How Much Down Payment Help from Family Makes Buying a House Affordable?

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Rich Girl Lauren lives in an expensive city, and her parents are offering her some money—but she only gets the money as a down payment for a home and she’ll have to pay it back eventually. Is it worth it? And separately, how are home buyers affected by the recent NAR agreement?

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Katie:

Welcome back to the Rich Girl Roundup weekly discussion of the Money with Katie Show. I’m Katie Gatti Tassin, and this is your favorite place to spend a Monday morning with me and my executive producer Henah, where we use the segment to talk through all sorts of money related topics right after a quick break.

Okay, so before we get into today’s episode, this week’s up upcoming main show is in honor of our Wealth Planner launch. That’s right, baby. The 2025 Wealth Planner drops this week. And one of the features that we spent months developing is a comprehensive financial independence timeline that takes into account everything from temporary expenses, to one-time large purchases to inheritances, to pensions, to social security and more. We also made it way easier to differentiate in the planner between long-term investments and investments for other things to avoid inflating your FI number if you are investing for a lot of different stuff at one time.

We also added a drawdown simulation by popular demand so you can see what’s happening when you quit working. Very fun. Very cool. On Wednesday, we’re going to talk about what it takes to calculate a truly accurate FI timeline. In honor of the Wealth Planner release, if you are interested, you want to be notified when it drops and you want an exclusive 25% off discount code, which is the largest discount that we will offer all year. You can sign up in the show notes to get on the wait list and we will slide into your Gmail DMS when it is time.

But in the meantime, onto the roundup Henah. What is our question today?

Henah:

Well, we’re back on the Money with Katie Show where you ask complicated hypotheticals and Katie runs the math to see what’s better. Everyone’s favorite.

This week’s question came from Rich Girl Lauren. She said, “I live in an expensive housing market where it makes more financial sense to rent if I’m only pulling from my own resources, but my parents want me to buy and are willing to contribute to the down payment if I choose to do so. (Not classic for me baby. They can call me if they want someone to buy.) In my ideal world, they would just give me the money now and let me invest it how I want, but I don’t feel comfortable asking for that. But even with their help, my monthly housing payment would be higher than it is now. So I’d need to reduce the amount I’m investing. A part of me is tempted by the immediate bump in the asset section of my net worth spreadsheet. (Does not sound like it’s a wealth planner though!) And it feels like a cash infusion would move me toward my financial goals, even with a lower savings rate going forward. Any advice on how to consider a windfall conditional on buying when running the rent and buying numbers?” And we haven’t done one of these in a while.

Katie:

I know, I’m like rubs hands together, we’re back. Fires up spreadsheet. The other really cool thing, honestly, about the scale that we have reached now with this show is that there are people in our audience who are way bigger nerds and have way better grasp of math than I do.

Henah:

You could have just said that they’re better at math. You don’t have to call ’em out.

Katie:

We actually got, there was an episode, I’m not sure if you all will remember it, but we did an episode a couple months ago where the person was like, should I pay off this HELOC faster or continue contributing the maximum to my pre-tax 401(k). And we had reached the conclusion on the show that because of the tax break, it was better to continue funding the 401(k) at full tilt. I think the person emailed and was like, yeah, I’m still going to pay off the HELOC because I just don’t like having debt. And we were like, all right, that’s fair. But someone had reached out and was like, Hey, I built a model that actually fully takes into consideration every single thing. And yes, you underestimated how much better off they are contributing to the 401(k). And I opened this document they sent me. It was enormous.

Henah:

Wasn’t it like a huge spreadsheet?

Katie:

It was a huge spreadsheet and they had factored in so many different things and I was like, okay, amazing. So I feel confident that when we do these, we will hear from people who will tell us if we are missing things and then of course we will always come back and note any important omissions. But in the meantime, we went ahead, we asked Lauren for all the numbers so we could really model this out, talk through it. And similarly to past episodes of this nature, the intent in sharing this very specific hypothetical is that my hope is that walking through the thought process will be illustrative for how to piece information like this together. And so you can kind of think about, okay, how could I solve similar types of financial opportunity, cost problems? Ready to go?

Henah:

Makes sense. Should we run through?

