Atlanta hbc 3.30.13

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Atlanta hbc 3.30.13

  1. 1. Redfin’s Home Buying Class March 30, 2013 Peachtree City, GA Presented by: Vanessa Fleisch Redfin’s Atlanta Team Follow: @RedfinAtlanta Like: http://www.facebook.com/RedfinAtlantaSlide 1 of 58
  2. 2. Agenda ● To buy or not to buy ● Overview of purchase process ● Understanding the Market ● Condos/Townhomes ● Touring ● Mortgages ● Choosing an agent ● Redfin as a tool ● Short sales & foreclosures ● What to know about closingSlide 2 of 58
  3. 3. A Little Bit About Who We Are Redfin is a real estate brokerage that has helped over 20,000 people buy or sell a home; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● The right home for the right price No obligation Get back a portion of our commissionSlide 3 of 58
  4. 4. To Buy or Not to BuySlide 4 of 58
  5. 5. Why You Should Buy a Home ● You have a family and need room to grow ● You expect to stay put for 5 or more years ● You’re handy & and ready to invest ● You’ve saved up a down paymentSlide 5 of 58
  6. 6. Why You Shouldn’t Buy a Home ● You don’t have a good reason ● You can’t afford the down payment ● You can rent for much less ● You plan on moving soon ● You’re worried about job securitySlide 6 of 58
  7. 7. Understanding the Buying ProcessSlide 7 of 58
  8. 8. Overview of Purchase Process (more details to follow) ● Information – learn as much as possible about the market, the neighborhood, price trends ● Tour some houses to get a general idea ● Interview Lenders- get pre-approved ● Choose an Agent ● Tour more seriously and find YOUR home ● Mutual Acceptance on your offer ● Home Inspection “Contingency” ● Financing and Appraisal “Contingencies” ● ClosingSlide 8 of 58
  9. 9. Understanding the MarketSlide 9 of 58
  10. 10. Case-Shiller: Atlanta Area v. 20-City 250.00 20 City Composite Atlanta 200.00 150.00 100.00 50.00 0.00Slide 10 of 55
  11. 11. Case-Shiller – By the Numbers Case-Shiller: Atlanta Area Up 7.6% year-over-year Peak was July 2007 Down 29.9% from peak Currently at May 1999 prices 20-City Composite Up 5.5% year-over-year Peak was July 2006 Down 29.4% from peak Currently at September 2003 pricesSlide 11 of 58
  12. 12. National Market Trends Multiple Offers - More than a Quarter of Listings Still Selling Fast ● 2012 inventory fell 30% ● Through the first 6 weeks of 2013 – inventory dropped another 18% ● Multiple offers are not only against 3 or 5 buyers, but more like 10, 20 and sometimes even 30 or moreSlide 12 of 58
  13. 13. National Market Trends ● January YoY Prices up 10% ● January YoY sales increased 9.1% ● 70% of homes in January had competing offers ● 30% of new listings were under contract in < 2 weeks ● # new construction projects in Q4 2012 up 44% YoY ● Why could slow the market? ► Mortgage rates have increased to 3.75% (highest since last Sept.) ► Eventually money will get more expensive and buyers will become more scarceSlide 13 of 58
  14. 14. Where is the Local Market Headed? ● Supply of homes is at a five-year low and won’t increase the rest of the year ● Rents have been rising, making buying more attractive ● Market stabilizing, though likely 2-3 years before significant appreciation ● Rate increases - biggest issue for buyers ● Rise in New Construction activitySlide 14 of 58
  15. 15. Atlanta February Home PricesSlide 15 of 58
  16. 16. Atlanta February Home InventorySlide 16 of 58
  17. 17. Peachtree City February Home PricesSlide 17 of 58
  18. 18. Peachtree City February Home InventorySlide 18 of 58
  19. 19. Absorption Rate “The rate at which available homes are sold in a specific real estate market during a given time period” Number of Active listings or comps in a specific market Number of homes that sold in that last 12 monthsSlide 19 of 58
  20. 20. Short Sales and Bank OwnedSlide 20 of 58
  21. 21. What is a Short Sale? The owner owes more on the mortgage than the home is worth ● Usually pre-foreclosure, but not always ● Listed for less than what’s owed to the bank ● Requires 1 - 2 banks’ approval (usually 2) ● May have other liens (taxes, utilities, HOA) How are short sales different? ● Flexible closing date ● Contract Price has to be approved by the seller’s lender(s) ● Property is sold “as-is” ● Get a 15% commission refundSlide 21 of 58
