Critical Housing 2022 Market Update - How to Buy a House in this Crazy Market | HBH Podcast Ep 84

By the time you're watching this Will Smith smack and Chris Rock on live tv, it's going to be old news. But the analogy is apropos enough that I decided to still bring it up, even though it's not instantaneously topical. If you're buying a home in the competing market of 2022, you thought it was going to be fun. You probably felt like Chris Rock up there hosting the Oscars and all of a sudden, bam. Will Smith walks up and clocks you. That's the 2022 housing market walking up on stage and you smacking you around. And then just to make it even worse, then the 2022 housing market goes back to the seat, sits down and starts to cuss you out what the hell just happened. Well, I'm going to tell you how that works in the 2022 housing market. And if you want to keep getting these updates, hit the like subscribe and bang that notification bell and you'll find out what's going on in the 2022 housing market every week. What's up my how to Buy a Homies David Sidoni here to help you navigate the home purchase process. You know, making sure that you can dodge that Will Smith haymaker. Didn't see it coming, but it's happening. So guess what? 2022 truth bombs coming your way today. I know the 2022 home market buying update. Not really what maybe you're excited to hear, but I've got some answers for you, so let's get into it. First update comes to us from TikTok. Yeah, I'm trolling TikTok gang. Come find me at how to Buy a home. It's fun. Now there was a realtor in another part of the country because he was looking at $250,000 homes. That's how I knew he wasn't where I live at $250,000 home hit the MLS now the MLS for those of you don't know, it's the multiple listing service and that's where realtors post homes for sale. It's got exclusive access and it's for licensed agents only and it provides information that is, you know, industry specific, agent to agent stuff. Lots of times we'll get information there that you won't see on the public site. Your agen also set up a specific MLS search for you and that's what this guy did. So this buyer was getting their up to date information and that's what the MLS does. You get the stuff before Zillow and Redfin. They take it all from the MLS. So the agent sees. Oh, cool, $250,000 home. That's what my guy's looking for. So they get that auto search alert. Lets them know they've got a home there. In their buyer's criteria, they call the listing agent right away and make a reservation to see the the home as soon as possible. When? Well, the earliest they can do is get an appointment for the next day. So go home, go to bed. Agent gets up, goes to the office, prints out the mls. All excited to get it ready for the showing he's got that day. Takes a look at the realtor. Only information on the mls and listen to what the listing says. Now, seller says she can only look at offers above 300,000. Remember, this was listed at 250. So please don't waste your time if you're below. Damn, girl, she got harsh all of a sudden. We have offers in hand above 300 already, so please call or text to see if your price is even competitive. We had 150 showings, and we've only been active for 24 hours. So, gang, whatever juice you thought you had going into in a negotiation, well, time to chow down some humble pie. I'm stoked that you save all that money over the last few years and you're ready to come in like a big, shiny, amazing buyer. And you know the seller's gonna pick you. Gang, it's time to know your role. The game has changed. And you may have been a big knight or a rook or maybe even. Maybe even a queen or a king, but now you've shrunk to a little pawn. You're actually less than that. You're half a pawn. I don't even. I've never even seen one of those, But I just made it up. Unless your offer and your buyer's agent stand out to that seller, what this listing agent is telling us is you're merely an annoyance to the seller's agent. That's the incredible thing about 2022. You write an offer, you're good to go. You're excited. But if you're not exactly in the top tier of what they're looking for, not only are you not going to get a counteroffer, maybe. And are you probably not going to get the house that you want? Oh, no. Even worse, you're annoying to the people trying to sell their house. That's the reality of 2022. Another story I heard is that a realtor representing a buyer tried to get their offer accepted on Friday. Now, that's a Smart move, because what they're trying to do is get it accepted before the seller could show the home on the weekend to all the mobs of potential buyers coming in. So what they did was they put in the offer at a competitive price with great terms, and then they threw this in. If the offer is accepted by midnight on Friday, buyer will contribute an extra $10,000 for the seller's closing costs. Now, this is great. This is a tip that I've given in the past, covering the seller's closing costs in the complicated art of offering over what the house is listed at, which means you could go into over what the home could appraise for. It starts to get complicated and use the buyer might be asked to kick in the gap between the appraised value of the home and your agreed upon high purchase price. So working these bidding wars in 2022, the agreed upon purchase price, it's often well above the