Homebuyer Tips For First Timers

In this engaging conversation, Mariette Frey interviews David Sidoni, a leading advocate for first-time home buyers. They discuss the complexities of the home buying process, the importance of choosing the right real estate agent, and common mistakes that buyers make. David shares insights on financial strategies, the concept of being ‘house poor’, and the significance of understanding contracts and representation in real estate. The conversation emphasizes the need for education and preparation for potential home buyers, encouraging them to take ownership of their journey. In this conversation, Mariette Frey and David Sidoni discuss the complexities of homeownership, the importance of guidance for first-time buyers, and the emotional journey of moving. They explore the financial implications of renting versus buying, the necessity of understanding the local market, and strategies for navigating the home buying process. The discussion emphasizes the need for education and support in making informed decisions about real estate investments.

Mariette Frey is a relocation strategist, life coach, and host of the Moving Tips + Tricks podcast. Every week on Smart Move Monday: Coach Mariette’s Corner, she offers free coaching to help listeners move with clarity and confidence. Check out her favorite tools, trusted show sponsors, and more at www.decidingtomove.com. Free spots are limited — coaching roster opens soon!

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Listen to the podcast here

With David Sidoni From The ‘How To Buy A Home’ Podcast

Welcome to the show, everyone. I have a treat for you. I have an interview. I’m changing the format of the show. We’re going to do mostly solo episodes, but only super strategic interviews, and this is one of them. I get asked about first-time homebuyers so often that I thought, “Why not bring on an expert?” I have with us David Sidoni. He’s North America’s leading advocate for first-time homebuyers. He is the founder of the How to Buy a Home platform, which focuses on educating and empowering this ignored sector, peeling back the curtain to reveal the insider secrets of the home-buying process.

He is an industry disruptor. He is taking on big real estate by focusing on the consumer’s actual needs, which we need so badly. He’s like my moving soulmate. He has over 1.7 million downloads on his podcast, which is called How to Buy a Home Podcast. It is the number one first-time homebuyer educational podcast. David Sidoni, welcome to the show.

Thank you. It was about two years ago. There are two Australian ladies who do the same kind of thing that I do. When I found their podcast, we called each other our spirit animals. You are my US moving spirit animal.

David Works With First-Time Homebuyers

You and I have had a call already, and we talked a lot about how important it is to be a guide, and for no other reason than it is so complicated and complex. There are so many things to think about. What inspired you to start How to Buy a Home and focus on brand-new homebuyers? We’ve had some real estate people on the show, and they don’t necessarily want to work with a first-time homebuyer because it’s so hard. They have so many questions. What inspired you to work with them?

It’s a combination of mostly a passion project and a labor of love, but then it was also a third act of my life where I realized I was in a position to give back. The last piece of that combination was understanding the industry and what was massively lacking. Twelve or thirteen years into real estate, I started back in 2005, and in 2006 when I got my license, the market crashed right after that. I’m in Southern California and I’m by Disneyland. I worked there in high school and college. When the market crashed, all my friends said, “I could finally afford a home.” It’s Southern California. It wasn’t cheap.

I don’t know if you know this, but I worked at Disney’s Orlando location. That is another reason you’re my moving spirit animal.

I think we’re at over 280 transactions with the people at Disneyland now. My partner runs the team, and boots on the ground. We both worked in entertainment at Disneyland, too. After doing that, it’s the way you’re supposed to do business in real estate. You’re supposed to work with first-time homebuyers at first, and then you move past that because that’s the low thing on the totem pole. You don’t want to do that anymore if you’re good. After ten years of doing the job, one day, my wife looked at me. I’m managing a team. I’ve got all kinds of buyer’s agents, and she goes, “You’re only happy when you work at the Disney people.”

The Disney people are happy, though.

If you want to make a happy person exuberant, hand them keys.

The keys to the kingdom, so to speak.

That is such an inside Disney joke for all of you. Sure, everyone in the big real estate is telling you, “You don’t want to do that. Hand that off to the new kids, the rookie agents.” I realized what an incredible disservice and a gigantic amount of disrespect that was being given to people that this is the largest financial transaction of their lives. I’ve seen stats that show that in 2024, anywhere between 47 and 74 agents did not sell one home, zero.

I knew this when I started this. The biggest piece of what I was doing was avoiding the crap. It’s not your fault. I felt like I was going to age myself. I felt like Good Will Hunting. It’s not your fault because it’s not. Today’s buyers are so much savvier and research-oriented that they end up because they don’t find the right thing. They end up doing all of it on their own. I don’t want to say they’re doing it wrong. I say they’re not doing it as well as they could.

Today’s homebuyer is so much savvier and research-oriented than ever before. Share on X

Efficiently and effectively, for sure. I think that there’s this analysis paralysis out there too because everybody has an opinion. You could talk to four different real estate agents, and they’ll give you four different ways to do it. None of them could be wrong, but when it’s your first time taking all of the terms in, you’re like, “What does this mean?” Even working with an attorney, their whole process is different as well.