  22. 22. What is a Foreclosure? ● A foreclosed home owned by a bank, lender or GSE ● Standard sale but: ► Verbal negotiations ► Long response times ► Repairs unlikely ► Legal addenda may require an attorney ► Limited or no disclosures ► Potential for multiple offers ► Bank can back out any time until they’ve signed ► Fannie Mae and Freddie Mac(GSE’s) – First Look Period ► HUD Homes also have a First Look PeriodSlide 22 of 58
  23. 23. Condominiums and TownhomesSlide 23 of 58
  24. 24. Condos ● HOA ► Monthly Fees Ext Building Maintenance Ext Liability Insurance Ext lighting, security Landscaping Pest Control Water Utilities Cable, InternetSlide 24 of 58
  25. 25. Condominiums ● HOA ► Meeting Minutes ► Special Assessments ► Rental Cap (10-25%) ► Wait list for Rentals ► Litigations? ► Typically, the older the building, the higher the HOA feeSlide 25 of 58
  26. 26. Condominiums ● Financing ► Conventional ► FHA ► FNMA ► Factor in HOA fee for approval amountSlide 26 of 58
  27. 27. Condominium ● What to look for…. ► Noise levels ► Staff friendly and helpful ► Pet friendly ► Pet restrictions ► Common Area cleanliness, maintenance ► Parking, location and number of spaces, visitor ► Storage ► Security, Concierge 24/7? ► Amenities, pool, fitness, tennis, clubhouse, etcSlide 27 of 58
  28. 28. Townhomes ● Fee Simple ► Lower HOA fees than condos ► Owner responsible for interior and exterior of building ► Maintain full home insurance ► If problem occurs, then work with insurance vs HOASlide 28 of 58
  29. 29. Mortgages Linda Walden Brand MortgageSlide 29 of 58
  30. 30. Review Your Financial Situation To Buy or Not to Buy ● Pull credit report, look for errors ● Establish comfort level for monthly payment ● Figure out how much monthly income goes towards debt: 28 – 33% healthy ● Pay down credit balances to 1/3rd ● Don’t open any new lines of credit ● Don’t buy any big ticket items ● Source of money ● Current employment statusSlide 30 of 58
  31. 31. Start Shopping for Lenders Compile a list of 2-3 lenders & brokers Good sources include: ● Redfins partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices *Know your lenderSlide 31 of 58
  32. 32. Getting Pre-Approved A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend you ● Establishes what you can afford & makes offer process go faster ● What’s the difference between Pre-Approval and Pre-Qualification ● Good for 90 days, depending on lender ● Ask for a few different amounts ● Similar, yet different from pre-qualification ● Redfin asks that you get pre-approved before your third tour ● Are gift funds involved? ● How much do you have for a down payment? Information needed: ● W-2, two pay-stubs, tax returns, bank statementsSlide 32 of 58
  33. 33. Comparing Loan Estimates ● Gather loan estimates ► A minimum of three, more is better ► These aren’t final numbers, but within a few thousand dollars ► Compare similar loans Program (FHA, conventional) Timeframe (same day) ● Compare costs side-by-side ► Discount & origination points ► Interest rates ► Insurance premiums (FHA, PMI) ► APR (interest rates + fees + points + PMI)Slide 33 of 58
  34. 34. Types of Loans ● Conventional: ► As low as 5% down ► Fixed or adjustable rates, conforming or non-conforming ● Federal Housing Administration Loan (FHA): ► Always have mortgage insurance ► Buyers need only a 3.5% down payment ● VA Guaranteed Loan: ► Veterans, active duty personnel, reservists/national guard, surviving spouses ► No down payment ● Ask your lender if they have special loan programs ► Example: BB&T Chips ProgramSlide 34 of 58
  35. 35. Where Are Rates Headed? Type of Loan March 14, 2013 March 21, 2013 30-Year Fixed 3.63% 3.54% 15-Year Fixed 2.79% 2.72% 5/1 ARM 2.61% 2.61% 1-Year ARM 2.64% 2.63%Slide 35 of 58
  36. 36. Make Your Decision ● When possible, get a loan commitment ● Make alternative funds liquid (401k, stock) ● Lock your rate once you have a contract on a property and a set closing date Good news! Loan payments are made in arrears, so your first loan payment won’t be for two months.Slide 36 of 58