last comparable sales. Now, the comparable sales are also known in the real estate world as recent comps. That's because, you know, all the realtors are just way too busy and things are moving way too fast for them to actually say the full phrase. Recent comparable sales, recent comps. Be fast, be snappy. So let's say you offer $400,000 on a home listed at $350,000, and the recent comps are all at $350,000. Well, now you might be asked to waive the appraisal, which means that if your $400,000 offer gets accepted, accepted, and the appraisals comes in at 375,000, you got to come up with an extra $25,000 over and above your down payment and closing costs because the loan will only go to the appraised value. That's as high as they're going to loan you money on it. And you can't decrease or move your money around. That's as much as they're going to give you. And the rest needs to be cash. The reason for that is because the banks are trying to protect the risk and they're only going to loan to what is considered to be an appraised value from that neutral third party. By offering $10,000 to the seller in the form of paying their closing costs, you can now offer a purchase price of $390,000. Now, it's still going to net the same amount to the seller, since they would have to come out of pocket for their closing costs. In any other $400,000 offer, they may have netted 10,000 less on their price. But by paying $10,000 of their fees that they're going to have to pay anyway to sell the home, you're netting them the same $400,000 offers, but you're reducing your exposure to the appraisal gap by $10,000. Now, the extra extra that the buyer agent put on this $10,000 closing cost incentive is that they're also offering this enticement with a Friday at midnight Cinderella Stage coast pumpkin clause. It's to try to get the home for their buyer before the madhouse of all the other buyers who crash on the home over the weekend. Do what you got to do in 2022. That is seriously going to be my new motto. Now here's another one for you. And I got to tell you up front, I have no idea the legality or the exact terms of how this offer worked. I'm just reporting the news. But I heard about this in my exciting life of trolling the world of real estate social media. So the truth of the matter is, when you're trying to purchase a home right now, most of the time, buyers are like, hey, what's going on with the seller? I've been doing this 16 years and I have people all the time asking me, we'll just ask the seller what they want. Let's see what we can give them. That's great if you're the only offer on the plate, but guess what? You're not only the millionth offer that's coming in, you're the millionth person trying to go and look at the home right now. So sucks for you and for many buyers, including some of mine. But you know, if you want to say to the agent, hey, we love the house, we want it, just, just ask them what it's going to take to get the house. And let's make sure we offer that again. Don't know what crack you're smoking, but that's not happening right now. I know it might have worked in the past for your friend, your aunt, or your parents purchase when they bought a house, but again, that's old news. Economies flip. And buying and selling anything has no one set of rules that work in every single market. This isn't just for houses. This is for everything. Supply and demand in the current economic situation that controls every negotiation. And the sooner that you realize that there are no overall tricks, rules, or hacks, everyone wants to find those things to make sure they don't get cheated. Well, it just doesn't work that way in a fluctuating economy. You Know, unless the tools and tricks and hacks that you found were newly formed from this week, not even last month, but from this week, based on the current supply and demand for what you're trying to buy. Not even just houses. That's why the podcast is a weekly podcast and not a PDF I didn't put out there. Hey, here's the perfect tricks to negotiate buying a home. I'd have to edit that damn thing every week and then ask you to redownload it again. And just so you understand, this works both ways, against buyers and for buyers, just like it works for sellers right now. But occasionally this can work against sellers, you know, depending on the market. Think about it this way. If you wanted to sell your car in 2021, when the supply chain decreased the inventory on cars, you had a whole new set of rules for how to sell your car, right? You got more than the blue book value. Why? Because the market had changed. So you need to take the same mentality going into this market. In this buyer's story in the 2022 housing market, the listing agent was not giving away any information to the buyers beyond the fact that the offers were well over list price. That is a phrase I can't wait to never understandable that they didn't reveal exactly what it's going to take. They're not going to reveal those numbers because of multiple offers and multiple bidders. By giving little information, perhaps a few buyers would shoot for the moon and overshoot even what they thought was their top number in order to get the home. If you don't believe me, call me after you've written your fifth or sixth or seventh offer and gotten rejected and tell me how you suddenly went 20,000 over where you thought you would never