Austin offer writing class 12.4.12


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Austin offer writing class 12.4.12

  1. 1. Redfin’s Offer Writing Class Austin, TX December 4, 2012 Follow: @RedfinAustin Like: 1 of 21
  2. 2. 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 2 of 21
  3. 3. 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 ● Good for 90 days, depending on lender ● Ask for a few different amounts ● Redfin asks that you get pre-approved before your third tour ● Similar, yet different from pre-qualification ● Information needed: ● W-2, two pay-stubs, tax returns, bank statementsSlide 3 of 21
  4. 4. What’s Included In An Offer ● Pre-approval letter ► No pre-qualification letters please ► Customized for each property ► Get a reputable, LOCAL lender ► Be prepared that the lender may get a call ● Copy of 3% earnest money deposit check ► 3% is not required, but is the norm ► Deposited into title within 3 business days of contract acceptance ● Cover letter ► Adds a personal touch to a business transactionSlide 4 of 21
  5. 5. The Art of Negotiations ● Starts with your pre-approval ► Understand what you can “comfortably” afford ► Conduct your home search based on your financial parameters – be realistic ● Understand pricing for your area ● Your initial offer will set the tone for negotiations ► Put yourself in the seller’s shoes ► Coming in too low can be a waste of time ► Be careful on artificially inflating the priceSlide 5 of 21
  6. 6. Focus on The Big Picture ● Don’t sweat the small stuff ● Don’t take things personally, (but the sellers likely will!) ● Don’t assume the other side is dishonest ● Don’t create an adversarial environmentSlide 6 of 21
  7. 7. BATNA ● Best Alternative to Negotiated Agreement ● Understand your and the seller’s alternatives should you not reach an agreement ● Identify the most beneficial alternative to be your fall-back during the negotiation – create leverage! ● Work together to create options that will satisfy BOTH partiesSlide 7 of 21
  8. 8. Major Factors In Pricing A Home ● Comparable homes ● Days on market ● Seller’s motivation and current loan situation ● Inspection reports ● Listing agent’s pricing strategySlide 8 of 21
  9. 9. Pricing a Home ● Zestimates - get out of the virtual world and into the real world ● What’s going on in the market right now? ● What are the intangibles of a home that will attract buyers? ● Redfin agent hasn’t seen the home? ► 95% of pricing is in the data and disclosures ► We depend on you and our field agents for the remaining 5%Slide 9 of 21
  10. 10. The 5% Rule for Sellers ● More advantageous and typically recommended by their agent, to reduce the price in 5% increments rather than take an offer that low. Each time they lower the price, they open it up to a new group of buyers that maybe willing to pay that price.Slide 10 of 21
  11. 11. Other Negotiating Points ● Contingencies ► How confident are you in your lender? ► How confident are we in the seller’s reports? ● Closing ► 30 days is the norm ► Driven by the lender ● Rent back option ● Closing costs ► Santa Clara County – Seller pays title & escrow (~1%) ► San Mateo County – Buyer pays title & escrow (~0.75%)Slide 11 of 21
  12. 12. Inspections ● Most offers are “as-is” ● As-is means you are taking the home without asking the seller to make any repairs based on what is currently disclosed in the reports and disclosures ● There is another opportunity to negotiate on a price concession if our own inspections turn up something new and/or significant…or you can simply walk away ► Think “game changing” repair ► Sometimes easier when it’s a larger ticket itemSlide 12 of 21
  13. 13. How We Handle Listing Agents ● Understand their pricing strategy ● Understand their goals ► Open houses ► Prefer to double end deals? ● Let us handle the negotiations ► We know what questions to ask, what to say, and when to say it ► We want them to understand our comp structure ► We build relationships with other agents and brokeragesSlide 13 of 21
  14. 14. Agent Report CardSlide 14 of 21
  15. 15. Multiple Offer Trends ● Homes are being listed at strategically low prices ► So properties are selling way above list price ► Base your offer price on comps & trends – NOT on list price ● Deadlines are being set to accept & review offers ► Sellers usually review offers after about 7 days on market ► To give property exposure and create buzz amongst buyers ● Multiple offers are not only against 3 or 5 buyers, but more like 10, 20 and sometimes even 30 others ● Some buyers are waiving their inspection contingencySlide 15 of 21
  16. 16. Winning Against Multiple Offers ● Make the competition eat your dust ► Redfin Instant Alerts ► Submit tours instantly! ● Get pre-approved with a lender and get underwriter approval ● Start the conversation early: ► Tour a house you like? Let your agent know right away ► Allowing the seller to stay late or agreeing to forego repairs sometimes matters more than paying the highest price ● Write a personal letter and appeal to the seller ● Know your limits ► Determine your target price range ► Know your max price so you know when to walk awaySlide 16 of 21
  17. 17. Escrow Process ● Sometimes the easy part is getting the house! The real work is when the escrow period begins. ● We will guide you through escrow ● We work with your lender, the title company, inspection companies, and listing agent to ensure everything goes smoothlySlide 17 of 21
  18. 18. Overview of a Purchase •Search homes online & tour •Get pre-approved •Find a dream home Finding •Consult with agent, write offer Your Home •Submit offer to listing agent •Negotiations •Success! •Earnest money (within 3 days) •Inspection contingency (5-10 days) Mutual •Title review (5 days) Acceptance •Financing contingency (20-25 days) •Waiting for loan approval •Escrow signing appointment •Get keys and take possession! Closing! •Receive Redfin refund •Complete Redfin SurveySlide 18 of 21
  19. 19. Recent Negotiation ● Sometimes the easy part is getting the house! The real work is when the escrow period begins. ● We will guide you through escrow ● We work with your lender, the title company, inspection companies, and listing agent to ensure everything goes smoothlySlide 19 of 21
  20. 20. After Class… Please fill out the survey we’ll send this week along with these slides. We’d love to get your feedback so we can improve. To get even more info on the home buying process, check out our home buying guide: 20 of 21
  21. 21. Our next class! Home Buying Class December 11, 2012 6:30pm – 8:30pm Security National Mortgage (Same Location) 21 of 21