 Worshiped a false idol, and angered the Lord thy marks, and are not worthy of his ten home-buying commandments which he hath given unto me. Um, excuse me. Property is theft? Yes. Also, why are we doing a ten commandments parody? Didn't Marks say religion was the opiate of the masses? Well, if communists and prophets share one thing in common, we both love telling people what to do. And in answer to your first question, if you're like 98% of Western socialists, at some point you will give up and try to join the bourgeoisie by buying a house. While we disapprove of your ideological treason, we can't in good conscience let you go off and be swindled by a sleazy real estate agent, even if that is your just desert. So, like that biblical bourgeoisist Moses, we're here to condense the complex and infuriating process of home-buying into ten simple rules, beginning with One. Thou shalt do thy due diligence. Okay, this first commandment is a cop-out, but it's a necessary cop-out. Just like it's impossible to distill all of human morality into ten laws, it's impossible for us to tell you every scenario you might face when buying your first house. Even if we were consher points and could make 17-hour long videos, we still couldn't tell you everything you need to know about home-buying. If you're watching this video because you're seriously considering buying a house, first of all, how dare you? But, more importantly, you need to do your own research. Survey show Americans do more research when buying a car than buying a house, which is insane considering cars don't appreciate in value. It's also insane considering a house will probably be the most expensive and complicated thing you ever buy. That's why you can't half-ass buying a house. You need to use your whole ass, which means researching as much as possible, which means reading lots and lots of books. It also means asking friends, relatives, and co-workers about their home-buying experience. Learning from the mistakes of others is a good way to avoid your own. But more than just researching the home-buying process, you need to do some serious self-reflection. Why do you want a home? What type of home do you want? What's the most important thing you're looking to get from your home? And above all else, you need to think critically about our second commandment. Two, thou shalt know how much thou canst afford. How much house can you afford? Unfortunately, there is no universal answer to this question, unless you live in Colorado, in which case the answer is nothing. But we should ignore the Colorado housing market, otherwise we'll all re-educate ourselves. Figuring out how much you can afford is difficult, because what you can afford depends on your personal finances. And if you have no idea about your personal finances, now is a good time to watch literally the entire rest of our channel. We'll wait. Five military hours later. Oh, you're back. Boy, that dead episode was long, huh? Now that you've gotten your financial house in order, you're ready to figure out how much actual house you can afford. First things first, though. Let's explain how you pay for a house. To no one's surprise, it's very rare for someone to pay for a house entirely with cash. If you have hundreds of thousands of dollars lying around, why are you watching this channel? Most people take out a mortgage, which is a home-buying loan. In addition to a mortgage, most people also make a down payment, which is a percent of the home's price paid up front. To get a mortgage, you go to a mortgage lender who looks over your finances and decides how much money they're willing to lend you. And here is the first great trap of home-buying. Assume a mortgage lender looks over your finances and says they will lend you $800,000. You might think, Wow! $800,000! Imagine how big of a house I can buy with that! Wrong. What? You're wrong. Getting a proof for an $800,000 mortgage doesn't mean you can afford an $800,000 house. But the mortgage lender said... Oh, the mortgage lender said. The mortgage lender who spent only a few hours looking over your finances. The mortgage lender who doesn't know Jack about you or your dreams and doesn't care. The mortgage lender who wants you to borrow as much money as possible so you pay more in interest. You're going to let the mortgage lender tell you how much house you can afford. This is the problem of failing to do your due diligence. Because if you don't seriously think about what you want and what you can afford, 98% of everyone who works in real estate will take advantage of you. So, no. You should not base your housing budget on what the mortgage lender tells you. Nor should you follow the erroneous 30% rule, which as we explained in our episode on renting, is a bunch of pigs. Our advice is to follow a guideline we call... The 2020 Rule. No, not that 2020. Our 2020 rule goes as follows. You can only afford a house if... A. You can pay a 20% down payment. B. You can still put 20% of your income towards retirement after making your house payments. If neither of these conditions is met, then you can't afford the house. But that puts most houses out of reach. Weird. It's almost as if the U.S. housing market is a cleverly designed capitalist trap to keep the working class in perpetual debt and property in the hands of the wealthy. As though everyone who works in real estate has an incentive for you to buy a house you can barely afford. Which brings us to... Three. Beware thy agent. Real estate agent. Is someone who helps you buy and sell property. They have access to local listings, no local ordinances and codes, and can help you with the negotiating process. This all sounds lovely, right? Well, there's a catch. Real estate agents are paid on... Commission. A commission is a percent of the house's price that gets paid to the agent. For example, if you bought an $800,000 house and your agent