Katie:

Let’s do it. Okay. So her rent is $2,100 per month. That is her half of a two bedroom, one bathroom apartment with her partner. She earns $130,000 per year and she is currently contributing 11% of her paycheck to a pension and around $1,800 per month to her pre-tax 457(b). So to make matters easy, I just plugged all of that into the wealth planner to get a quick estimate for her take home pay, it’s around $5,800 per month after she makes those contributions of around $2,900 to those various retirement vehicles and pays taxes and whatnot. So for those of you doing the math in your heads, she is basically investing about 35% of her post tax income for retirement.

Henah:

Good for her. That’s amazing. Yeah.

Katie:

Crushing it. She also has $200,000 invested already in a taxable account, but she mentioned that is not her top priority right now. I don’t think she’s actively making major contributions to that. And then quickly, just a little bit more math, sorry, there’s going to be a lot of math today. Her $2,100 per month rent is approximately 24% of her post-tax income. So just that we’re all tracking here, she’s in a great spot with her current housing costs as far as her income goes, and this is the kicker equivalent housing in her neighborhood. So we’re talking a two bedroom, one bathroom condo cost between $900,000 to $1.2 million.

Henah:

For one bathroom?! For one toilet?

Katie:

For one damn bathroom. Can you imagine spending a million dollars for a single toilet?

Henah:

For one single toilet?

Katie:

We could never,

Henah:

Could never.

Katie:

I won’t even stay in places that only have one toilet. I have such anxiety that someone is going to be using it when I need it. And that’s on getting my December colonoscopy. Centering.

And she sent Zillow links to us to prove it and her parents are willing to offer her $200 grand for a down payment, but they’re offering it to her in the form of either a 0% loan that she will need to pay back or as co-owners on the property who will then own that percentage of the equity is my understanding.

Henah:

I think that all tracks. So I mean, besides the fact that she would only she’d pay over a million dollars and get one singular toilet, how would you pencil out kind of how this works?

Katie:

Alright, so I’m going to assume that she’s going for something kind of in the middle range of that price range and let’s say she finds a place for $1,050,000. Her parents are loaning her $200k, so she’s going to put that down and I’m kind of ignoring closing costs and all of that. Obviously that does really matter here, but I’m trying to look at long-term where this lands, so I don’t want to get too caught up in the details, but she’ll put that $200k down, she’ll need to borrow $850,000 from the bank, and with an interest rate of 6%, the monthly payment on the principle and interest will be $5,100. And then we obviously still have to add in property taxes and insurance and potentially if it’s a condo, I’m going to assume there’s HOA fees, kind of honestly even ignoring that. But her total monthly payment will be roughly a thousand dollars more conservatively or around $6,100 per month.

Henah:

I’m scared mean, so obviously she could refinance in the future, but we’re not assuming that she does that at this point. Correct?

Katie:

Yep.

Henah:

Okay.

Katie:

A hundred percent. So as we know, she’s currently splitting her rent, so it’s not quite fair to compare her $2,100 half of rent to a $6,100 monthly payment of servicing debt. It’s more apples to apples to compare the $4,200 in rent to the $6,100 if they continue to split the monthly payment, her half after buying will be about $3,050 or about $950 more per month than she is paying now. And I’m saying half in quotes because as far as the bank is concerned, as far as the property tax assessor is concerned, she is responsible for that full payment. But obviously we’re assuming that the living situation will continue and someone else will be living there and paying for half of it.

Henah:

I guess I’m just worried that if she and her partner were to break up and the partner had been paying towards the mortgage, but I guess we can get to that.

Katie:

Henah, you’re stealing my thunder, babe.

Henah:

Oh, I’m so sorry.

Katie:

Okay. So I wanted to flesh out the comparison between her total rent and assuming it’s increasing by 3% per year as we know rent goes up

And her total monthly payment first just to see at which point in the future her total rent would eclipse her cost of ownership, assuming that that rent increases by 3% per year and her taxes and insurance never change, which I think we’re talking about someone that lives in San Francisco, which if you know anything about San Francisco, you’ve got earthquakes, you’ve got fire, you’ve got all sorts of things that could impact your insurance, but we are going to assume that none of that ever changes. It would still take 14 years for her rent to cost more than the cost of servicing that debt to the bank and obviously the other associated costs of ownership.

Henah:

So right now things are leaning towards renting.

Katie:

Yeah, I say things are not looking so hot for buying

Henah:

Yet.

Katie:

Yet. Presumably all that time she could be investing the cost difference and she alludes to this in her question that she is afraid she will have less to invest if she does this, but as we know that gap will close over time. Rent does go up theoretically, your monthly cost of ownership should be relatively level, even though there are more surprises when you’re a homeowner, and as of right now, we know that that gap closes after 14 years.