That’s a lot to take in. You assume that you’re being protected. If you’re a newer real estate agent, they might be missing things. I know I certainly had some experiences that I was wondering if I was giving somebody a chance because they were newer into the market, but also, “What didn’t they tell me that I probably should have known?” That’s the worst feeling in the world because you don’t know what you don’t know.

You have the choice. As a buyer, you have the choice of who can be your representation. The biggest peelback of the curtain is in California, it’s about 3,000 hours to be a cosmetologist, and you have a whole apprentice system. It’s about 40 hours of open book to get a real estate license. Again, 87% of agents quit in five years. The brokers know that. They understand that a lot of people are doing it part-time and as a hobby, but they make more money off the newer rookie agents. The broker gets 50% of the split. That’s the system. It sucks. Let’s get on the solution side of that. First, over-educate the people. I gave everything away for free.

This isn’t about the money. This is legit. That’s priceless right there.

Other people will say, “We have realtors all over the country for you, as Zillow does.” Those realtors pay for that slot. They’re not vetted, and they pay a monthly subscription to be thrown in front of your face online. What I did was took a few years and vetted a bunch of people. I have fired more people than I recommend. I also say, “Learn it all here. Here’s how you go interview an agent if there’s nobody that I know in your area, or if you want to interview other people.”

The number one mistake is that people spend way too much time researching interest rates and how to buy a home themselves, negotiating how they should write their offer way more time on that than they do interviewing the realtor, who then will connect them to a few different lenders and then build their team first and plan with them for a year.

Common Misconceptions When Buying A Home For The First Time

A lot of people don’t know that they can do that. I think that with the new NAR rules, if you’re not familiar, you have to sign a contract with the real estate agent, which is awesome for us as a consumer because you can interview without signing a contract and use that as what you are going to do for me as your real estate representation. That’s a good opportunity for you to take that time and interview because you’re right, everybody has a friend, and you almost feel bad like, “This person introduced me to this person.”

I remember getting introduced to somebody because I was moving to a new city. I didn’t question it. I assumed that they were good, but my vibe, my feelings, and the energy that I was getting from this person weren’t great. I felt bad at that point because it was a friend of a friend, and I was good friends with that person. Tell us more about that. There have to be so many misconceptions about starting their journey. Can you go into that a little bit more?

Take some ownership, “Thank you so much for introducing me to your friend, Steve. Here’s my number. Have Steve call me. I’m going to set up an interview with him.” “Steve is great. We do trivia every Thursday night.” “I don’t know if you heard about this new lawsuit that happened, but I have to sign a contract. I want to interview that person.” That’s number one. That’s how you handle your friends with friends.

That problem that you talked about is a huge problem that you’re not going to find on the internet. The internet is not going to tell you, “Everybody you know is going to try to push somebody on you.” Keep in mind the fact that only 13% of these people are still going to be doing this in five years because 87% are trying this out and quit in five years. Don’t you want your agent to be there five years from now to help you sell your home the next time?

Realize you’re not looking for a needle in a haystack, but you are looking for 13 out of 100. Understand the licensing process is as pathetic as I mentioned it to you. My eighteen-year-old in college, who is scatterbrained as all get out, could pass a real estate test tomorrow. It’s like a DMV test. You just have to know what to study. I think, in general, when you have that first interview with someone, have them email you what they’re planning to do. That way, you have it in writing if you do sign a contract.

You can get out of the contract. I know I had to ask for a release, but I had to specifically ask for a reason. They were a little hesitant to do it. I didn’t realize it when I signed the initial release because we were going to look at homes. I wasn’t sure if I was going to buy it, but they had written in there that I was locked in with them for a year. What does that mean if you lock in with somebody? Does that mean if I were to leave them and go to a different real estate agent, then they’re owed a portion of the commissions if I buy something?

Now we get into legal stuff, and I can only say so much. Read the contract. Understand. I would say if there’s any binding contract and you’re not released from it, there will probably be some concessions that are within that. That’s why I said, when you’re done interviewing with someone, get in email what they said they’re going to do during that year. Perhaps, hypothetically, if they don’t follow up with those things, you have a paper trail of the things that you want to do, which might make getting out of it easier for you.

Most importantly, I’m not a lawyer gang. If they are doing what they said, you are under contract, which is better for you because you don’t want a door opener. You want an expert who is your advocate. When it comes to the next level of what I’m trying to educate people, these people don’t get paid until they close on the home. Most of the time, the seller is still paying for the buyer’s agent. The numbers have not changed that much since the lawsuit.

In other words, it’s like getting a financial planner to work with you once a month, do updates with you, check on you, and never take a fee. Why would you do it on your own with Google as opposed to with a professional? Where the disconnect is I know you’re a year out. You think I’m going to interview all my people once I’ve saved up 20%, which you don’t need. Interview all the people a year ahead of time. Go, “You know what? February is a slow month at work. I want this to be my last lease ever.” Interview all your people, get your people. If they’re not willing to work with you for a year and give you action steps, they’re part of that 87%.

Mistakes The Cost Homebuyers The Most Money

What are some other mistakes that are made that cost people money like that?

