Redfin's Pre-Sale Condo Class, Seattle, WA

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  • [REQUIRED – to be updated by the presenter to suit their strong points]
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  • To be updated with information from neighborhood pages on the website.
  • To be updated with information from neighborhood pages on the website.POINT OUT HOW TO VIEW CONDOS AND HOUSES
  • To be updated with information from neighborhood pages on the website.
  • [REQUIRED – Update each time with latest rate information]http://www.freddiemac.com/pmms/

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  • 1. Redfin‟s Pre-Sale Condo Class Hosts: James Garner and Christy Kim Redfin‟s North Seattle Team March 4, 2014 Ballard, WA @Redfin Facebook.com/Redfin Slide 1 of 33
  • 2. About your hosts! James Garner Listing Agent North Seattle ● ● ● ● ● Agent for 11 years Closed over 250 homes Specialize in: New Construction Services: Ballard/North Seattle Lives in Seattle Slide 2 of 33
  • 3. About your hosts! Christy Kim Senior Agent North Seattle ● ● ● ● ● Agent for X years Closed X homes Specialize in: XX Services: X Lives in X Slide 3 of 33
  • 4. Agenda ● Redfin ● Condo sales & inventory trends ● Market Effect ● What to look out for ● Pros and Cons ● Break! ● Process ● Negotiating ● Preferred Lenders / Lenders ● FAQ ● Q&A Slide 4 of 33
  • 5. A Little Bit About Redfin 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 ● Right home for the right price  No obligation  Commission credit Slide 5 of 33
  • 6. Your Agent. A Good Fit? Click here when you decide See all deals & reviews Slide 6 of 33
  • 7. Cost and Inventory Market Effect Slide 7 of 33
  • 8. Ballard Market Trends: Low Inventory Slide 8 of 33
  • 9. Ballard Market Trends: Rising Prices Slide 9 of 33
  • 10. Find It On Redfin Slide 10 of 33
  • 11. Market Effect ● ● ● ● ● ● Strong local economy fueling jobs (the Amazon effect) Historic low interest rates More and more „all cash buyers‟ The return of the investment buyer Less inventory and more buyers Multiple offers Slide 11 of 33
  • 12. What to look out for Slide 12 of 33
  • 13. What‟s mine is mine ● ● ● ● ● ● ● As a rule of thumb you own from the „paint in‟ Remodeling & Hard Surface Policies Limited Common Elements Common Elements Amenities Parking Storage Slide 13 of 33
  • 14. HOA Review Period (re-sale cert) ● ● ● ● ● ● ● HOA Dues – what it includes HOA Minutes – 2 years worth Rules and Regulations / CCR‟s Pet Policy Rental Cap Reserves Special Assessments Slide 14 of 33
  • 15. “Pre-Sale” or “Under Construction” Pictures from the MLS Slide 15 of 33
  • 16. “Pre Sale” or “Under Construction” Actually… Slide 16 of 33
  • 17. Finding New Home Listings ● Builders may not list every home in a development on the MLS – your agent can inquire about other homes ● Notice of “Proposed Land Use” sign – a dead giveaway ● Builder websites, newspapers on Saturdays photo: vintageseattle.org Slide 17 of 33
  • 18. Pros & Cons Slide 18 of 33
  • 19. New vs. Resale? Buying new construction has it’s differences… • No inspection contingency in contract • Earnest money amount is usually set by the builder and non-refundable • Builder‟s documents lean towards builder. Few to no “outs” for buyer after certain timelines are met. • Less negotiation on price, other terms • Longer closes, depending on the progress of home, builder can extend without penalty Slide 19 of 33
  • 20. New Construction Pros ● ● ● ● ● ● You pick exactly what you want You pick the location of your home in a community Modern floor plans All major systems are new – lower maintenance Higher energy efficiency Planned community – parks, retail, harmonious architecture ● Warranty – shorter term touch ups & longer term protection ● No fixing some prior owner‟s mistakes or problems ● No inheriting a mismanaged or under-funded HOA Slide 20 of 33
  • 21. New Construction Cons ● ● ● ● ● ● ● ● HOA may have restrictive rules Lots of similar floor plans Landscaping isn‟t mature Living with construction noise Can be more expensive per square foot Builders may not be negotiable, depending on market Pre-sales can take a long time – up to 1-1.5 years Builder may change the homes they are building in the future – either the plans or the price Slide 21 of 33
  • 22. The Process Slide 22 of 33
  • 23. How far along is it? • City permits • Most options for changes and upgrades • Longest timeline “Presale” Home Slide 23 of 33 Under Construction • Limited changes • Pick colors possibly • Timeline varies • No changes • Upgrades limited • Close quickly, like a resale home Completed “Spec” Home
  • 24. Pre-sale: Picking your floorplan and orientation • Pick a plan that works for how you live. Do you entertain? Any special requirements, balcony, views etc. • What direction are you facing? • Does it include parking? Slide 24 of 33
  • 25. Basic Build Process 8-12 months •Permitting Process (floor plan and lot permitted by the city) •Foundation poured •Framing/Roof/Windows Stage (inspected by the city) (order for cabinets/plumbing fixtures/furnace/H2O tank, trim, doors) •Exterior Siding/Painting Stage •Electrical/Plumbing/Heating/Insulation Stage (re-inspected by the city) (order for flooring/appliances/fixtures) •Drywall/Interior Painting/Doors/Millwork Stage •Cabinets/Plumbing Fixtures/Other Fixtures Stage •Flooring/Appliance/Landscaping Stage •Clean-up •CO (Final „Certificate of Occupancy‟ Certificate from the city) •Private Inspection and Builder „Blue Tape‟ Walk-through with Buyer Slide 25 of 33