So if she invests her half of the difference because she is not paying the full price in either renting or buying in this situation in an S&P 500 index fund and she gets 6% average annual returns until year 14, she would end up in year 14 with around $150k in an investment account. But crucially no property. She doesn’t own the place that she lives, so that’s worth knowing,

Henah:

But then her parents are offering this $200,000 down payment assistance. So how would we figure that out?

Katie:

So this is why this case is unique because ordinarily we would have to look at the opportunity cost of that $200,000 down payment. We’d have to say, okay, well you could put it into a house, but what would it do in the stock market if left alone? But it sounds like she only gets access to this $200k if she uses it to buy a house. So her opportunity cost in this calculation is backwards from how we would normally run it.

It’s also unique because she is sort of house hacking. She has a partner who is paying half of the monthly payment, or I should say she would be house hacking. There would be another person whose income is paying down that mortgage. But I guess if they get married, that equation does kind of shift a little bit because right now this is someone whose income is not fueling her saving and investing and their spending is not affecting her spending. But if they get married now theoretically it’s like one household. You together are responsible for servicing this payment. So it’s a little bit less you have a roommate or a tenant and more like it’s all just coming out of money that would have been yours anyway. Does that make sense?

Henah:

Okay. That makes sense.

Katie:

Okay. So that said, it does sound as though her parents expect her to either pay it back or enter into it sort of like a business agreement and invest that $200k as an equity stake in this property. So if we go the payback, the $200,000 route, my question would be are you paying back $200,000 over the same term as the mortgage? Are they expecting you to pay it back as you go? Because if so, you’re looking at is it almost like you’re getting a second 0% mortgage from your parents where you’re spending $555 a month to pay them back?

Henah:

It reminds me of when people say, I’m going to borrow from my 401(k) for my down payment. It’s kind of the same thing where you have to also pay them back.

Katie:

Yeah, you’re like, well, you’re going to have to pay it back.

Henah:

So that sounds like a pretty penny.

Katie:

And so with that added to the projections, you’re getting the $200k bump up front, but your opportunity cost of the extra expensive owning goes up pretty considerably from $140,000 in a investment account by year 14 to around $230,000. I’m sure that there are other options here.

These are obviously her parents. They clearly have a vested interest in her owning where she lives or they want her to and are willing to subsidize that. In part, I think that there’s another element here of if she just has to pay the money back when she sells it eventually. That would I think kind of change the game a little bit because then you’re not paying it back as you go, and so you have a little bit more money now to do other things with.

But if we aren’t paying it back, but they’re getting an equity stake, my assumption is that that percentage around 20%, whatever they’re putting down of future gains would theoretically belong to them or they would have claim to it based on the way that they said they’d want to enter it into it. As co-owners, the only thing that’s interesting about that is that in the submission she said her parents said she could keep all the gains, but she would have to repay the $200,000 when she sells it.

Henah:

So she’s basically on the hook for only $200,000, nothing else.

Katie:

It does sound like that’s the case.

Henah:

Yeah. Okay.

Katie:

So a lot of complexity in the hypothetical, but I would say at the end of the day, if she gets to decide, I believe the better structure for her is to pay it back when she sells it. Say, okay, I sold the property, I’ve lived in it for however many years, here’s your $200,000 back, and we’ll get into what type of growth we’d be assuming in order to see if she’s coming out ahead basically.

Henah:

Okay, so that makes sense. So now we have to assume what that appreciation looks like, what the sales price is going to be and when she decides to move. So how would we decide that?

Katie:

Yes, we’re talking now jumping into the future, selling some point in the future. I looked up appreciation in her zip code over the last 10 years. Property in her city has appreciated at a rate of about 5.1% per year. If we go back to 2000 and have a fuller picture, it’s 4.27% per year. So I’m going to assume 5%, I’m going to go kind of in the middle, well really closer to the upper end and then effectively figure out what would happen in the future if she takes their offer structures it such that she only pays back the $200,000 after she sells and accounting for the opportunity cost difference of her rent versus mortgage for those 14 years that she’s spending a lot more on housing.

Henah:

I have a follow-up that has nothing to do with this specific question, but how long did it take you to figure out all of these factors and run all of the numbers?

Katie:

Probably like an hour.

Henah:

Oh, okay. This is very comprehensive, so I’m very impressed.