I think the biggest money-costing can be looking at the home and looking for the sexy immediate deal. A lot of times, some people are looking at and trying to get something so under market value and not realizing the long-term wealth that that home is going to get you. I had a doctor one time who was researching for a year and had all these plans. When I hooked him up with what I call a unicorn realtor, the unicorn was like, “You knew this and that.” He was like, “I read this. I read that.” She’s like, “Right now, this is what’s happening. This is what happened to my client last week. The stuff you read about is not happening anymore because the website is a year old.” He goes, “Oh, my God, I’m the WebMD patient.”

Many people are trying to get a home at market value without realizing the long-term wealth it will give them. Share on X

He called his own BS.

The biggest money saver you can make is to invest way more time in hiring a person. You’re hiring an advocate. Don’t think you’re just getting someone to open the door for you and a lender who punches in the numbers. Beyond that, there’s a gigantic trick. The price that you negotiate is your first negotiation. After that, you’re going to have an appraisal that comes in. After that, you’re going to have an inspection where you might ask for credit. In California at seventeen days, that’s your first negotiation. One of the money-costing mistakes that I see is people negotiate way too hard for the price. The reason is because they’re not educated. They don’t understand the whole system. If you’re working with someone for a year, you understand that the day you write the offer and put that in, that’s 1 of 83 steps.

I moved to Chicago. In the next upcoming episodes, I’m going to talk through what happened. I had some crazy stuff happen. Even just looking at it from a mortgage perspective, a couple of people told me to date the rate and marry the house. Find the right house that’s going to fit where you want to be, the people around you, and what it has inside of it. I needed an amazing kitchen with a lot of cabinets because I didn’t have a lot of cabinets in my last place. I get it. I love it.

I was getting out of a lease, and I had asked for seller credits because we were having some plumbing problems. Luckily, I have an uncle who’s a plumber. He had given us a reputable company to work with. We did a lot of plumbing inspections. It was the best money I’ve ever spent because, between the initial plumbing inspection and the follow-up plumbing, the rotting, and all of the inspections I had to do, like the camera snaking, I probably paid $1,000 for that.

What I did was get seller credits. I didn’t negotiate down the cost of the house very much like $4,000 or $5,000, but I got $10,000 worth of seller credits for me to keep that money in my pocket for when I have to replace some plumbing things because I live in a very old historic district that has a ton of trees. I know I’m going to have to rot it out again, if not replace some of the plumbing under the house because it’s a slab. I prepared myself for that.

Negotiating down the price to another $5,000 was going to save me $30 a month. What I wanted was that long-term investment that I needed to look at. That’s what I did. They were all in for it. By keeping that price up, it raised the value of the homes of everybody around me, which also helped me. People don’t think about that. They want the monthly payment, which I think sometimes is the zoned-in focus, which is important. What that plumbing could have cost me if I didn’t do those inspections, I’d be standing in water every time I took a shower.

How Not To Be House Poor

That $30 a month versus $10,000 liquid is probably one of the number one things that I want to help illuminate and reveal to people. One of the number one fears I hear from people is being house-poor. Are you way more house-poor if you’re paying $30 a month versus having $10,000 in the bank or $30 a month less but having $0 in the bank?

Explain the concept of house-poor. If somebody hasn’t bought a house before, it might be a new concept for them.

A lot of people say they don’t want to put all their money into the home, deplete their savings, and then make their payments. If you’re renting and you’re living paycheck to paycheck, then house-poor isn’t for you. House-poor is for people who may have a little bit of savings while they’re renting, and they want to make sure that they still stay liquid at some point in their lives. That’s the reason why they don’t jump.

That’s one of the things that I have talked about a lot over the last six years now, helping people. We’re in a different world than we used to be in. There needs to be a little bit of flexibility in understanding that if you don’t move because you don’t want to put your savings into a home and do what I call a rent replacement strategy, then you’re going to end up being not house-poor. You’re going to be 40 years old and be “poor poor”.

Everybody thinks you have to put 20% down but you don’t.

The average first-time homebuyer was 7% in 2023 and 8% in 2024. That’s taking into account the people who maybe got an inheritance or a gift and put the 20% down. Almost every single one of the thousands of first-time homebuyers that we work with is using 3%, 3.5%, or 5% down.

I did 5% to keep the money in my savings.

I have people that come to me all the time, and they’re like, “I want to put 20% down, but if I do that, I’m going to be house-poor because we barely have enough for the down payment of closing costs.” I go, “What if we put 10% down?” “Then I’m going to get PMI.” That’s why I have an episode called PMI is Not The Devil.

I love that because you build up to the PMI. You can get the PMI removed.

PMI is a privilege. You’re buying a $400,000 house, and you’re waiting to save $80,000. When you’re sitting there with $50,000 in the bank, how much longer is it going to get you to save the other $30,000? You look at the price of buying the home today with $50,000 in the bank versus 20% down. With the 10% down, the PMI is going to cost you $100, and the loan is going to be about $500 more a month. You’re looking at $600 a month. What you’ve done is you’re paying $600 a month to yourself to give yourself $30,000 in the bank.