ever go. It happens. So this buyers and buyers agent looked at the sold comps. They saw how far over list price the homes had sold in the last month and they realized it was a lot. So they decided to offer 165,000 over list price. I know, butt cheeks clenched and you're freaking out right now. This was a high value home. But how many of you think, whoa, that's crazy? Well, what they saw was that people had been closing homes 200 to $250,000 over the list price in this area in the last month. So 165 over listing price, that wasn't even totally out of control. But again, they wanted this house, so they still wanted to be competitive. So here's what they did. They added a different incentive. They offered to pay 2 years salary to the seller. Talk about thinking outside the box. Two year salary. What that does is it reduces the appraisal exposure by I think, the technical terms of buttload, and it nets the seller some serious profit, not just at the sale, but over time. If it sounds crazy to you, you got to know that in some parts of the country I'm hearing offers going 50% and I heard one that closed 79% over the list price on luxury homes. 500 to a million over list price for a 1 to 2 million dollars home. That's what's happening in the luxury price range. It's true. And my camera guy, his eyes are about to fall out of his head right now. 79% for luxury homes. As I always say, if you're concerned about what you're doing with your money on a $250,000 purchase, watch what the rich people are doing at the million and $2 million price range. Are they going over list price or are they holding back and waiting for a crash? No, no, they're paying 50 to 79% more. And I always think those people at that price point who are buying houses today, they have to have some knowledge and some smarts because they are in the position to buy a 1 to 2 million dollars home. And so at some point they had to know what they were doing to get themselves in that position. I once had a very savvy client of mine who could afford to buy a $3 million home back in 2009. Now, if you haven't studied your history, 2009 was a crap show. The market, the, the real estate market had dropped and the stock market had dropped and everything was falling apart. We were in the Great Recession. So what he said to me was he had plenty of money to buy a $3 million house, but he asked him to find, he asked me to find him a rental in the $3 million house neighborhood that was going to cost him $6,000 a month instead of buying, which he totally could have done, no problem. So of course I went into my spiel. Rent versus buy. You know it's going to cost you $72,000 a year in wasted rent. And he says to me, yeah, but just give it a year or two. I'll bet I'll be able to get one of these three million dollar homes for two million. And I'm in a position that I'm cool if I take the risk and I lose $72,000 a year if I'm wrong. So after I poop my pants, then I said all right, cool. Whatever, dude. Your money. So I helped him do it. And fast forward two years later, and he was right. And he bought one of the homes in that neighborhood. In fact, a larger home than his $6,000 rental for $1.85 million. So two years at $72,000 a year, it cost him $144,000 in rent, but he ended up buying a home at a discount for $1,150,000 off. Follow the smarties when they're waiting. Wait, if they're not waiting, Guessing they know something that maybe those of us down here in the lower middle class, regular middle class, upper middle class, maybe something we don't know. Which brings us to our next topic, which is another thing I'm hearing that a lot of people don't want to deal with the bidding wars. So to get away from the bidding wars, they're gonna buy a new build, a new home. Plus, buying a new home means they get a new home that's clean as a whistle. And that means it's time for another edition of why do we say that? It describes the whistling sound of a sword as it swishes through the air to decapitate someone. Clean as a whistle. Now, why would I bring up such a gruesome story? Well, because if you're thinking that buying a new build is going to be clean as a whistle, I want to prepare you for some, you know, potential Marie Antoinette possibilities. It's not necessarily going to be that quick fix that you're hoping about. Hoping about again. Grammar with David. Now, some buyers think that new builds avoid the big bummer in the 2022 buying process, the avoiding the drama. It sounds super bitching to them. So you think, hey, I get to avoid the pain twice. One, I get to skip all the bidding wars, and two, I don't have to deal with the hidden problems since so many people buying resales are. Are being told that you're not going to get any repairs or credits after you do your inspection. And I might even, you know, the sellers might even demand that you even waive the home inspection if you want to be considered to even get the home. And of course, that home inspection gives you the comfort and the safety, but now they're like, you know what? The comfort and the safety of buying a new home, you know, without that money pit of a problem. That sounds pretty enticing to some people. Here's the current market info on new builds in many areas. You are not going to like this. They have bidding wars, too. I had A recent listener in Austin, Texas, get on a waiting list for a builder. This is the