Katie:

Well, I guess we’ll see. If anyone says, Katie, you’re so wrong. And actually here’s a better model.

Henah:

When the nerds come in, as she said.

Katie:

I know, I kind of feel like the kid that would take the most roundabout way of solving the math problem, and then the really smart kid in the class would be like, you know, can just do this. I’m like, oh, okay. Well we both got there. That’s what matters.

Okay, so to do this, I used an amortization calculator and I plugged in our $850k that we’re borrowing and our 6% rate for 30 years fixed. And then I ripped the data into my own spreadsheet where I had everything else kind of percolating and basically compared the amount that she still owed on the mortgage with the appreciating home value, assuming that it’s going from $1,050,000 up by 5% per year routinely. And so if we assume that she’s going to pay 3% when she sells, I think it’s usually closer to six, but with the changes to…

Henah:

Now you’re stealing my thunder.

Katie:

I’m like, let’s say she only because it’s going to be a high value sale. And so usually when houses are that expensive, you have a little bit more wiggle room with your negotiation. But I basically subtracted out all of our different variables. So I projected into the future, I then looked at the post-sale value after paying 3% to an agent. I then subtracted what she would still owe the bank on that mortgage. I then subtracted the $200,000 that her parents loaned her, and then I accounted for the opportunity cost of the difference in her half of the monthly payment that could have been invested. So the money that, you know what I mean, and what that would’ve become in an investment account and kind of net that out. And drum roll please.

It does appear as though she would come out ahead pretty much immediately taking their offer.

Henah:

Wow.

Katie:

Absolutely shocked me. In fact, I’m so amazed by that outcome that I am about to double check all my math because I was like, wait, what? Really?

Yeah, so she would be in the negative slash in the danger zone where all the variables, we didn’t really talk about closing costs. That can be tens of thousands of dollars or you have to replace the heating and cooling in the unit or whatever. Condos I think are also a little bit funky because I just remember talking to one gal who bought a condo in Dallas and within a year something had broken the HVAC, but because of where it was on the roof, she had to pay a special company to come in. It was like a $20,000 ordeal. So I’m defining that as the danger zone where swings that could kind of tip you over. But yeah, man, I mean she is like six figures ahead by year five. Assuming none of that goes wrong.

Henah:

Wow. If I remember her original email correctly, she was like, this wouldn’t happen for a year or two where we may relocate to the East Bay where things are a little bit cheaper, considerably cheaper. So maybe she’d get more bang for her buck if she moves two miles east.

Katie:

Yeah, I think if she did that, it would be pretty clear. So I mean year five, what I’m referring to is the home theoretically going up by, again, 5% per year would be worth $1.2 million. She would still owe about $790k. The post-sale value after the 3% would be discounted a little bit. It looks like by about $40 grand. She pays the bank back by then she’s got $447K leftover, then she pays her parents back, she’s got $247K, and then she’s accounting for the opportunity cost of what that money could have done if it had been invested in the stock market, that differential. And by then she’s down to like $187K ahead. But I’m like that’s pretty significantly ahead.

Henah:

But also there are a couple things that we didn’t talk too much about risks and watch outs, which I know that you will…

Katie:

Sure.

Henah:

I know I saw your thunder before, I’ll let you get to those. But the other one is just like that the S&P 500 is up what, 20% right now? So 6% is pretty conservative, but what are the other ones?

Katie:

Yeah, so I think in total, I would say that generally speaking, I am pretty pro renting unless you know are going to be in a place for a very, very long time. But in this case, with that much down payment assistance with a roommate who is essentially footing half the bill for everything, well for the monthly payments, obviously if you are assuming that you can charge them that, which it sounds like it might be a little above market rent. So you might not be getting truly half, but you are effectively house hacking to some degree and you’re in a traditionally strong market.

So all of these things taken together, barring any major downturns in her market or major maintenance issues, if you can stick around for 10 years, you could do quite well at the 10 year mark. We’re still talking about $500,000 in net proceeds after factoring in paying back the bank, paying back your parents discounting for opportunity costs and you’re already saving 35% for retirement.

So this is not someone where I’m like, I don’t know, you’re kind of contributing for your future. I maybe wouldn’t go that route yet. We’d obviously have to see how much that would be reduced by, but her save rate is so strong that I’m like, yeah, all of these things taken together, I think it makes sense.