House prices are not going to go down. They’re going to continue to rise.

I’m going to nerd out for you because I’m the biggest real estate nerd. On my show, I’ve been saying it for six years. I say, “Say it with me now.” Everyone says, “Low inventory.” The number one reason why house prices are going to continue is that since the beginning of time, back in the ‘80s, we have been building 1 million to 1.2 million to 1.3 million homes per year. The only times we got below 1 million and, most importantly, 550,000 or 600,000 homes, were in 2008, 2009, 2010, 2011, and 2012. Five times we’ve been below. That put us below. A Redfin report said that we are between 2.4 million and 7.2 million homes short of what we need. Supply and demand.

House prices will continue to go up because we have been building a million to two million homes per year since the 80s. Share on X

I’m not saying they’re going to skyrocket again like they did in 2022, but we will not have a crash. Home prices are going to keep going up. Create a rent replacement strategy. Get in the game. At one time, I said the analogy like we’re walking into Target, and we all have $100. Who can get the best deal? You’re walking into Target, and everyone’s pockets might have $100, but one person is all in change, and half of it is in rubles and euros. The other person has a pocket full of concepts and ideas of where they’re going to get $100, Mom and Dad going to help them, and someone is going to loan them some of that money.

There are so many individual options. We have to attack on what you want. Why are you buying this? What’s your personal goal? When I, as your team, understand your personal goals, that’s where we figure out that maybe you will get this place because it has the monster kitchen you want. Maybe you will do it now when rates are at 7% and not worry about it because if rates go down, you can refinance. Most importantly, you have the kitchen that you want. If you rented here for a year at $2,000 a month, your $2,500 a month is $25,000 that you gave to nobody.

Is there a way to calculate? I know it used to be when the rates were lower, it was like $500,000 for every $100,000 that you borrowed. I had dinner with a friend the other night, and she’s paying over $2,000 a month for a 500-square-foot studio. What could she afford if she took that $2,000 a month and bought it if she had the savings?

That is the beginning of a 45-minute conversation. If I was helping that person, what you told me was what she spent.

Tell me more about that.

What’s her debt? What’s her savings? What’s her income? What’s her potential job in the future? Most importantly, how long does she think she wants to live there? Let’s go to the personal side of things. How long do you think you want to live in this place with this 500-square-foot apartment? Maybe you need to move. If you do, I know an awesome podcast you should listen to.

Let’s dig into your debts. Let’s dig into why your debts are there. Let’s take a look at your last two years’ tax returns. Are you self-employed? We need to know a thousand things. The problem is everyone goes online and reads, “If you do this, you can do this.” The “If you can do this” means you have zero debt and you have a steady job for the last two years. There was a Harvard study that 21% of people are paying 50% of their rent.

I bet it’s a mix of the two.

That’s on rent, 20% on debt, and then they’re living on 30%. The old thing was it should be 30% of what you make. They do loans up to 48% or 50%. Because people are renting at 40% or 50% of their monthly income, there needs to be a rent replacement strategy. Some of the numbers you can look at generally, but you look at the interest rate. PITI is the new payment – Principal, Interest, Taxes, and Insurance. Your I is going to put you $700, but then you got to put the rest together.

There is no simple black-or-white one-step app, punch a few numbers in to get it, because the taxes and insurance are going to be different everywhere. It’s not $700. It’s probably closer to $850 or maybe $900 for $100,000 borrowed, but it depends on you and your credit score. Your PMI changes based on your credit score. All of this can be done with a guide, a real person, not an AI robot, and not an algorithm on a website. Real people will help you get into this.

Buying a house and getting a realtor can be done with a guide - not an AI or an algorithm but a real-life person. Share on X

My mortgage guy is Jeff Orrell out of North Carolina. I’ll give him a little plug here. He was my old neighbor. You can buy down the rate, and a lot of people don’t realize that. There’s that level of whether it makes sense or not. He had an entire spreadsheet for me that showed me if I bought down to this, this is how long it would take me to recover that money. Is it worth it? Honestly, it wouldn’t have been worth it for what it would have cost me to buy down even half a point.

Another part of that seller credit is when the rates drop, if they do, I doubt we’re ever going to see a 2.8 again for a long time. I don’t know how you feel about it, but in the next year or two, if they even drop down a couple of points, that would save me a little bit of money. You have to pay it to refinance, but it would be worth it in the end because you would save over 30 years. That’s another strategy. You have to look at the numbers and see if it makes sense because you’re right.

How To Prepare For Home Ownership

It’s not just that interest rate. You have all of the other things involved. Plus, you have to pay for moving to get to that place. You have closing costs, and you have to pay for an attorney to do the paperwork. You have to pay the title company to close on the title. There are all kinds of things you have to pay for. If someone is dreaming about homeownership, what’s one thing, two things, or five things they can do to start preparing that now? If they want to buy in two years or a year, what do you suggest?

