Everyone wants to know. When should I call a realtor? When CAN I call a realtor, a lender, or an attorney? What’s the right timing to do this whole thing right? In this episode, David Sidoni dives into the best, most efficient, and most money-saving time frames every first-time home buyer should know.
How Much Time Do You Need To Plan to Buy Your First Home?
A First-Time Buyer Guide To Starting The Planning For Making The Big Purchase
Gang, grab your popcorn. It’s time to spill some tea here. In November of 2022, Zillow dropped this bombshell data analysis. They told us this, “Prospective home buyers spend about as much time researching new TVs as they do their mortgages.” Zillow, I’m listening.
What is up, my How to Buy a Homies? How are you all doing out there? It’s going to be a little fun episode getting into the juicy deets on this Zillow shocker. I know lots of Gen Zs and Millennials out there are sick of the Boomers telling you that you’re entitled and that you have a got to get it quick attitude. This survey comes out, and that stirs that debate even more. Here’s the deal. The truth is this is not your fault. The world is changing, and things are getting faster and easier to master. Let’s figure it out. What is the actual right amount of time it takes to plan instead of just ragging on you and telling you you should spend more time than TV?
The Zillow Survey Says
Where I’m coming from is no judgments. I’m looking to help protect you from making a bad decision and losing thousands of dollars. Here are the facts. Don’t shoot the messenger, gang. I’m just telling you what’s going on. Here’s what we found out. According to this survey from Zillow, some of you have been duped into the fact that you think that you can google all this stuff about buying your first home for a couple of weeks and then you’re all set. Hear me out. Remember, I’m not judging you. One of the big things about this survey is I’m also considering the source of this information. This came from the Zillow home loan department. I wonder why they said that.
I know damn well why they said that. They chose this controversial clickbait headline. It’s either to piss you off or shock you into a panic that you haven’t planned shopping around enough, so you end up calling who? Them. You’re already there on their article. It’s going to be easy for you to click right on them. The ironic thing about this whole thing is getting this data is the one thing Zillow does great. Do you know what they completely suck at? Helping you do your home loan the best way for you, as well as referring you to realtors who are good for helping first-time home buyers. They’re just going to refer you to the realtor who pays them the most money for advertising.
Maybe that’s why instead of writing an article about what they can do to help you, they wrote this article with the clickbait title to tell you how impulsive you are. The stats are gross. If you resemble some of these stats, I’m not mad at you. It’s not completely your fault. Own that, and let’s figure out how to do this the right way for you. Of the prospective buyers, 28% spent at least a month researching vehicles for their next car purchase.
Twenty-three percent spent at least a month researching their vacation options before booking, and 12% spent at least a month researching a new TV before purchasing. Only 13% of all the prospective buyers spent that much time a month researching all their options for their mortgages. 12% took a month for a TV, 13% for their mortgages, 23% took a month for their vacations, and 28% took a month for their car. That’s way more than the amount of people who took that much time shopping for a mortgage, figuring out, and planning the entire home-buying process.
Lender Or Realtor First?
Here’s the deal. If you’re a homie and a reader, you know that here, I preach a better way to do this. The more time you prepare, the more options you’re going to have and the better deal you’re going to get. You can find a support team to help you for way more than a month, even though sometimes it doesn’t feel like it, but that’s why we’re here. This article, as well as most of the things you find on the internet, is going to tell you to spend time shopping for a lender. Why? It’s because realtors are dumb and haven’t figured out how to use the internet well. The lenders have, in fact, talked to the gang at Silicon Valley, and they’re the ones who are out there the most.
Realtors are individual business people. They don’t have the marketing budget to figure out how to build a billion-dollar website. Lenders are backed by big banks. They’ve got all the money, so they got to the internet first, and their message is out there. Lender first, realtor next. That’s completely backward. Your biggest takeaway from this little revolution of insider tips on how to buy your first home the best way with all of the hacks that work for you, not for the people who are trying to get you to be their client, is that the most efficient way to shop for a lender is to shop for a first-time buyer advocate realtor first. That’s the beginning of the building blocks for your support team. They can help you build the rest of that support team.
