and so is the mortgage interest rates. That math doesn’t work. If you’re approved for $2,500 a month, but you only want to spend $2,000 a month, you only go out and look at homes that only cost $2,000 a month. You are going to lose about $85,000 in the price of homes that you are looking at by dropping it by $500. By the time you saved enough money to lower your down payment, and you put that money into your loan to make that $500 a month payment difference, the home is going to cost way more, and your monthly payment will be even higher because interest rates are probably going to get above 3.5% rate. What can you do to make that $2,500 a month maximum on your loan approval feel as comfy as the $2,000 a month? Reduce your 401(k) contribution if you contribute over the maximum. Warning. Comprehend this and know these numbers before you tell the world that some freaky old man on a show told you to do this. I have seen many readers who tell me they simply can’t afford to pay more. Let’s say they say they can’t afford to pay more than $2,000 a month. They have got a 401(k) that gets mashed up to 6% but they contribute 10%. That’s a 4% that you are putting into your 401(k) that is unmatched. That’s a difference that you’re throwing into the well. You can use that money. Diversify your long-term retirement with historically appreciating assets. At least, that’s what the nuns said and Hedwig’s told me in grammar school. Don’t despair. Don’t say it’s impossible. I have more readers closed their closing than they ever had in the same time. In the history of this show, it can be done. Prepare like a girl scout. DM me for cookies. My daughter, Bella, has a website and she’ll ship them to you for real. What else can you do to get a little cushion of cash above your down payment and closing costs? My favorite thing is the bank of mom and dad, grandma or grandpa, uncle or crazy aunt. Tips for begging and how to ask your family for money? The right way is in the Thanksgiving episodes 30 and 60. Here’s a little success story for you. A listener who is sketched out about buying his first home reached out to me. I got his information. We worked together. We got a personalized strategy to best suit him and his wife’s needs. Busting your job. Hold them. Take it. He is a great dude and smart but he was looking for a specialized guide to help him with what he was trying to do. He wasn’t just thinking about one house. He was thinking about a bunch. We got together, worked our plan and got him a unicorn. Here’s the update. He said to me, “We already refied. I got rid of my PMI and we are keeping our 2.75% interest rate only 6 months after our purchase. Your help has seriously set us up financially for the rest of our lives. I can’t ask for more than that.” Why am I telling you that? Because I want to feel good about myself? No. Think about this. They went and got a house. Did they get a killer deal? No. Did they buy the house for 10% lower than market value? No. Did they get some crazy negotiation, not $25,000 off the price with their Uber cool tactics of their unicorn realtor? No. They spot a house. They didn’t buy something on sale. It’s not like a car or a computer that you research on the internet and you buy when you see the price drop. Homes are not on sale. This is about you preparing to eventually buy in a competitive market because that’s when the universe said, “Your age is appropriate to buy a house.” I don’t even know what that means. This is when you’re thinking about buying a house. The best time to buy a house was yesterday. Deal with it. I replied to him, “That’s the part I keep trying to tell people about. Don’t look to hire someone to help you find a home. Find a realtor who can be a consultant and change your life. Congrats.” All I did was consult with him. I sent him to a unicorn and he did the rest by learning, accepting and preparing. They got ready to get the house and weren’t looking for a deal or a bargain, just getting a house. Once prepared, they accepted the numbers and the market, decided to compromise a little bit and then reluctantly realized they probably stretched a little bit. He’s calling me about purchasing his next home. We are trying to strategize and figure out if he’s going to buy another home, a forever home or an investment home. Usually, this is where I wax philosophical and wrap things up in a neat, tidy bow with some semi-poetic but probably cheesy words of wisdom but screw that. I’m too tired of doing this bid shown. I wanted you to understand that if you were thinking about it in 2020, be ready for buying a home to become like that. Preparing? It’s not going to be like that. You can take your time, figure things out and do whatever you want but once you start getting out there and looking at homes, the speed is coming. If you got questions, find me on my Instagram @DavidSidoni. You can always go to the website, HowToBuyAHome.com. There’s a little place where you can ask me a question at any time you want to or go to the Facebook group, How To Buy A Home. Reach out if you are ready to jump in this crazy race and you want to employ a unicorn team in your area. I said to employ but they are free, rad and are going to make you feel more b****** You feel b******* when you have a unicorn in your corner. Don’t forget. If you have a chance, please take a little time. Drop a review. It would mean so much to me. It helps other people see it. Check out Spotify. They are doing reviews. Don’t be scurred. You can do this.
- Ep 68 – 2022 Housing Market Forecast For First Time Home Buyers
- Ep 69 – Dave Ramsey Is Dead Wrong When It Comes To Buying Your First Home In 2022 And Beyond
- Ep 70 – URGENT 2022 Housing Market Update For First Time Home Buyers
- Ep 71 – Interview With Randy
- Ep 57 – It Will Cost You Much More To Wait For Things To Cool Down
- Ep 49 – Should I Offer Over List Price To Get My Dream Home? How much?
- Ep 53 – Real Story From A Real First-Time Homebuyer
- Ep 73 – EMERGENCY Information AGAIN On 2022 Bidding Wars
- Ep 46 – Bidding Wars! How To Win Them
- Ep 39 – How To Write An Offer For Your First Home Purchase
- Ep 41 – How To Write An Offer For Your First Home Purchase
- Ep 30 – The Secret, Easiest Down Payment Assistance Program EVER!
- Ep 60 – Tips For First Time Home Buyers To Buy At The End Of The Year
- @DavidSidoni – Instagram
- How To Buy A Home – Facebook
- Spotify – How to Buy a Home