The first part of the suggestion is an interesting piece of data that I have over the last six years. This is my little passion project to help people in Southern California. I got tired of driving to Starbucks by Disneyland. I thought I’d make a podcast, and I have them listen to the podcast. That’s our first meeting, so you learn all that stuff. We then have a second meeting. Podcasts go everywhere. People started calling me.

1.7 million downloads later, you still have stuff to talk about.

The data that I accumulated at the end of last year was that 72% of the people who reached out to the How to Buy a Home folks were 12 to 24 months from buying. Seventy-two percent of the people who said that were under contract for 3.2 months. The top tip I have is that if you are a person who’s tuning in to this show or if you are a person who listens to my podcast, I’m telling you right now, you are at the top level of society, of the people who can buy a home. You’re already at the top level, and you’ve already overthought this. You should be talking to a pro right now. If this podcast was a Super Bowl commercial, I couldn’t say that because 72% of the people out there weren’t ready to go. If you’re here, you’re ready. You just don’t know it because you don’t know your options.

I think that’s part of it. People spend more time planning a vacation than they do the next twenty years of their lives.

People spend more time shopping for a laptop online, a car, or a cell phone than they do shopping for their realtor. It should be a hundred times more.

People spend more time shopping for a laptop, car, or cellphone than shopping for their realtor. Share on X

I remember having a conversation with my mom because she was moving to Tennessee, and she was renting and paying. This is ridiculous. Mind you, this was ten years ago when the interest rates were lower, and we had gone through some stuff in the market. That number, that $500 for every $100,000 you can buy, you’re paying three times what you could afford in a home. She had savings, and she didn’t want to live in a house because there are a lot of other things that you pay for as a homeowner. I had to buy a snowblower the other day because I live in Chicago, and we were going to get 8 inches. After this interview, I’m going to go out and use it because we got another 4 inches or so last night.

There are all these things that you have to pay for, like lawn maintenance. Looking at it from her perspective, she didn’t realize that she could afford what she could afford and that a townhouse she didn’t need very much. It was a small townhouse in a cute little area with people around her age. She ended up saving money each month. Now, she’s buying new windows that she’d been saving up for a couple of years. The thing is that you don’t know until you start having those conversations. It’s important to have conversations with somebody who understands that you’ve never done this before and can walk you through it and hold your hand.

With The Moving Podcast, the tips and tricks that I’m giving are going to seem very elementary sometimes for some people who have moved a lot, but not for somebody who’s never had to make a big cross-country move and has a rubber band radius around their family but has been dreaming about moving to Southern California. That was my story when I first started. I had no one to ask because nobody had left the area around where my grandparents lived. I come from a freakishly large family. I had one friend who had moved to San Diego, and I called her. We had spent a lot of time doing karaoke in the city of Chicago together. She and her husband had moved out there.

Guiding Homebuyers With The Process

I had to go to the Better Business Bureau to find a mover, and I ended up getting my stuff held hostage and calling them, saying, “I thought these were good movers. They were on your site.” They were like, “Call the FBI.” I’m like, “You call the FBI. What are you talking about?” They’re like, “No. There’s a division of the FBI that you call, and they assign you an agent.” I didn’t know that. How would I know that? Google wasn’t born yet. I wasn’t googling anything to help me understand that. I think that what you’re doing is so incredibly important, having the experience that you have because you’ve been doing this for nineteen years or twenty years, right?

I finished my nineteenth year in real estate.

Having that kind of trust and knowing that you’ve been through it all, you’ve probably seen every situation you can imagine. You’ve done a podcast about it to help them through it. I love what you’re doing because it’s so important to be well-educated. When those things come up, it’s not to say that it’s going to be a deal breaker for you, but you understand that this isn’t that big of a deal or “This is a big deal. I need to take this seriously.” I think that’s the part that people get scared of. They don’t know what they don’t know, so they don’t even bother researching.

I’ve got over 310 episodes. People ask me all the time, “How do you do it? Didn’t you explain how to buy a house in 25 episodes? Scroll through the titles. You’ll see.” That’s the point. We closed on some first-time home buyers that I’ve been working with from Disneyland for five years. We just closed on Friday, five years, because their life was changing. I’m not saying we were looking at houses every weekend, but it was sitting down, planning, and replanning. I didn’t know about you when I started my podcast. I thought that there might be things like you.

There was an early podcast I found called How to Money by two dudes in Atlanta. They always talk about the difference between frugal and cheap. I had Joel on my podcast early. He was great. I went, “I’m going to tell everybody what to do,” because, in my mind, we both had horror stories. Yours was your stuff being held hostage, which is so random, by the way. Mine was that I had plenty of money in my twenties because I got lucky in my career. I rented and I spent $104,000 in rent in the 1990s. In today’s dollars, it’s $250,000 something. Guess what I got when I was 28 years old and moved out of my fourth apartment? $1,500 for my security deposit.

I’ve lived in San Francisco. This was back in 2003. My rent was $2,200 a month. I moved to New York City, and I was paying about that as well. I don’t even want to calculate how much I was paying in rent all those years that I could have bought something. It wouldn’t have been smart for me to buy something back then because I was moving all over the country. I knew that I didn’t want to stay in one city. I wanted to explore everywhere. Now, I’m comfortable that I bought a place because I know I’m going to stay here. I swear to you that I’m going to stay here for several years. I might not say in this house particularly, but I do love the house, and I want to stay in the area.