However, the biggest risk watch out that I can see, I think it’s twofold actually. One is a prolonged downturn. So she lives in San Francisco, which has done well, but actually did quite poorly in the 20 years prior to that, Detroit had better appreciation than SF in the last couple decades of the 20th century. So things change and we know she cannot afford this monthly payment on her own. She needs a partner or a roommate to afford it. There is very, very, very little room to downsize your earning potential when your monthly mortgage payment is six grand a month. So I’m not sure how much her partner makes, but to afford housing that costs $6,000 per month, they need to be collectively earning about $20,000 a month, which is $240,000 a year, like minimum.

Henah:

So that makes sense to me because when I heard $6,100 a month, my heart dropped into my stomach.

Katie:

Yeah, it’s a lot. It’s a very high monthly payment that you would be on the hook for.

Henah:

But I feel like there are also some fringe details we want to be aware of. So one of the things that she had mentioned in her email was that the parents were still deciding if it’s going to be a 0% loan or an equity stake because there was some potential tax implications. They said something about a 4.2% tax from the IRS. I don’t really know how that would pan out, but I guess she’d have to rerun the numbers and see if that still makes sense.

Katie:

Yeah,

Henah:

She said that unpaid balances will be accounted for in estate distributions should her parents pass away before she sells it. So effectively she would get less if her parents unfortunately passed, and then in my opinion, it would leave her in a situation where she can’t really expand her budget either too much unless her income vastly increases. Because like you said, if the partner’s not there, she’s going to have a time. If she decides to move to a lower paying job, she’s kind of screwed. So that’s the thing.

The last thing that I would keep in mind, but if someone had, say the Wealth Planner, would you recommend that they keep that loan at 0% under the debt section or in any net worth spreadsheet?

Katie:

Oh, good question.

Henah:

Do she remembers that it’s there and even if she’s not paying it back piecemeal, that’s not really her money, so to speak.

Katie:

Yeah, you’re so right, because she will, when she sells it, have to pay that money back. So it’s better to discount your present net worth calculations by it now because in order to realize the gains on the asset section of the table, you by definition will have to realize that $200k deficit. So yes, I would definitely say tracking it that way makes the most sense.

Henah:

As soon as you say present net value, my brain went uhhh.

Katie:

The present net value. Net present value. Yeah.

Henah:

See, I didn’t even say it right, net present value.

Katie:

Well, the joke is that I don’t even know what that means.

So what’s notable to me though, for most people listening to this who, I dunno, you know what this situation now that we are entering that great wealth transfer timeline, this may actually be more common than we realize where like, parents are willing to extend wealth in this way, but would not be willing to just hand over a $200,000 check or are not willing to distribute it unless you’re using it in this way.

But I do think it’s notable that if that $200,000 were hers and it were growing at a rate of 6% per year, she wouldn’t even break even until around year 10, as in she would be in the hole as opposed to renting and investing the difference, continuing to invest the difference until year 10 as opposed to being half a million dollars ahead. So that opportunity cost of the down payment is an enormously powerful variable when you are trying to decide which path makes more financial sense.

Henah:

Yeah, that makes sense. And I guess if you’re trying not to buy a million dollar property, you would go even further, right?

Katie:

Yeah, yeah.

Henah:

Well, speaking of homes, I have a money story.

Katie:

Let’s go.

Henah:

It’s actually partially related to myself, so we’ll see. But this Rich Girl Chanci wrote in about the NAR agreement. And so I want to just give some context as to what that’s about before I read her full statement.

But basically, if you are in the process of buying a home, you’re probably aware of the National Association of Realtors, NAR. So over the summer you might’ve seen headlines. There was a settlement agreement that resolved claims that were brought on by home sellers regarding broker compensation. And so this officially went into effect of August 17th of this year, and they have a whole page on this website, which I’ll link to you in the show notes, but to kind of boil it down, when you had talked about seller costs in the past, buyers were not really expected to pay their real estate broker directly. So if I’m a buyer, which I currently am, and I have an agent and I want to go buy a house, I’m not usually paying that 3% fee or whatever that fee is. And that’s because those commission fees to both the buyer’s agent and the seller’s agent were paid by the home seller. And so those commissions are usually about 5% or 6% of a home selling price. So for example, if you have a $450k home, which is I believe the average price of a home in the United States right now, a seller will be responsible for $27,000 in fees, and that would be split between the two.

Now, experts have said that this commission kind of is baked into the home listing price and then kind of inflates the home price to begin with. But beginning that week in August, the TLDR is that you now must have, it’s two parts. You must have a written buyer agreement that meets certain criteria about how an agent will be compensated. So if you were trying to work with several agents, which of our friends have mentioned doing, you can’t really do that anymore because you’re going to be on the hook with your exclusive agent.