This is crazy. I swear. As I was getting ready to write this article, I was listening to another podcast that’s out there trying to help first-time home buyers run by a couple of lenders. They were giving step-by-step instructions on how to buy your first home. Their step one was to go to a lender and get pre-approval. I expected that. Everyone’s doing that. That’s them. They’re doing their thing, no problem, but two steps later, when they’re explaining what the best way to find a lender is, they said it’s through your realtor. They said step one is to find a lender, and they said step three, the best way to find a lender, is to go through your realtor. Maybe you should rethink that. I’m not the smartest guy in the world, but it sounds to me like step one should be to find your realtor.
The rant is over. Let’s move on and give you the information to help you get planning. There are lots of information that is out there, and it obviously can be confusing, to say the least. As one of my readers said to me one time, as a Millennial, I first went to the Millennial’s best friend, Google. It’s so awesome. A lot of you might be turning to the internet first and find our friends at Zillow who tell you that most people research more when buying a car, a vacation, or even a TV. Let’s see why you guys didn’t want to find a team and plan early and what you should do that these folks did not.
Work On Your Credit
This is one of the huge reasons why people don’t find their support team early, and I hear it all the time. Nobody wants to get their credit pulled. Credit pull is the devil. The whole thing is to work on your credit. “How can I work on my credit if I get another credit inquiry? I’ve seen that on my credit card, my Credit Karma, my Rocket Credit mortgage booster extra bonus thing, whatever the heck you call it.” The survey shows that 30% of the people didn’t want to shop early because they didn’t want the credit pull. I’ve addressed this before, so let me hit the bullet points. I get it. I understand.
Here’s the truth bomb. This is maybe one of the dumbest things I hear all the time, and it usually comes from the smartest people. Don’t be mad because I said it’s a dumb thing. Read that correct. I called you smart. The reason it’s dumb is because you’re ignorant, “No, he called me ignorant.” Remember, guys. Here on the show, ignorant isn’t a bad thing. Ignorant means that you don’t know everything. I understand that.
I am not being condescending when I say this. I’m telling you, there are three paths to go on. If you take that one, it’s a dumb path, and you can get in big trouble. I’ve taken this trip before, and this is the path you want to go on. Yes, it usually involves talking to a lender way early and not pushing that part of your journey off because you don’t want to get a credit pull. I am so pissed off that so few people out there in the financial world or in the real estate industry have not explained how costly this over-cautious thinking can be.
If you reach out to a lender a year early, do they have to pull your credit? No. If they pull your credit, is it going to kill you? No. I was having a conversation with a lender who talked about the fact that they’ve got three different kinds of credit pull. They have a super soft pull, a soft pull, and a hard pull. If you’re thinking dirty thoughts, you and I are on the same page. Those are specific terms that they use when they talk about pulling your credit. You don’t have to get your credit pulled. Please hear me. Don’t wait to talk to a lender because you don’t want your credit pulled. There is plenty you can do without getting your credit pulled or just getting a soft pull that doesn’t affect you.
Most importantly, that means the people you are going to be working with are going to be giving you a plan for the next twelve months instead of you doing this on your own. Especially you smart people who are conservative and have all your ducks in a row and say, “I’ll be fine. I’ll call when I’m ready,” awesome. You can be way more ready if you talk to somebody earlier. This is the biggest mistake I see, and I get so bummed out, and I want people to understand. Please jump on this as soon as you can and get things going. Can you do this on your own and call a lender when you’re 2 to 3 months out? Sure. If you do that, will you likely get the best outcome? Probably not.
Down and dirty, this is the best way to do it. Call a lender a year out, even two years out, if you’re a long-term planner. Did you hear that, folks? Two years out is a long-term planner. A year out, I don’t consider that long-term. A year out is the right amount of time you need to plan. When you reach out, will you get your credit pulled every single time? Maybe, but also maybe not. There are plenty of options for you. The reason why some of you might go ahead and get your credit pulled at that time is because you have plenty of time to earn those points back. It’s only a 2 to 5-point hit.