one that they liked. And they found out that they were 63rd on a list with 85 names. Yep. Hate to break it to y', all, but in most areas, getting a new build is not a secret hack. You're not the only one who figured this out. Remember, the inventory shortage is happening because of the builders not being able to build fast enough. They had pandemic stalls, lumber price increases and supply change issues. And though that issue is resolving right now, you can't build a house in a day. So they're still behind. They're in massive catch up mode. And then there's this little fun nugget. The ones they have completed, they've got plenty of buyers ready to pounce. So they're actually doing lotteries. Lotteries for just patches of dirt. Not even a home begun to be built there yet. Oh, and while they build on that patch for three, six or nine months, they will, and they have done this. Get you to sign a contract and then find clauses in that contract that you signed with them, even with your deposit down. And they'll find a clause to raise the price during the construction that takes three, six or nine months because the market is pushing the prices up three, six, and nine months. And in some cases they'll cancel the contract and just give you your deposit back. Why? Because they're builders and they figured out they can make more money giving you more your deposit back and selling it to someone else on that list of 85 people. So let's say you have a contract for the B model, lot number 14, and it's in the builder's tract and you put a $20,000 deposit down for a five month build. Cool. Now, since you signed that contract and gave them the 20 grand a month ago, they've had 85 people who are out there and got disgusted with the real estate market. So they come in and they sign up for a new build, a model B, just like you. And they went on the builder's wait list. The wait list, it'll kill you. Well, the builder calls all the selling agents who are at the property and tells them, dude, the market's going up. Call all those 85 people on the waiting list for the next five Model B homes being finished and let them know that we're going to have new homes coming out at a higher price and see who bites. So now one of those five homes is your home. So what they're doing is seeing if Anyone else is going to buy it at that increased price. Monday morning, a month after you sign the contract, the Biller calls all 85 people and they only need to get five of them to agree to buy that home at a $25,000 increase. Not sure if they have to give you your deposit back, that takes $20,000 out of their current profit, but it creates a $25,000 increase for an expected new future higher total profit. And what's scary about this is I'm talking to all my unicorns all over the country. Even a supreme unicorn frequently cannot keep the deal together, as the builders often refuse to do any amendments to that original contract. When they realize they've got multiple people coming at them, they take that offer in the beginning phases of a build out and then depending on guess what, supply and demand, they change it. So if you're 63rd on that list of 85, don't think that builder is working as fast as they can to build more homes since they have a long waiting list. Remember, they only have so many plots of land to sell. They're playing an algorithm game. If the market's going up, they're not thinking, wow, let's just keep building and building and building because we can make more and more and more. No, no, no. They only have so many lots to sell. Their game is to get as many buyers on the list as possible and then carefully watch the market and try to time each release and each price based on how high they can jack up the prices without waiting too long, losing interest, or finding a potential bump in the market where they have to sell for less. They have deep pockets and can keep the investors happy by promising larger returns a little bit later on because they're going to do a trickle release. Rather than dump all the homes all at once, sell them off, but maybe leave some money on the table because the market's going up. If only 5 out of 85 people on that waiting list agree to the new price, they're going to resell the homes, release the deposit back to the five people that signed a contract, and then work to build up another list of buyers for an even higher price point for the next phase release, or maybe for that same release, and do the same thing to the people who replaced you. Now, I'm talking really fast and giving you a lot of information. I hope you're taking it all in, but a lot of this, I know you're thinking this sucks. And if you're new to the podcast at this point, you're probably confused at the title of the podcast, you're like, dude, the podcast says it's how to buy a home. But today it sounds a little more like how there's no way you can buy a home. I feel you now. Lots of people out there, they're trying to sell you. And what I'm trying to do is make sure you understand the entire process and realize how buying a home fits in. Best practice for what you're doing. Lots of people out there are trying to sell you a mortgage today so they can pay theirs next month. That is not my jam. My goal is to educate you and empower you to buy a home when it's right for you, when the numbers make sense for you. And for some of you out there, 2022, it