  37. 37. Putting it all together to findYOUR homeSlide 37 of 58
  38. 38. Redfin.com-Benefits of a MLS Powered Site ● All the homes for sale: 30% more listings ● You see what the agent sees: 4x the data ● Real-time market data: photos, details of just-sold homesSlide 38 of 58
  39. 39. Highlights of Redfin’s Site ● Search by zip code or neighborhood ● Saved searches/instant alerts ● Agent notes ● Download results ● Price your home ● Forums ● Home buying guide ● Home inspection guide ● Any questions about the site?Slide 39 of 58
  40. 40. Open Book ● Redfin Certified Providers ● Every professional is reviewed and all reviews are shown ● Search for local: ► Inspectors ► Lenders ► AttorneysSlide 40 of 58
  41. 41. Choosing the Right AgentSlide 41 of 58
  42. 42. What to Ask Any Agent ● Is this your full-time job? ● Familiar with foreclosures or short-sales? ● Where were your last five deals? ● Who else will be working with me? ● Will you show me all properties for sale? ● When am I committed to working with you? ● Has a client ever filed a complaint? ● How are you paid? ● Can I see some reviews of your work?Slide 42 of 58
  43. 43. Experience With Multiple Offers This occurs when inventory is down and buyer interest is up 5 Tips for Winning in a Bidding War 1. Make the competition eat your dust 2. Get pre-approved with a local lender & get underwriter approval 3. Start the conversation early 4. Write a letter & appeal to the seller 5. Know your limitsSlide 43 of 58
  44. 44. Redfin’s Partner Program Partner agents are employed by other brokerages, but have teamed up with us to provide Redfin-Certified service to a wider range of customers. We’ll refer you to a partner agent when: ► A home is outside of our direct service area ► A home is below our price minimum ► We’re experiencing an unusually high customer demand We survey all partner agent clients ► All surveys are published on their Redfin page ► 97% of customers would recommend Redfin partnersSlide 44 of 58
  45. 45. Traditional vs. RedfinSlide 45 of 58
  46. 46. TouringSlide 46 of 58
  47. 47. Making the Most of Your Tour 1. Bring a camera, notebook & tape measure 9. Peek into the attic 2. See how much sunlight the place gets 10. Bring a marble or two 3. Check the bathrooms for rot & mold 11. When sharing a wall, make sure it’s thick 4. Look for wavy or discolored wood siding 12. Ignore the appliances and carpets 5. Make sure water spouts drain away from 13. Check the closets house 14. Get the disclosure packet 6. Take stock of storage space 15. Compare the property’s tax records to the 7. Turn off any music playing in house listing details 8. Check for hardwood floorsSlide 47 of 58
  48. 48. How Touring with Redfin Works ● Up to six homes per tour in two hour blocks ● Go on as many tours as you need ● Led by agent or field agent ● Need to be verified ● No obligationSlide 48 of 55
  49. 49. Home Inspection and Other ContingenciesSlide 49 of 58
  50. 50. Home Inspection ● We recommend that you have a home inspection ● Home Inspections are performed early in the due diligence period ● $350 to $800+ depending upon the size of the house ● Your agent will accompany you ● Your time to evaluate the property ● Types of Due Diligence ► Specialized Inspections – Structural, Stucco, Septic, Sewer Scopes, Well, Specialized Roof, Tree, Pool, Radon Test, Air Quality/Mold Test, Termite & Pest ► Survey ► Other – Schools, Crime, Traffic, Sex Offender, etc.Slide 50 of 58
  51. 51. Other Contingencies ● Appraisal Contingency ► Performed in conjunction with financing ► Appraisal report must be completed prior to the expiration of the Appraisal Contingency Period ● Financing Contingency ► Buyer must make full application for the mortgage with their selected lender within 3 days of binding agreement ► Lender must provide a loan commitment letter or denial letter prior to the expiration of the Financing Contingency Period ● Title – Owner must provide clear title to the property ● Other – Contingencies on sale or lease of other property, etc.Slide 51 of 58
  52. 52. Closing – what you need to knowSlide 52 of 58