One of the things you need to know about this is Credit Karma, and all those monitoring services don’t give you the entire picture. If you got 28 different scores, they don’t tell you exactly which one is the one that you’re going to need to use and show to the banks when you’re going for a home loan. The other thing about this that’s important to remember is there’s only one way to improve your credit, and it takes time.
Everything you do to improve your credit takes time. I don’t care if you go out tomorrow and get a $50,000 credit card. Your score does not jump immediately. Especially when it comes to resolving any negative things you have, getting rid of stuff takes major time. I always recommend talking to someone. Most of the time, you can make up the 2 to 5 points over a year, and it’s better for you to see everything on your credit score or talk to your lender. They may have a soft pull option.
[bctt tweet=”Everything you do in improving your credit takes time.” via=”no”]
If you’re one of those people out there who says, “I’m going to wait until 90 days because I want to make sure I get my credit pulled once at that time when I’m writing up and getting ready to write offers and do my loan,” first, go back and read other episodes where I’ve discussed this even deeper than I have now. I’m not a Boomer, I’m Gen X, but if I were your older Gen X uncle and we were at the holiday festivities now, I would have you in a headlock and be giving you noogies just to tell you that 90-day thing is a myth. Don’t do it.
In all of my years with thousands of first-time home buyers both here and all over the country, I have never seen anybody lose a house because they pulled their credit early. I have dozens of times seen somebody lose a house because they waited because they didn’t want to pull their credit until they got close to buying a home. I am so fired up about this. I just listened to myself. I realized in that segment I said the words credit and lender. That is not how you pronounce those words.
Share Your Financial Situation
That’s your fun fact for the episode. Let’s move on. The bottom line is this fear has been implemented in your brain because lenders and realtors don’t get paid until you close. The lazy ones out there don’t want to work with you for free for those long periods of time. Find yourself a support team willing to work with you for a year or more for free. Those people will set you up in the best way possible. Another thing we learned from the financial survey is that 14% of the people who were getting ready to buy a home said that they were too embarrassed to share their financial situation, so they waited until the last minute to go over all that stuff with someone that could help them get a loan.
Truth bomb number two, ladies and gentlemen, boys and girls, strap in your seat belts because this is going to be a tough love moment. You don’t want to share your financial information because you’re embarrassed. Get over it. No bank is going to give you hundreds of thousands of dollars based on you being a good person. Here’s good practice. Take all your bank statements, get them all printed out, hold them in your hands, and stand in front of a mirror naked and sing that song the bearded lady sings from the Showman. Now you’re all fixed, and you know what it’s going to feel like to get a home loan.
The most interesting fact from this survey was that 49% of all prospective buyer surveys spent less than a year preparing for the mortgage process. Take a second and think about that. Think about that number. Forty-nine of all prospective buyers surveyed spent less than a year preparing for the mortgage process. I have my thoughts on that. What are yours? Go ahead and say your thoughts out loud now. I’m sitting by myself in a dark room doing the show. This is a reciprocal relationship. I am not going to be the only one talking out loud to myself. You do it. Say it out loud.
What do you think of that statement? Forty-nine of all perspective buyer surveys spent less than a year preparing for their mortgage. Did you say something? Did you say, “Damn, 51% of the people prepared over a full year?” Did you say, “Only 49%? That’s crazy.” Did you say, “I hate word problems, Sidoni, and this is why I failed math?” Did you just sit there and say nothing in the silence? You’re breaking our trust in this relationship now. I’m trying to build up a reciprocal bond in your eyeholes, and the least you could do is speak out loud in front of other people and look like a weirdo like me.
Regardless of whether you said something or not, the answer to the question of this episode, “How much time should I spend planning?” is simple, even if you thought 49% was way too low or too high. The reason is we don’t know when you are reading this and when it’s the best time for you to buy. The answer to, “How much time should I spend planning?” is the most you can. That’s it. The reason is simple and logical.
There is no downside to starting to plan now for purchasing your first home. If you’re worried about stuff and things happening in the future, I got news for you. There’s always life, and there will always be stuff. There’s always going to be something happening with the economy, in your life, or in the world in general. I started this back in 2019, and we didn’t know anything about COVID, the recession, or Ukraine back then. Guess what? Things happen.