is the year that the universe decided that you should look into this. But maybe it's not the year for you to do this. I know it may be discouraging and disappointing for some of you, but I'm not here to burst your bubble. If you wish you'd been able to do this two or three years ago, we all do, but we don't have a crystal ball. I'm here to give you the reality of the current real estate market so you can enter into that feeling confident that you're getting real information, not just a sales pitch. I'm confident that for some of you, once you run the numbers, jumping into the suckiness of the 2022 market will be a less sucky financial decision than for you to keep paying a rent that is going to go up over the next few years. That's why I'm delivering these harsh truth bombs. Moral of the story? Life's not fair. But challenges that you overcome throughout your life, they're going to make you smarter. Somewhere out there, there's a buyer who turned 26 in 2012. Think about that. Where were you in 2012? Living in a dorm, doing keg stands and not even thinking about buying a home. Or were you wondering who was going to ask you to prom back in 2012? Or maybe. Maybe you were 26 in 2012 and now you have a seething disdain for me for not starting this podcast till 2019 and holding all this information back a la Adam Sandler and the Wedding singer when his fiance bails on him at the wedding and tells him the next day that she is in love with him anymore. To which he says, once again, things that could have been brought to my attention yesterday. My sound people hate me now, but that line makes me laugh. Well, the reason why I'm telling you, this is because like you, I rented in my 20s. If you're 36 today, ta da. I did the exact same thing and I didn't know any better, but now I do know, so I'm telling you. So let's use this information to move ahead. Let's look at that 26 year old buyer from 2012. After renting for four years before 2012 in a huge economic recession in 2012 he had his parents that got him her they to stop renting and buy a condo. So good for them. So the buyer took the advice from the parents, bought a place and guess what? It was totally easy, no drama. It was a buyer's market. So at the bottom of the market they bought the home and it's been going up for 10 years while they've been sitting there. Again, great story for that guy. Wish I could do it for you, but I'm not Doc Brown. Don't have a time machine. Although I do love deloreans and I cannot do that for you. So this isn't you. Deal with it. How do you deal with this? Well, here's a fact that might make you feel better. For you, I can almost guarantee that if Today in your 20s, 30s or 40s, you learn how to navigate this challenging market, you're going to have a far better understanding of how to take advantage of future markets. You're going to be way smarter, way more savvy than that lucky 26 year old back in 2012 who had the good fortune of his parents not only giving him the advice of 202012 since my podcast didn't exist back then, but also having the good for the good fortune of being 26 years old, of having his her they parents deciding to get freaky back in 1986. Life is challenging. That's why I sing stupid songs to you to try to keep you uplifted. I heard something the other day again on TikTok. I can't believe you can. You can fix the algorithm so you get some decent stuff in your fyp. And this is something I heard. Pain is unavoidable, but being miserable is optional. Whoa. You're going to benefit so much from this. Even if you don't buy a home this year, you're going to have learned the ins and outs of the market. You're going to have learned what you can do and what you can't do. And someday the things that you will be able to do that you can't do today, you'll be able to do Tomorrow you're going to be a battle tested warrior who in the future will be so pleased at how easy it is by comparison for you to decipher and take advantage of the new markets. And you're going to crush that entitled Lucky 26 year old from 2012 who never learned to embrace the harsh realities of life. And it isn't even close to being prepared to compete with your wisdom, your smarts, your financial acumen that you've accumulated here in the mud and the blood of the trenches of 2022. I was getting some national intel, talking to my unicorns all over the country and I talked to one of my great unicorns up in Salt Lake and she told me that she had to have a blunt discussion with some of the listeners that she was working with. Again, like me, sometimes you have to be Captain Depression 2022 stats and facts and monologues. But knowing that she was coming from that, you know, good intentioned place, you know, sometimes you got to drop the truth bomb. They were getting discouraged at not being able to get everything they wanted as the prices continued to go up. They even mentioned a bubble. So she turned it around on them and gave them the new unicorn bubble talk. She said, I actually need to burst your delusional bubble. The market's taken off in the last eight weeks and we've missed out on the Turnkey Homes at 500,000. So now we need to make new decisions since you've seen all the options and all the homes that are out there. So are we going to be buying a turnkey 399home with room to bid up or are you looking to get 500 home that is going to need a little bit more