  53. 53. Closing: HUD–1 Settlement HUD-1 Settlement Statement – Lists all fees/charges/credits By law, the final costs listed on your HUD-1 must be within 10% of the estimates provided on your Good Faith Estimate (GFE). ● Lender charges ► Includes origination fee, appraisal fee, credit report, insurance and tax escrows ● Title charges ► Includes settlement fee, and owner’s and lender’s title insurance ● Government charges ► Includes recording fees, recordation taxes and property taxesSlide 53 of 58
  54. 54. Attorney Closings ● What does the Attorney do? ► Prepares the final documents, including the HUD-1 ► Represent the buyer’s lender ► Conducts the closing ► Examines and clears the title to the property ► Records the deed, mortgage and any other recordable instruments ► Issues title insurance to the lender and the buyerSlide 54 of 58
  55. 55. Closing: Title Insurance ● Lender and Owner Title Policies ● Title insurance guarantees that the property is clear and marketable ● 2 types of Owner title insurance policies ► Limited (Standard) Protection against pre-closing defects in title ► Enhanced (Eagle) Costs 20% more than Standard policy Covers post closing fraud, forgery, identity theft Increases with value of the property up to 150% of original price Includes coverage for: mechanic’s liens, invalid permits, forced removal of structure, unrecorded easements, unrecorded leases,Slide 55 of 58
  56. 56. Closing Day ● You’ll have a final walk-through on closing ● Closing typically takes 1 hour day or just before ● Get keys and take possession! ● What to bring: ► Government issued photo ID ► Certified check or wired fundsSlide 56 of 58
  57. 57. So What Now? ● Make sure it’s the right time for you ● Start browsing online ● Check out our Home Buying Guide and Events page ● Find the right agent ● Look for a lender and get pre-approved ● Start seeing homes ● Make an offer & close the dealSlide 57 of 58
  58. 58. Thanks for Coming! Please fill out the survey that was handed out at the beginning of class. We appreciate the feedback! Check out our upcoming classes and events at http://www.redfin.com/buy-a-home/classes-and-eventsSlide 58 of 58
  59. 59. AppendixSlide 59 of 58
  60. 60. HUD Settlement Statement
  61. 61. Favorite Real Estate Links● Property information ► PropertyShark: Zoning data, title history, permits, neighborhood data; navigation is clunky● Neighborhood information ► WalkScore: Proximity to points of interest ► Trulia Heat Maps: Median prices across a county
  62. 62. Favorite Homes For Sale Links ● Redfin: MLS + FSBO + REO, updated every 15 minutes, with DOM, price history, Zestimate ● craigslist: Major FSBO source that Redfin doesn’t have ● HotPads: Foreclosure heat maps ● RealtyTrac: Foreclosure market detail, subscription required for full reports ● Brokerage site of listing agents: more photos of the listing
  63. 63. Favorite Data Links ● Case-Schiller Indices: Pricing trends by metropolitan area ● Altos Research: Median price trends and days on market by city, but some complain data is unreliable ● MSN Home Affordability Calculator: Based on your income & credit score ● SmartMoneys Home Buying Worksheet: Similar to the MSN calculator, but requires more info
  64. 64. Favorite Mortgage Links ● Bankrate: Many ads, but is great for comparing local lenders ● Zillows Mortgage Marketplace Help Center: Articles mortgage rates, types of mortgages, credit reports, and a series of mortgage calculators ● The Mortgage Professor: Bare bones information on mortgages, definitions of common terms, myriad of mortgage calculators ● HUD FHA page: Most reliable explanation of FHA loans, good site for first-time buyers
  65. 65. Favorite Links● Loans for first-time home buyers ► Federal Housing Administration (FHA) ► Fannie Mae and Freddy Mac● Government sites ► Federal Trade Commission: Articles & alerts for home- buyers. ► Dept. of Justice: Role of competition in real estate
  66. 66. Favorite Links Cont.● Remodeling & renovations ► DoItYourself.com: A few ads, but a useful clearinghouse of information on remodeling ► National Association of Home Builders (NAHB): Articles on remodeling your home, most are good

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