  • 26. Builder contracts Builders have a package of documents: ● Builder addendum ● Full builder purchase agreement ● Neighborhood description documents ● Timeline advisories ● Warranty information ● HOA documentation These are non-standard forms that will override standard purchase agreement documents and must be read carefully. Slide 26 of 33
  • 27. Common Provisions in Contracts Some common clauses in builder contracts are: ● No inspection contingency – inspections are allowed and builder must fix code issues but you can‟t walk away ● Financing – different timelines/clauses than buying a resale ● Builder walk through – “blue tape walk through” to create a “punch list” right before closing ● Closing delays – builder may automatically extend closing with no penalty if their process is delayed but if you delay with your lending there may be penalties ● Repairs after closing – builder may be allowed to finish things after closing within a certain timeline ● Earnest money non-refundable – after a certain period your earnest money may go “hard” Slide 27 of 33
  • 28. Upgrades & Changes Slide 28 of 33
  • 29. List Price = Builder‟s “Standard” or “Spec” • List price is for the builder‟s “standard” specification of finishes • “Standard” specs will vary from one builder to another • Upgrades/options will add onto the price of the home •Other options, such as air conditioning, or adding features are straight prices the builder charges • You can easily spend 15-20K on upgrades/options, adding to the cost of the home Slide 29 of 33
  • 30. Paying for upgrades Every builder has different processes: ● Roll it into the purchase price ● Upfront deposit ● Upgrade deposits are non-refundable ● May be fees for getting quotes for making changes Every builder has a specific deadline for each house after which certain upgrades cannot be added or changed. Slide 30 of 33
  • 31. Specifications List Every builder should be able to provide: ● A list of what upgrades are present in the model ● A standard list of specifications or „specs‟ for each home ● If the plan you are considering has any upgrades preselected and included in the price They may or may not have: ● A list of common upgrades ● A price list or master list of options/upgrades ● A cost associated with quoting custom finishes ● Limits on changes that they are willing to make Slide 31 of 33
  • 32. Front End vs. Back End Slide 32 of 33
  • 33. Front End vs. Back End „Front End‟ means on the purchase price: ● an offer of $545,000 on a list price of $550,000 „Back End‟ means on concessions or upgrades: ● an offer of $550,000 on a list price of $550,000 ● asking for the builder to include certain upgrades or credit a certain amount towards upgrades or closing costs. Slide 33 of 33
  • 34. What works best? Builders prefer to negotiate on the back end. Why? ● Avoid setting a precedent of discounting for future sales ● Avoid upsetting prior purchasers who paid full price – these are their customers and future referrals for their company ● May be able to control material and labor costs The best approach varies case by case. Builders often have certain styles. An experienced agent can lay out your options and make a recommendation. Slide 34 of 33
  • 35. Preferred Lenders & Financing Slide 35 of 33
  • 36. Where Are Rates Headed? Type of Loan February 20, 2014 January 2, 2014 30-Year Fixed 4.33% 4.53% 15-Year Fixed 3.35% 3.55% 5/1 ARM 3.08% 3.05% 1-Year ARM 2.57% 2.56% Slide 36 of 33
  • 37. Preferred Lenders Many builders will have a special relationship with a lender. ● Ownership – may be owned by the same parent company, or may just be an institution the builder likes ● Concessions – certain “specials” may be linked to you agreeing to use the specific lender ● Rates – usually comparable, maybe not the very best deal you can find, may have longer term rate lock products (which you need for new construction) ● Process – may be contractual provisions that are easier if you use the preferred lender as they are familiar with that certain builders contracts Slide 37 of 33
  • 38. Financing ● ● ● ● ● ● Conventional vs. FHA Condo Questionnaire Lender Review (Resale Cert) Buyer Review (Resale Cert) Two Months HOA dues Move-in fee‟s Slide 38 of 33
  • 39. FAQ Slide 39 of 33
  • 40. Common Questions ● Is this builder reputable? ● Can I tour new homes with a Redfin Agent? Yes! ● Can I still get the Redfin Refund if the home is not listed on the MLS yet? Yes! ● Can I change anything in the builder contract? ● When do I have to tell them I am working with an agent? ● The agent in the builder‟s model told me they are a buyer‟s agent. Are they working in my interest? ● Can I get a better deal by going with the builder‟s buyer‟s agent? Slide 40 of 33
  • 41. Questions? Slide 41 of 33
  • 42. Thank you for attending! Redfin Hosts: James Garner – james.garner@redfin.com Christy Kim – christy.kim@redfin.com Add drew‟s info here! Please fill out the survey. We‟d love to get your feedback so we can improve our classes. We will also send you this slide deck. Check out our home buying guide: Redfin.com/home-buying-guide Check out our schedule of upcoming classes at Redfin.com/events Slide 42 of 33