And as part of that disclosure, you’re going to have a very specific clause of that amount or rate of compensation and how it’s going to be determined, and it has to be objective. It can’t be open-ended, it can’t, like buyer broker compensation shall be whatever the amount is, it’s going to be like it’s either $0 x percent x hourly rate, X flat fee.

Katie:

Oh, because there’s no longer, it’s no longer in these contracts as a default that the seller has to pay them 3%. So now they have to come to you to get paid for their work.

Henah:

Exactly. And so the second part of this is that the offer of compensation, so when a seller or seller’s agent shares that compensation with a buyer’s agent, it can’t be shared anymore on the MLS, which is your multiple listing services for your area where they put all the homes. And so what some agents in the past used to do is they used to filter out homes that were for sale that were like 3% commission so that they weren’t wasting their time on anything that was less. And then people were like, that’s not really fair. So now any offer of compensation is not shared on there.

So the seller can still offer, they can still make that offer available, but it has to be communicated off of the MLS. So this brings me to Chanci’s story and my own. So Chanci said, listen up home buyers, you need to negotiate for lower fees with your agents.

Most don’t even realize they need to do this because the buyer’s agents are still telling buyers they don’t need to worry because sellers typically pay the fee. My husband and I are currently relocating from Colorado (sad face) to New Mexico, so we’re going through the buying and selling process. New Mexico requires you to sign a brokerage agreement before any agent can show you a house, which is the same that I just mentioned as a new addition. And I was aware of the NAR agreement, but I didn’t really understand what it meant for us as it’s new. So we signed a buyer agreement at 3%, but we should have negotiated, especially because the price point of homes we’re looking at as still a great deal for an agent at 2.5%. It turns out that the seller of the home we’re now under contract with negotiated 5% split between the agents. So now we are on the hook for that additional 0.5%.

Katie:

Whoa, wait, so the seller can negotiate on your behalf and then you’re on the hook to pay whatever they negotiate.

Henah:

She said, I am now meeting with my selling agents to list my home in Colorado. And when I asked what their fee was, they instantly came down from the old 6% norm that was split between agents before I even tried negotiating it. So it sounds like the seller is offering to cover the 2.5% and that’s the max that she’s negotiated for with her side of the story. And so for them, if they’ve negotiated 3% for their buyer, their buyer’s agent, then they have to pay that extra 0.5%.

Katie:

Oh, they’re just paying the differential?

Henah:

Yes.

Katie:

Oh, so the seller who negotiated 5% or whatever is like they’re going to be on the hook for two and a half, but because the buyer agreed that they would get three, they now foot the bill for the, okay, now I’m tracking. Wow. Okay. Well, these are those interesting little pieces of fallout from that court’s decision that I feel like people just don’t know. I didn’t know.

Henah:

The argument from the court is that this is actually making things more transparent for buyers because it gives them the opportunity of choice and to decide and that they can negotiate, which is what people didn’t feel like they could do before.

So I’m in a similar boat because I’m house hunting as well, if you’re in Atlanta or Decatur, hit me up because your girl doesn’t know what she’s doing. But when I met a realtor, I did have to sign an exclusivity agreement with them, which when we talked to previous realtors, it wasn’t an issue because it was before this August 17th date. So as soon as that kind of hit, she was like, no, you got to do this. And then when we were talking through that commission, she was upfront like, Hey, these things are negotiable now, blah, blah, blah. 3% is a standard and blah, blah. So I think we just signed for the 3%. I don’t even know that you could negotiate down to 2.5 until I read this Rich Girl Roundup, which is why I think it’s important that we share it with you guys if you are in the same boat, because now I could be in a similar situation if I go to buy a house and I’d be on the hook for that half percent.

Katie:

The exclusivity agreement thing seems so wonky to me though, because what if you’re working with someone and you sign an agreement and then they just fall off and they suck.

Henah:

There’s parameters on their end that they have to agree to as well of timely service and blah, blah, blah. You can break the agreement under specific circumstances.

Katie:

Yeah. I’m like, how binding are those?

Henah:

They’re pretty reasonable, but obviously you are on the hook. And so if you find your own home and you do most of the legwork as Chanci saying, like, my seller didn’t…

Katie:

We did it all.