I think that if it is the right place and the right time to start exploring, not to say that you have to buy a place, start exploring, arming yourself, because it’s going to change. The environment and the economic climate are going to change. If we were to have another recession, prices could fall on houses. You might be able to buy one. If what the administrator is touting as things are going to get better, then you might make more money and be able to afford a house. Either way, you have to know what you’re doing in order to even start entertaining that.

I think the analysis paralysis right now is out of control. Usually, the average age of first-time homebuyers is 31 or 32 years old. In 2024, it was 38. I get it. One of the reasons is the sticker shock. I’m paying $2,000 a month in rent. It’s $2,800 if I got a mortgage, I would use this mortgage calculator. The first thing I’m going to say is mortgage calculators are garbage. Go talk to somebody who can do your whole debt-to-income ratio and everything. Even when they get to that and they see $800 more, it’s all they think about. It doesn’t make sense.

A 3% down payment might be a little bit more than a first and last. Let’s talk about twelve months from now. I know it’s going to suck, $800 more. It’s hard right now, but it’s not changing. Rents have gone up double what they’ve gone up in the past. From 2010 to 2020, it doubled. Everyone talks about how Boomers are buying a house for this. They had a lot more expendable income. One of the big things that I want to make sure people understand is that the $800 difference, the hardest and highest mortgage payment is going to be in the first three years. It stays fixed, and your income will go up.

If you’re a renter right now, three years ago, how much was your rent? What if your rent today was that? That’s what owning a home is like. If it’s a $800 difference, next year, technically, it’s $650 because your rent went up $150 if you stayed there. I talked to someone whose home was up 11% two years ago. His home is up 11% in value on a $400,000 home. That’s a nice chunk of change, but the rent in the place he was at is up $450.

I knew I was going to do a city POC, which is doing a proof of concept in the city that you want to buy in or move to for at least five days because everything is sexy over a weekend. You’re not going to see any of the bad stuff. I would love to build a community of people that can swap out their places. If somebody wants to live in New York City and somebody wants to live in Southern California, they could swap places for a month.

How Long To Buy A House On Average

One of the things that I put in the new Moving for Smarties eBook that I’m releasing is a link to the Laura Makes Moves website. Laura Sinclair is a friend of mine. She is my moving buddy who’s in there, connecting with somebody who can help you through the emotional turmoil of a move because it’s crazy. You know that. One of the things that she created was Rent or Buy. It’s a whole calculation of your amortization down the road if you were to have rented for five years or bought for in those five years.

From what I was looking at the time, it was very similar because the rent in the place that I was moving to was so high that it was lower. Whatever the calculation was, I wasn’t going to lose a ton of money by renting for one year to try that city out. It was worth it for me. I had a house that I was in the process of buying. Because of the inspection and the neighborhood, all of these factors, I ended up having to walk away from that house. Had I bought that house, I would have been stuck. You lose money when you have to sell a house before two years if you make money on that house.

There were so many things that I had to factor in that it was worth it for me to walk away and lose that earnest money and the inspection money. The inspection was incredibly expensive for whatever reason because it was a 1920s home. You want to get the works because you’re looking at trusses, sewers, and the whole works. The inspection was $1,700. It was ridiculous.

It was pricey.

It was probably the most expensive inspection I had paid because the one that I had here was $700. That’s probably more average. The point of my story is that had I got into that house and realized it wasn’t the right house for me would have been a very expensive mistake because now I’m locked into that mortgage. Spend the time talking to a good, educated, first-time homebuyer specialist, listen to your podcast, the How to Buy a Home podcast, and arm yourself with the information you need. It is scary, but it’s not that scary when you get into it. If you have somebody holding your hand, it’s a lot easier than if you’re going at it yourself, which you would never want to do.

I think that by exploring a city, you can two-prong it. You can do the POC. You’re going there to get the proof of concept. If you’re there somewhere for a year, you looked at those numbers, and went, “Okay,” what if you fell in love with the city during that year? Instead of talking to a realtor who is going to be trying to talk you out of renting, we have our unicorns all the time. They’re like, “Cool, let me know when you’re here.” They will help them get a long-term rental. When they’re there, they sit down and go, “Okay, twelve-month plan.” “What if we don’t buy?” “Cool. You have a little extra money in your savings account.” “Wait, you’re going to do that for us for free?” “Yup.”

All you do is you work on three things. That’s the whole last lease ever that we do with people. You work on your credit score, your debt, and your savings. You go back and listen to your podcast, and they listen to how to explore the city. The same way we do for buying a house. Don’t drive to that place in the daytime. Drive it on a Friday and Saturday night.

Walk your dog there at night. How long on average does it take to buy a house? Isn’t it 2 or 3 months from start to finish?