got a 3% commission, they would get... Five plagues later. $24,000. Because you're an intelligent comrade, you realize any agent has an incentive for you to buy an expensive house. And bad agents will push you towards an expensive house so they can get a bigger commission. You may be tempted not to hire a real estate agent and try and buy your first house by yourself. We don't recommend this because chances are any house sellers will have hired a real estate agent who is a lot savvier to the game and is definitely looking to upsell you. Here are two suggestions for finding a trustworthy... Buyers agent. One. Check the agent's references. We recommend asking any potential agents for a list of clients who bought property through them. When you get this list, call or email these previous clients and ask how your potential agents performed. If any agent was sketchy or incompetent, you'll hear about it. Two. Offer a reverse incentive. The second way you can prevent your agent from gouging you is to offer a reverse incentive. Meaning you offer a lump sum commission and a bonus. If and only if they get you a better buy. That way your agent has an incentive to knock down the price. Or thou shalt get pre-approved for a mortgage before house hunting. Mortgages are a series of episodes into themselves, so we won't go into all the details. What's important to know right now is that before you start looking for houses, you want to get pre-approved for a mortgage. Mortgage pre-approval is a rigorous process where a lender looks over your income, debts, credit score, and cash on hand. After looking over your finances, a lender decides how much money they'd be willing to lend you. In theory. Why get pre-approved for a mortgage? The reason we recommend this is for when you're house hunting. After you get pre-approved for a mortgage, a lender gives you a pre-approval letter. This letter shows any sellers that you're serious about buying a house. So serious you've already gotten your finances in order. This comes in handy if you find yourself in a competitive market where others are offering on your dream house. If you have a pre-approval letter, a seller knows you can show them the money. Five. Thou shalt prioritize location over home size. If you watched our episode on renting, you'll remember we said you should prioritize location over quality. Meaning what your house looks like isn't nearly as important as where your house is located. If you're someone who cares about whether you live in a Dutch colonial or rant style house, go to any other source of information on housing. For our figurative and your literal money, your new house should be located as close as possible to your wage slavery. And the amenities capitalism creates to justify your wage slavery. That way you reduce the daily stress of a long commute. You can always renovate a house, but teleportation is still a long ways away. Six. Thou shalt be skeptical of the asking price. You people have too much money. Well, let's rephrase that. You people have too much access to credit. Why do we say that? Unlike the entire rest of the planet, Americans know nothing of bartering. We go to the grocery store and pay what the sticker says. We get a new job and are happy to be paid $12 an hour. Bartering is simply not a part of the American way of life, which is why home buying is a difficult process for Americans. Because home buying requires some negotiation. There is always a seller and a buyer in real estate. The seller wants to get as much money as possible. The buyer wants to pay as little money as possible. These two competing interests have to work together to come up with a price that satisfies everyone. Haggling over price is uncomfortable. And you may be tempted to skip negotiating altogether and pay whatever the owners are asking for. But this is dumb. Very, very dumb. Because when you buy your house and then learn what other people in your neighborhood paid for their houses, you'll kick yourself so hard you'll stick a boot in your ass. It's the American way. How do you figure out what the right price is? You need a little something called a comparative market analysis. Hey, hey, wake up. Hey, you drifted off to sleep there when I said comparative market analysis. Okay, wake up. Look, I know the phrase comparative market analysis seems like it was engineered to make you fall asleep instantly. But it's important if you're buying a house. A comparative market analysis or CMA is a document that shows what houses of similar size and conditions sold for in the neighborhood you're looking to buy. For example, if we looked at Fort Collins CMA for 2022, we would see home buyers were paying $200,000 over the asking price. Jesus Christ. Colorado aside, a CMA can be a powerful tool for establishing what the right offer is. That way, you don't insult the seller by lowballing, but also don't overpay by tens of thousands of dollars. Of course, even if you make a reasonable first offer, 98% of the time the seller will come back with a counter offer. And so it will go back and forth like a never-ending game of ping-pong until you both reach a number you can agree upon. Negotiating for your dream house can be nerve-racking, but this is where having a seasoned real estate agent comes in handy, because a trustworthy buyer's agent can guide you through the process. Just prepare yourself for a tense negotiation and remember our next commandment. No matter how much you prepare, your first home purchase will be stressful, because for most of you, your first house will be the biggest purchase you ever make. And unlike a broken coffee maker or f***ed-up potato, if you don't like your house, you can't return it for store credit. To make matters worse, you also can't spend a lot of time examining your dream house, because if you take too long, someone else will come in with a better offer. That's why you