Henah:

Yeah, we did it all. Then you’re just paying an extra $5,000 or $10,000 for something that, they didn’t really do much for you.

Katie:

Oh my God. That would drive me nuts. Well, when we’re moving to Denver in the spring, we had chatted with a couple agents just to be like, we don’t know if we want to rent or buy. Maybe you can help us weigh our options, find stuff for us on rental and buyers markets, whatever. And no one was trying to get me to sign shit. So I’m like, I think these people can tell that I am extremely, and they’re not even going to waste their time trying to get me to sign something.

Henah:

It applies even if you just want to tour a home.

Katie:

Wild.

Henah:

Obviously you can go to an open house and you don’t have to sign to enter an open house, but if you reach out to an agent and you’re like, hey, I want to go tour this, you have to sign. And it was something that my realtor disclosed. She was like, I can’t actually show you this one home that you’re interested in until you sign that agreement for me, because that’s the legal ramification now of this larger NAR follow up.

Katie:

What’s interesting though, I mean, not to be shady, but I would feel pretty comfortable. I think just showing myself the houses, if I know where I’m trying to go and there’s an open house, I feel like I could go and check it out on my own without really needing someone to show it to me if the owner is there and their agent is there, you know what I mean? So what is the benefit then of having someone who’s taking, taking you there to show it to you?

Henah:

So a couple things have popped up for us. One was we got in before it was even on the market because our realtor was able to communicate to their realtor and say like, Hey, we have a couple that’s really interested, blah, blah, blah.

Katie:

Okay.

Henah:

That was nice. It’s not really something you can easily do for yourself.

Katie:

Yeah, that’s a benefit for sure.

Henah:

Two, they’re able to also communicate with that realtor to ask questions. Do we think that they’d be flexible on these sorts of things or what’s their timeline? They just have more connections to that realtor. I personally have never tried to get in touch with someone else’s realtor to ask these questions. And three, there are realtors that will be really honest with you about—

Katie:

I wouldn’t buy this because XYZ.

Henah:

Yeah, they can’t say certain things. There’s a code of ethics that they have to follow, so they can’t say things about the school system or whatever.

Katie:

That backsplash is fugly.

Henah:

But I do think that there are certain things that if you read between the lines kind of thing, or just for example, I remember one of the things that I said is I really don’t like that LVP flooring that’s like dark gray. You know what the flooring I’m talking about

Katie:

Graige.

Henah:

Millennial graige. And I was like, I’d really prefer hardwood. And so we went to some open houses and she was like, oh, there’s definitely hardwood underneath all of this other stuff. Stuff that they know about houses that I just wouldn’t know, or they were like, yeah, I can see that the outlet in this place is great because it connects to this and that’s really useful right here. And I’m like, I wouldn’t know that, I’ve never.

Katie:

You could fit a full bouncy castle in this backyard. And have you considered that?

Henah:

I mean, that would be one of the first things I’d do for my dog.

Katie:

This is making sense. Okay. All right. I’m with it. I will say that there are interesting subreddits where people will talk about it, give it people advice on how to list on the seller side, how to list your own home and be your own agent and save the 5% or whatever. So I know that there are some people who take that as a challenge of I’m going to do this on my own and save the money. I personally, to use Ramit language, one of my money dials is convenience. So I think I would probably be willing, I’d be working with the pro, but that information is out there.

Henah:

I think I would do it if I was an established homeowner. I don’t feel like I know enough about a house to list it and be really confident in that listing.

Katie:

Well, you got to get the house first.

Henah:

Well, yeah, I got some time.

Katie:

But I mean, I’ve heard from people as a non-homeowner, I can’t see myself listing. I feel you. I feel you. You’re like, I’ve never done it before. I don’t know what to expect. I’ve never been through the process.

Henah:

But people who are like, oh, I already found the house on my own, blah, blah, blah. And I’m like, well, I understand why you wouldn’t want to pay the 3%, but it’s like if your realtor also fought for you to get concessions or got the closing costs cut down or whatever, I just feel like those are things that I can’t necessarily negotiate for myself because I’m baby. And if they’re like, no, I’m like, okay. My bad.

Katie:

Sorry for asking.

Oh man. Okay, wait, before we go, I do have a funny related story to that of being conflict-averse, because I was talking to Thomas about this the other night. He was telling me that I’m a mark when it comes to, he’s like, anyone’s got a booth and they’re trying to talk to you about something. Someone’s knocking on the door asking for a donation. There is someone on a bike who has a Bible they want to give you. He’s like, you are a mark. You’ll stand there and listen to anybody, and you’re way too nice and you’re always giving people. So I go, yeah, Thomas, but I feel badly. I feel bad that they’re asking for my, I feel like I feel obligated to give it to them.