If you’ve got me here now in your eyeholes, that tells me you were thinking about buying a home someday. In this endeavor, if you are preparing to do that, which is why you’re here, there is no downside to preparing, only positives. That’s even if you keep reading this and decide you never want to buy a home. It’s still positive for you. Let’s go over the basics. First thing, work on your credit score. Second thing, automate your savings and start building savings if you don’t have any. If you have some, build on it because more is always better. The third big thing is to start working on your debt, but work that balance between adding to and growing your savings while paying down your debt.
Those are the three things you got to do. What happens if in a year, 2, or 5 years you decide you hate the idea of ever living inside a house, and you’re going to go full van life forever? What’s the downside? You now have a bitching credit score and more savings to buy a super suite tricked-out van. What’s down with that? Do you see my point? No matter what happens, this is going to help you. What happens if you say, “Screw this. I’m going to travel the world and live in mud huts.” Now you can apply for killer credit cards and get a whole bunch of bitch and bonus points, and you’ll have some spending money for all the time you’re going to spend at those outdoor bizarre buying crazy things. As a generation, why do so many people wait to start this plan?
Personally, I don’t think it’s because of procrastination. I don’t think it’s because this generation is lazy. I am not on the side of those Boomers who say, “You damn kids don’t understand work and sacrifice.” Every single generation says that. To the Boomers who say that, gramps, when they made the steam engine and the automobile, did you still ride horses to go to another state? Heck no. You took advantage of the technology that was offered to you. Technological advances are here. It’s not that we don’t want to do more hard work. It’s that we don’t have to.
The problem is that these companies that want your money are selling you on the ease and convenience of their new technology. What they’re doing is they’re not giving you the full picture. It’s not your fault. They’re making you think it’s so easy. You only have to do a few clicks to figure out these things that take some more time in research to find the best thing for you. Can you do it with the people who do it super fast? Yes. Will that be the best option for you? Perhaps not. What the internet is doing based on my analogy I said before is they’re selling you a steam engine, but it’s probably going to crash, or they’re selling you that Model T car that’s better than the horses, but it’s going to break down. It’s not your fault.
The best way for you to work your planning is to use bigger and better resources. That means great unicorn realtors and lenders want to help you with your planning. No one’s going to be mad at you if you want to start your plan and don’t hit your goal dates. Let me put that to rest for all of you very nice people. If you’ve got panic and anxiety in your mind thinking, “I don’t want to waste this person’s time. They’re not going to help me,” if that’s what you think and feel from the other person, they’re not the right person for you. I’ve got news for you. This happens to us all the time. We work with people, goals change, and we readjust things.
We’re not thinking about, “How quickly can I get this person a home?” We’re thinking about, “What can we do to get this person into the right home?” If you’re working with the unicorns out there, they’re not going to care if you buy a home in a year or 2 or 3. The good ones are going to give you the right service and the right steps at that time, and realize that if they’re giving you the roadmap and the guidance you need that you are going to refer them to other people. Therefore, who cares if they get paid from you now or in three years?
Here’s the insider pull back the curtain on how good realtors and lenders pay our own bills. I’m not expecting to pay my bills in December with the people who reached out to me two months ago, and neither unicorns all across the country. We’re going to pay our bills in December with the people that reached out to us two years ago. We’ve done everything to line them up perfectly, and now they’re thrilled about all the options they have, the good service people know and love, helping people early because we see how much better it is for them, and they’re much happier when we get to the closing.
You benefit the most from that, not us, not your unicorn realtor, not your unicorn lender. You have more options, possibilities, and choices that work for you. Even if you’re super smart and got a bunch of spreadsheets, that’s great. What I’m telling you is the best way for you to beat the system is to find a team that is willing to work with you early. Don’t think that you’re being extra nice by not reaching out to us until you’re ready to go because a lot of the people who come to me really nice and said, “We didn’t want to bother you early. Here’s everything we’ve got,” I look down at it and go, “I could have made this a lot better over the last 3 to 6 months.”