Typically, 30 days, and it’s usually because of the lender. If you’re a cash buyer, you can be done in five days, but that’s from the day of acceptance. You might put an offer in and there might be multiple offers, and you could be in bidding wars for a week and a half.

Also, it probably takes a month to go out on the weekends. If you have a lease that’s one year, think like 9 or 10 months in, you could be moving, or you could be looking for a house to buy a house. For me, it has been incredibly important in the times that I have bought a house to move slowly. I didn’t have to be out on that one day. I was living in the city of Chicago and I was renovating a house in Orland Park. I was able to live in my house, live in the city while the house was being renovated. I didn’t have to live through that renovation. It was nice even if you’re pulling up carpets, putting luxury vinyl plank in, or painting. Having that luxury of having a little bit of an overlap when you’re buying that house to do things and get there slowly sometimes is awesome. You’re going to get that last month’s rent back.

There are so many things to say about everything you said. Number one, five years into doing what I do, I sat down with a focus group with a bunch of Millennials. I started talking to them about what was going on. One of them raised her hand and she said, “Dude, this is when I hire you. I’m eight months. What do I do now?” I sat with them and we created the Last Lease Ever program. The idea is the day that you sign that lease and you’re thinking 8 or 9 months, I’m going to look to buy. I seriously want to do a meme of “’Sign the lease, call, and start interviewing realtors.” That’s why it’s called the Last Lease Ever. Speaking of memes, I recently put one up because someone closed on a house. I think it was the 5th of February, and their first payment wasn’t until April 1st.

What a lot of people don’t realize is that rent you pay forward, you pay on the 1st of the month for the next 30 days you’re going to live there. This is silly, but this is the little detailed stuff. When you buy a home, if you close on the 7th, 8th, or 9th, part of your closing costs is to pay for the rest of that month. All the days left of February. March 1st comes around, you don’t pay. April 1st, you pay the mortgage company backward for the March months.

Many times, the day you get your keys, you’re going to get seven weeks of paychecks before you make that first mortgage payment because the first part of it, you’ve already paid as you’ve already saved for it as part of your closing costs, especially if you’ve been working with someone for a year. I have 2 or 3 different podcasts about whether you should break your lease.

The $2,000 you’re going to pay versus the last year homes went up 4.5%. If someone came to me in February and they could have bought in April, but they waited till November because their lease was up there, cool. Your $400,000 home went up $16,000. We’re glad we saved $2,000 on the lease. That’s individual for everybody. The biggest thing we do is explain that seven-week thing to people, and we overlap like a mother. I had one person go, “My brother has a pickup. I had to pay an extra two weeks for my apartment, but I saved $4,000 in mover because I moved three boxes a day for four weeks.”

If you’re going into that strategy, I would highly suggest you look at the lease itself and calculate how much it would cost you because I ended up having to pay $9,000 to break my lease. However, I got to live in the place for those couple of months. I knew I was going to be leaving. I was able to spend some time finding the home. I knew the minute I walked into this place, it was my house. I could picture my future dog in here. I knew I wasn’t even looking anywhere else, but it was important for me to break that lease. I closed on December 26th, which is my birthday. It’s also Boxing Day. Ironically, I was born on Boxing Day, and I’m a moving coach.

I’m calling myself a relocation strategist because you have to have some good strategies, but that was part of my strategy. I was okay with breaking the lease. I knew that if I waited until the spring, they could have either rented this place out because it had been sitting on the market for 60 days or the prices would have gone up because in the spring, everybody wants to buy a house. They don’t want to do it when you’re trekking through snow.

The spring is the giant time. I did a podcast. Remember last September when I told you the window was September to March 1st? All the data came out, and it showed it. The best times to buy a home were December 2024 and January. Sellers were giving the most concessions. Homes were staying on the market longer. We’re starting to see more listings come out, but the demand is increasing as well.

This is why I need to get you on my podcast, too. Here’s what’s going on. You’ve got all your personal stories, which are helping people. I have all the data. You had the $9,000 thing, but it reinforces what I talk about. If you’re talking to a professional and you’ve looked at everything, that might make sense to you. I have data that shows that over the past 3 or 4 years, read your contract. You’re correct. I’ve had more people call their landlords, and their landlords are like, “Cool. I will break it. You know what? It’s free. Get out as soon as you can,” because they’re going to raise it for$800. $9,000, maybe, but you don’t know what you don’t know if you don’t call.

In my defense, the rent was expensive at this place. It was a luxury apartment complex. I had a coffee shop in the building. I knew that if I was going to rent for a year, I wanted it to have all the things better than Planet Fitness. That was in my defense.

I do everything on the podcast at $400,000. Let’s say you’re renting and the average rent for that is $2,000. Let’s say they’re going to charge you $4,000 to move if you break your lease early, a couple of months, or $2,000 and you’re going to lose your deposit. It’s cool. I’ve had people call. If they’re trying to move in the spring and summer this business season, we’re talking about the landlord who also wants to rent in spring and summer, and he’s super stoked about it. Maybe that is New York College. They’re like, “Good. We got to get them out. We’re going to renovate over the summer and then charge double when the semester comes around because Mom and Dad are going to pay for it.” There’s all that stuff that can happen.