Henah:

Why do you feel obligated?

Katie:

He goes, why? He was like, they should feel bad. They’re the ones imposing on you. And I was like, that’s so true. They are imposing on me. They are asking for my time. Why do I feel obligated to give it to them? And so it was just interesting. He was like, yeah, I never feel obligated. I don’t feel bad if I say no. When someone asks me for my time. I’m like, no, good luck but not interested. And I was like, that feels kind of to our conversations about being afraid of conflict or being a people pleaser or wanting to negotiate against yourself.

I can’t help but notice that It feels a little gendered that I feel like growing up, I was always told to be a nice girl, to be a good girl. You should be very accommodating. You make everyone feel comfortable. Yeah. You just want to be a good girl, right? And part of being a good woman is being giving and being selfless and giving anyone anything they need from you. And so I am trying, I’m working on being just a little bit more of a [bleep], just a little.

Henah:

She said, have you considered being a [bleep]? Bleep that out. Have you ever done the exercise where you walk down the street and you don’t move out of the way when men walk on the sidewalk?

Katie:

Brilliant. I have hives just thinking about it.

Henah:

You’ll realize how often you’ll, you’ll just move and the man never moves. And I started doing it and I started doing it when I worked in the city and I was like, oh, this is all of the time.

Katie:

Dude. So it was so funny because we were having that conversation on a walk and I was like, yeah, you’re right. I don’t owe people my time just because they ask for it. They’re imposing on me. I deserve to be. I’m in control of my time. Literally Hena, we turned the corner and two missionaries on bikes ride by and they go, can we tell you about Jesus? And I looked at him and I turned to them and I go, no thank you. I was like, whoa. That was a test.

Henah:

It was a test. Why do you have so many missionaries on bikes? I’ve never heard of this before.

Katie:

Yo, it’s central. It’s the desert of California. Everyone thinks—

Henah:

I’ve never heard of that.

Katie:

California’s where all the liberals live. No, dude. That’s just not the coast.

Henah:

That’s just the coast. Yeah. I’m just imagining you being like, no, don’t think so.

Katie:

I know. I was like, no thanks, but good luck! And also you look really pretty and I’m rooting for you!

Henah:

Well, I think the other thing too is I’m not saying that we’re well known, but I think there’s this feeling of if someone sees me and I’m not super nice to them, and then they put two and two together that I am X person… you know what I mean?

Katie:

Henah said, well, I’m mini famous in the niche of personal finance, people are going to hear this voice and they’re going to know for miles, going to—

Henah:

Well, as I told you last weekend, I was in a wedding and the guy that I was paired up with to walk down the aisle with, he was like, oh, what do you do? I said, I’m in personal finance. We have this blog at a podcast, whatever. And I said, it’s under Morning Brew. And he said, Morning Brew. Oh, I listen to the podcast. I really like that blonde money lady. And I was like, that’s us.

Katie:

Recording for duty. It’s funny because I think people will, with the Chappell Roan discourse, people will always be like, I feel like that’s a thing where I’m like, well, you don’t want to be recognized. I am like, I fucking love it when people reckon me, when people come up to me and they’re like, I love your show. I’m like, oh my God, tell me more.

Henah:

Remember when I said that at the airport and you told me to shut the **** up and—

Katie:

No, whatcha talking about?

Henah:

Yeah, we got dropped off the airport, if you remember, we’re waiting for Jovanni. And then I was like, oh my god, Money with Katie!

Katie:

Yeah, because you were faking it! I’m saying when real people come up to me and they go, oh, I love your show.

Or there was a United Flight attendant once that when she was like, what would you like to drink? And also, I love your podcast. And I was like beaming for the rest of the flight. So I absolutely love the attention. As a matter of fact, I got into podcasting because I love attention.

Henah:

That’s true.

Katie:

So to withhold the attention from me is actually cruel and unusual. But not if you’re selling Bible, you have a booth and you want a signature. Okay, that’s all for this week’s Rich Girl Roundup, and we will see you on Wednesday to talk about the 2025 Wealth Planner and what it takes to calculate a truly comprehensive financial independence timeline. And yes, that includes using some of your investments for a down payment.