The weird thing is you’re making it harder on yourself and us because eventually, if you have a goal that is three months from now, now we’ve got 6, 9, or 12 months’ worth of work to do, and we’ve got to scramble to get all your ducks in a row and get you ready to buy. A quality team is going to have information that you cannot find on Google. With a few tips and tweaks, but most importantly, creative thinking, you can be set up months in advance and avoid the scramble because there’s going to be enough scrambling even if you have everything perfectly lined up.
The Most Convenient Is Not Always The Best
That’s real estate. That’s the game. Things are going to go nuts no matter how planned you are, so you might as well be as planned as you can be. All you nice people out there, you’re not bugging the good ones. Get yourself started. If you’re waiting for the planning process for other reasons, that’s understandable too. It’s not your fault. Things have never been easier when you want to get things done. We all have too much technology now because it has lulled us into an expectation that things can come to us in a few clicks. Corporations know that.
[bctt tweet=”We have too much technology right now that it’s lulled us into an expectation that things can come to us in just a few clicks.” via=”no”]
When you listen to big corporations and all their marketing and what they’re trying to do, customer service and actual value in the product that you offer are no longer the driving force in what companies are doing. The main thing companies are trying to do now is be the most convenient thing for the consumer. You might fall prey to internet realtors and lenders who are trying to make sure they’re the most convenient.
Therefore, you might assume that they’re there for you and they’re going to help you prepare and get you ready when you call them because they’re just a click away, and it will be nice and easy. You might get a solution from the folks who are making things the most convenient, but at what cost? Convenient solutions are not always the cheapest and best for the consumer. Think about it. Have you seen the extra charges on DoorDash or Grubhub? That’s convenient, isn’t it? You could have done the whole thing for $10 less if you got into your car and drove three minutes, and came back.
[bctt tweet=”Convenient solutions are not always the cheapest and best for the consumer.” via=”no”]
Here’s another example. My video producer told me he was in the mall and walked by a kiosk. One of those kiosks offered him $45 to sell his phone. He went home, got on the internet, a little clickety clackety, and researched for a little bit. After a three-day wait, he ended up getting $305 for the phone. Do I think my video producer is the smartest guy in the world? Absolutely not. You guys should see this guy. He’s no genius, but at least he figured out that by doing a little bit of research, eventually, maybe you can find more value for yourself.
One more time for those of you who didn’t hear me earlier and were zoned out while you were on the treadmill. The answer to the title of this show, “How much time should I spend planning to buy my first home?” is simple. The most that you can. You got three big things you need to do, your credit score, your savings, and your debt. It takes time to do each of them properly.
I’m not even talking about the time that you should spend researching creative loan programs, the types of homes, the down payment assistance programs, using your 401(k) retirement to pay for some of your down payment or your closing costs, researching neighborhoods, or the thousands of other things that you’re going to need to research when you get going. I’m talking about researching just the beginning to figure out the savings, the debt, and the credit score.
Doing all this for more time than you think will actually help you. It’s not going to hurt you, even if you decide to bail on the whole idea of buying a house. When do you plan? You ask. I say now. I’m excited to get as many of you out there as possible to start on your plan ASAP because 2023 is going to be the year of the first-time home buyer. I’m still working on it but hang tight. I’ve got some exciting stuff coming in 2023 for you guys. Tune in for that announcement. Spread the word to your friends, family, or any renters you know. Share the show with a friend.
Seriously, how many TikToks have you shared with someone in the last 24 hours? Now, think about the value you can get when you text this to them. This is legit. If you want to, you can go to the @HowToBuyAHome on TikTok and share my TikTok, also on Instagram @DavidSidoni, YouTube, and YouTube Shorts, and the How To Buy a Home Podcast. Everything is always at HowToBuyAHome.com. If you have the second greatest holiday present you could give me, take 94 seconds and review the show on Apple, Spotify, or Google.
Also, you can jump into the First Time Buyer subreddits and tell people all about the show. That helps us too. This is going to be a big year for first-time home buyers. It’s time for you to start planning immediately, even if you’re going to buy at the end of ’23 or ’24, or you bail on the whole idea and go live in a van. Spread the word. The best time to start is now. Good things are coming for first-time home buyers. You can do this.