work Pop delusional bubble, just like that. Well, I don't want to bum you out completely, but I do want you to be actually really for real Z informed. But let me give you some positive stories from the 2022 listeners. I got this one the other day. Hey David, my partner and I just had an offer accepted on a townhome here in Atlanta. Good for them. Got a lot of listeners in Atlanta getting a lot of good things happening for them. And they go on to say, given the sales price, we can afford it, but it's still daunting. We just wanted some reassurance that it's better, better to buy now rather than later. I get sick when I see relatively similar townhomes just a few months ago go for 25 or $50,000 less than some parts of town. I appreciate any words of Encouragement. Well, if they listen to the last few episodes, there's a lot of words of encouragement there. But I wrote back to them and told them this. Home appreciation has quickly skyrocketed since about mid January to today. Now, because of that, the data's slowly coming in, so you're going to see those old prices and freak out. But I've personally seen homes jump 5% in just a few short weeks. Now, 5% doesn't sound like a lot. And if you haven't been doing real estate for a long time and you haven't done the math to realize how much is 5% on a $250,000 home, that's a lot of money. So you're seeing those homes 25 or 50k less a few months ago. Well, your home that you're writing an offer on right now at that new price that's right in line with the rest of the country. I also told them, hey, no one can predict where it's going to go from here, but basic supply and demand has moved prices way up a lot faster than everyone anticipated in the last few weeks. Homes everywhere are more expensive in March than they were even just in January or even February. And that's likely to continue through the summer and the rest of the year, even with interest rates going up. So why such a fast and crazy jump in the market so early in 2022? Okay, let me give you some of the data now to back up all this craziness. Remember all the stuff that I reported to you at the end of 2021? The beginning of 2022? No, David, I don't remember every podcast I listened to, especially not from three months ago. Okay, let me tell you about it. All the forecasts from leading economists back in 2022, they were. Or the end of 2021, beginning of 22. We looked at what they said, and they said that 2021 saw that home prices had gone up an astonishing 19% per year. That's not normal, everyone. 19% is insane. The average, like I said, 3 to 4% a year. When you're taking all the ups and downs, that's the average. So the predictions were that we would slow down. Now we'd slow down to what is still a historically really hot pace of anywhere, to 7 to 11% for the entire year of 2022. And then let me refresh your memory on the interest rate forecast at the end of 2021. Rates were, you know, a little bit above 3%. And the forecast was that they would slowly rise over the entire year up to 4%. So what happened? Well, I'm here to tell you that it's only March and all of these forecasts have happened already. In January, inventory for homes were so low that things went haywire. There were only about 923,000 homes for sale in the U.S. that was 19.5% fewer than 2021 and 40% lower than 2020. So with that insane lack of inventory, housing prices increased at lightning speed. Making all the year long predictions for price appreciation, how much the homes would go up. All that happened in just the first quarter of 2022. Didn't take 12 months, took two and a half, three. And what about the mortgage rate increase? People freak out about a half point or a quarter point and I understand it changes everything in your payment plan. But now recent jumps have happened due to inflation and the Fed and all kinds of stuff. And taking a look at the rates, right now we're up two full points. Not a quarter point or an eighth of a point, two full points since last summer. The largest jump in over a decade. But it's not because the Fed raised rates, even though that's what a lot of people seem to think. Truth is, the way that it works is mortgage rates are not actually tied closest to, to the Fed rate is actually tied closest to the ten year treasury bond. Bonds lose their value when inflation goes up. So that's where we're finding the raising in rates. Bonds have been losing their value and that's happening this year. Inflation is up big time. We're talking 7.5% in March. So what does that mean? Well, like I just said, the bonds are going to lose their value. We've seen it with the inflation, the gas, the groceries and the regular old expenses, they're all going up. That affects that 10 year treasury bond and it loses its value. And there you go. Now mortgage rates go up. But the reason why people think that it's a tie to the Fed rate is because the Fed rate, they have a plan to fight inflation. It raises the Fed fund rate when inflation starts to run away. It's the Fed's way of slowing the economy down. So yeah, the Fed is raising their rate, but it's because of inflation. And inflation is the cause of bonds losing their value. And that is tied to the mortgage interest rates. How's that? Who tuned out like 30 seconds ago? Don't lie to me. Look, I'm giving this information for anyone who wants to understand. If you're looking, trying to find