should make your purchase offer conditional, meaning you can always back out if certain conditions aren't met. Now, we can't foresee what your first home purchase is going to be like. Communism hasn't developed future predicting technology yet. But there are two conditions you absolutely must put into your purchase offer. Make sure you can always pull out if you don't get the financing you need. Hopefully this isn't an issue if you already got pre-approved for a mortgage, but this is capitalism, so you know, pick our happens. We're going to guess that 98% of you aren't professional home inspectors. So you probably can't tell whether a house's foundation is sinking, its roof is in danger of collapsing, or the water heater is going to explode at any second. To find out these things, you need to hire a professional home inspector. A home inspector is someone who inspects houses for major structural issues. What kind of major structural issues? We don't f***ing know and neither do you, which is why you should hire a professional. Of course, finding a reliable home inspector is a task unto itself, and there are plenty of unqualified home inspectors out there, which brings us to our eighth housing commandment. In another video, we give you just the tips on what makes a good property inspector. But for right now, we want to highlight one vital condition that must be met when you hire an inspector. Any report that you get must be in writing. And when we say writing, we don't mean a checklist or some silly rating system that certifies your house as Unlike rotten tomatoes, property inspections matter, which is why you want your home inspector to do a thorough job, and why you, your agent, and the seller's agent should all be present. That way you can see what the inspector is talking about, and more importantly, take pictures. Now we pray to Marx that your new home gets a clean bill of health. But considering two out of five houses have some kind of major structural issue, chances are your new house will need corrective work. Luckily, you made your offer conditional, meaning you can renegotiate with the seller and have them knock down the price or leave some money for repairs. If you are lucky and there are no issues, you can safely cross the Red Sea into the last part of home buying, the closing process. Nine, thou shalt understand closing and its costs. Well comrades, you've almost reached the land of milk and honey. The only thing that stands between you and your new house is the closing process. Of course, because this is housing, if you don't know anything about the closing process, you may find yourself like the ancient Israelites and wandering the desert for 40 years before reaching your promised land. The first thing to know about closing is what an escrow is. With hundreds of thousands of dollars on the line, it's easy for you and the seller to mistrust each other. That's why 98% of the time, both of you will open an escrow, which is a neutral third party that holds your money, title, purchase agreement, and any other important documents while you finalize the details. Think of an escrow as the Ark of the Covenant, a sacred vessel that holds your home buying covenant. Also, there's a good chance an escrow could melt your face off. Of course, opening an escrow isn't free, which brings us to the second thing you need to know about closing, the closing costs. Oh yes, the closing costs. Closing costs are the fees you pay in addition to the down payment. Closing costs include fun things like homeowner's insurance, title insurance, private mortgage insurance, prepaid loan interest, property taxes, loan origination fees, escrow fees, legal fees, inspection fees, recording fees, notary fees. Quite a lot of fees that add up rather quickly to the point where closing costs can add up to two to five percent of your home's purchase price. So for example, if you bought an $800,000 house, you could pay up to five more plagues later. $40,000. Again, this is in addition to the down payment. But because you're an intelligent bourgeois who's followed all our commandments, you're prepared for the closing process and its costs. And finally, finally, you're ready to move into your new home. Which brings us to ten thou shalt not covet thy neighbor's house. There is no such thing as a perfect house. Intellectually, you know this to be true, but years from now, when you're sitting in your unfashionable house that you're still paying the mortgage on, you'll begin to feel buyer's remorse. Maybe not today, maybe not tomorrow, but someday you'll become dissatisfied with what you have. And capitalism being the parasitic system that it is will prey on your dissatisfaction. It'll start bombarding you with images of perfect houses and perfect families loving their perfect houses. And you'll start visiting open houses thinking you can find that perfect house. Whether you actually need a better house or need to move to a better neighborhood is between you and your marks. But if you're only looking for a better house because capitalism says so and you believe what anyone tells you, hi, we're communists. How you doing? For the rest of you who are capable of thinking for yourselves, you realize perfection can never be bought. Your perfect house must be worked towards day by day, month by month, year by year. And if you truly love being a homeowner, you'll relish the chance to work on your house, to improve it, to make it truly your own. Home ownership is a lot of hard work and you better be Mark's damn sure you're ready for that type of commitment. Or just wait 10 years until no one can afford anything anywhere and you'll never have to worry about buying property again. Either way, I'm Comrade Rourke and you are the Revolution. Please email us at communistfinance at gmail.com or follow us on Instagram at comrade Rourke. Even if that is your just dessert, cut.