I think that there are major needs that are not being addressed. One is how to plan to buy a home. If my podcast had a real name, that’s what it would be, How to Plan to Buy a Home. Don’t WebMD it and try to listen to my podcast, so you can do it all on your own. The moving part, people think you just call a truck. This remote world that we’re living in, and the service that you’re offering is so incredible. People can and should realize that there’s help to do it and try it. While you’re there, rents aren’t changing. Start a strategy. I say it all the time. What’s the worst thing that happens if you start planning to buy a house and you decide not to? You have some savings, your credit score is better, and your debt is under control. Maybe not down, but maybe you know how it works.

What I ended up doing was renting a two-bedroom apartment. I had an office, a guest bedroom, and then my bedroom. I put the rest of my stuff in storage because it cost me $100. Kudos to you U-Haul Noblesville. I loved working with them. I think I paid $150. I ended up getting two units because I ended up paring down. I liked having a clutter-free place, but because I had owned a home, I have two amazing egg chairs that are gigantic that I will never ever sell. I’ve had so many people offer it cause they’re so comfy.

I had my outdoor grill table, a patio table, and all those things that I don’t need in an apartment. I couldn’t fit in there. That was part of my strategy. I’m going to go completely minimalistic. I’m going to put a lot of my stuff in storage. I lived right off the Monon, which is a little hiking trail. I could jump on the Monon and walk half a mile. I was in downtown Carmel, Indiana, which is a super cute little historic area.

That was part of my plan. If I’m going to get to know the city, and I’m going to fall in love with the city, I want to put myself in a place where I can do that. After three months, it is a great place to live if you have a family, and it’s an adorable little city. I was coming back to Chicago every week or every other week. I think I came back to Chicago six times in three months. My people are here. I realized that I wanted to be closer to everybody in my community and my corporate headquarters. It made sense. It was a great strategy, and it only cost me that $9,000 break in lease.

The American dream has changed a lot. We’re not going to the picket fence anymore. When I hear the average age is 38, how many 33 or 34-year-olds do you know that have their stuff together? I understand why maybe they’re not on it, but there’s a ton of 28-year-olds that have been four years on a job, and they’re probably going to stay there for another 2 or 3. If they lose it, they’re going to get another one. In other words, there are plenty of people that, at least if you have never had a threat of being evicted and you’re renting in Chicago for $3,000 a month, there’s a lateral move for you to do condo apartment townhome. If it’s $800 more a month, don’t think about $800 more a month. Think about $3,000. It’s a replacement strategy. Your $3,000 a month goes to nothing.

Somebody else’s pocket.

We’ve had a lot of people that have done condo townhome living. They’ve made a lateral move because they figured out this city was more for them and their single life. Two or three months after they move in, especially with a condo townhome or apartment, because they’ve been planning for a year, they do it again. No, you’re going to do two things. You’re going to call that same team that you’ve been working with for a year, and you’re going to do plan one and plan two. Plan one is I’m going to use the equity in this house and sell it to buy my next one. Plan two is this is the world’s greatest rental, I’m going to be wealthy for the rest of my life, and I’m going to keep this.

You don’t do the same savings. If you were saving $1,000 a month, maybe you save $50 a month. If you were working on your debt, cool, let’s keep working on that. Your credit score is probably awesome because you did it. Now, it’s going to get even better because you’re a mortgage owner. I think that people who are 32 years old, rent in Chicago for five years, spend $36,000 a year in rent, and decide to buy, If they just bought a condo, done both of these things again, and kept saving, then at 38, instead of buying their first time, they’re buying their second time, they’re doing it for 3% down, they’re keeping that place that they bought for $400,000 that’s now worth $500,000, and they’re renting it for more than their mortgage. I don’t like to get into all of it because there are a thousand podcasts about that. My whole thing is, here’s what’s wrong with the first part of the process. Let me fix it, but those are the options.

Get In Touch With David

That’s the strategy. I have loved this conversation. I know we could talk for another two hours. I promise I will come on your podcast, and we will talk about even more things.

I can’t wait to pick your brain.

I got lots in there. Tell us how they can find you, David.

HowtoBuyaHome.com. Everything is there. The podcast is called How to Buy a Home. YouTube is called How to Buy a Home. Instagram is called @HowToBuyAHomePodcast because someone won’t give me @HowToBuyAHome, and he hasn’t been on since 2018. Everything is at HowtoBuyaHome.com.

Thank you so much for coming on. I know this information has been incredibly valuable and I cannot wait for the next time I talk to you. Have a great day, David.

Thank you.

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About David Sidoni

David Sidoni is North America’s leading advocate for first-time home buyers. He’s the founder of the How to Buy a Home platform, which focuses on educating and empowering this ignored sector, peeling back the curtain to reveal the insider secrets of the home-buying process.

He’s an industry disrupter, taking on big real estate by focusing on the consumer’s actual needs. Now with over 1.7 million downloads, the How to Buy a Home podcast is the #1 first-time home buyer education podcast.