the factors, these, the way the factors work. Once again, the Fed rate is generally not tied to the mortgage rates, it's tied to other borrowing money rates much more closely. But in this case, because inflation is happening and the Fed's raising it to fight inflation, that is changing the 10 year treasury bond, which is one of the indicators that are going to let you know where mortgage rates go. So to help clarify a little bit more, what's the Fed rate control? The Fed sets a target rate for the Fed funds by setting the upper and lower limits which banks then base their loans off of. So that's what the Fed rate does. It averages the interest rates the banks charge each other overnight and that's the effective federal funds rate crap you never wanted to know, but now you're buying a house, so you should. The federal funds rate is one of the Fed Reserve's key tools for guiding U.S. monetary policy. It is actually impacts your apys that you earn on your bank accounts, the rates that you pay on your credit card balances, and that fund rate effectively dictates what they say is the cost of money throughout the United States. So now if you caught all that, great. If you didn't rewind it, you know, either for fun to, for clarity or, I don't know, just for torture. Your call. But remember, gang, knowledge is power. And with this knowledge, understanding and being able to watch all these different markets or hire someone to watch it for you and explain it to you, or listen to the podcast, that'll help too. But if you've got all this knowledge, you can crush that 26 year old from 20 2012. When you're selling your first home in 2032 and trying to buy another home, and he's trying to buy the home too, but they don't have any clue what they're doing because they've never been through it when it's hard. The deal with all this rate talk is when rates are low, it's easy to pay off credit card bills or to borrow money to buy a house. So with low interest rates, that encourages spend. And now with demand for products being high because we've got supply and demand and inflation problems, well then prices are going to soar. So the goal is when the Fed raises interest rates, it's to lessen people's desire to spend and lowering demand on all these other goods, it's eventually going to lower prices overall and that could trickle down to the housing market. And that's good news for you. See, I told you I was going to give you good news, but then you were like, dude, I didn't realize it was going to be wrapped in three minutes of CNBC finance talk. The bummer is inflation's got other bad news. But it's something that you should be aware of if you're trying to go through this whole should I buy a house process. I know that it already sucks when you're trying to fill up your gas tank or just buy some groceries and you're butt handed to you when you they tally up the total. But if you figure out how to buy a house, but this piece of bad news is actually some good assurance if you're figuring out how to buy a house, it's a positive incentive as you're fighting this difficult fight to purchase in these monster challenging times. Because guess what else? Inflation is pumping up through the roof. Actually, an apropos analogy, through the roof because it's the roof that you rent. Rents are up 15.9% so far in 2022. Thank you very much. Inflation. So the moral is this market is nuts and you can play behind the scenes and help get yourself ready during all this psycho ness so you can pounce when you've got all your ducks in a row. Here's some encouraging words from listeners already hooked up with unicorns and in battle, just a few examples. Thank you so much, David. The unicorn is super nice and knows Grand Rapids really well. She got me a contact with a local lender that also assisted me with credit repair and those plans should I need one once I catch my mom for a day next week we're going to be scheduling an appointment and talking about a cosigner. You never knew about that, but it's something that it's not for everyone, obviously, but there is the opportunity for you to talk to someone about your plan and see if that is an option for you to move things quicker than maybe you thought. Love that. Plans in motion. Here's another one. Hey David, My partner and I had a nice long talk with our unicorn and are feeling good about her as a realtor for us. Thank you for taking the time to refer us to her. To be honest, I definitely use the stress test questions you gave to interview a prospective realtor. I love that they thought they were like calling themselves out. I'm fine with that. They continued. But she did great and we're feeling very comfortable and continuing forward with her and hopefully we're gonna buy a house in the next half year or so. I have to say, your network you guys are part of really sounds like a positive approach to the field. I had to ask her why a realtor from Florida was being recommended by one from the opposite side of the country. It's totally cool. Unicorn Nation. Look, the whole unicorn thing just fall out of the sky. I've been networking with realtors who work the same way that I like to work in the same coaching programs. As a matter of fact, the ones that work by relationship, not by just transaction, not turn and burn. And in fact, at the end of this note, this listener said my partner was laughing that maybe she should leave her job and go work for their unicorn. I love that I told him that I've got several unicorns that I endorse personally and you don't have to ask them the questions that I tell you guys to ask any potential realtor. But the cool thing is go for it because I totally trust these folks. They're like minded people I've been working with since 2005. It helps that over the years I've weeded out a lot of the weenies and I can get you to a good unicorn. And here's one more positive story to help you get over all the crap I just laid on you in the first half an hour of this podcast. This one says yes, I did it. Offer accepted under 200,000. I would have waited till tomorrow to send this to you, but I know that you might be up. Someone who listens to the podcast and knows that sometimes I'm here to the middle of the night. I'm getting a rent back through the month of June if the tenant stays there. Otherwise we close by the end of May. No more need to cancel my lease. 2 bedroom, 1 bath and the payment is $50 cheaper than my rent. I say it again gang, this home was under $200,000 but her new mortgage is $50 less than her rent and everyone says the interest rates are so high you never know till you ask. Yeah, she's so stoked because then she tells me oh and by the way, the rent's rising. $100 if I signed a new lease. And now she doesn't have to. She said she can afford to live alone comfortably. No need to rent out the room unless she wants the extra money. The HOA was only 300 bucks. Those of you who haven't looked into it, that's not expensive. Get ready for it. And she said that she was right in the offer that she binged six hours of the podcast to settle her nerves. Thanks for your help. This is incredibly stressful process. You made it easier. Couldn't have done it without you and from the start. And it all started with you, sir. And then she says, if you thought I was going to stop listening to the podcast, you're wrong. I hope you're doing well. Get ready to add me to your wall of success. That's the wall behind me. Got pictures of all kinds of listeners that have managed to purchase a home. And this is a great story. This is my person who reached out to me and said, you know, I got a great job with Amazon. I love it, but, you know, it's a regular job. Can I really buy a house? And I was like, you know what? Let's talk to a unicorn. Let's run your numbers. So now she says to me, get ready to add me to your wall alone. That means she bought it by herself. She's totally stoked. And then she says, I'm going to be holding a sold sign with a smile bigger than the one on my Amazon van. That's awesome. Okay, no. So if that story didn't pick you up, I know things can be tough when you're out there and you're like, great, great story, Dave. What about me? Okay, look, I've got something else for you. If you need a pep talk, Call this number. I'm not joking. Call this number. 797-988-8410. It's a school project where kindergartners give you a pep talk. I actually had some sellers that were selling their house, and the buyer bailed on their house. So they lost the sale of their house, and they lost the dream house they were trying to buy with the proceeds from the sale of their house. It totally bummed me out. So I talked to my partner here at the how to Buy a Home podcast, and he said, dial 797-988-8410, call them, and a kindergartner will give you a pep talk. It's awesome. So when your offer gets rejected. Not if. When One of your 20, 22 offers gets rejected, because odds are it will call 797-988-8-410 and go through the dial prompts, and you can ask a kindergartner to give you any different style of pep talks. It's awesome. I'm not gonna spoil the jokes because they're really good, but when you listen, send me your favorite, because I have one that totally was awesome. Run your numbers, believe in what you're doing, and if you want to get mad, I feel you. But get mad at your parents for not procreating earlier so you couldn't Buy a House in 2012. Sorry, this is what we got so let's take advantage of it. Check out the YouTube page. Help us spread the word with comments. Five star reviews and even better written reviews on Spotify. Yeah, Spotify is doing reviews now. Or wherever you listen to podcasts. Dump a review there. It really helps. Follow David Sidoni on Instagram and find me on TikTok at how to buy a home at TikTok. I'm there. I'm dancing. I'm getting stupid. But the point is I'm trying to reach everyone before they listen to other people on TikTok telling them horrible advice. So let's get the conversation started and help people out there scrolling through those trending videos trying to find the one place that they're not going to get just trending topics for first time home buyers. They're going to get the real real My truth bombs on real estate. We know people are listening out there on TikTok, but it's time to get the truth from someone who actually cares about them and knows what they're talking about instead of the dude that just went viral for no reason. Remember the three Ps when you're trying to buy a home in 2022. Patience, persistence and perseverance. And if you feel like Will Smith and you're getting the urge to go for that fourth P punching people. Well, chill out. Mellow, unwind bra. Take several seats. Ease off. Show some restraint. No punching. Try this P planning and then you can do this sa.