Redfin’s Home Buying ClassMay 15, 2012 Bellevue, WA
AgendaConsidering…● To buy or not to buy● Market conditions● Searching for a homeLooking…● Finding a real estate agent● Wo...
A Little Bit About Who We AreRedfin is a real estate brokerage that has helped over 20,000people buy or sell a home; 97% w...
To Buy or Not to Buy
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 ...
Why You Shouldn’t Buy a Home●   You don’t have a good reason like family or schools●   You can’t afford the down payment● ...
Market Conditions
Case-Shiller: Seattle Area v. 20-City 250.00          Seattle          20 City Composite 200.00 150.00 100.00  50.00   0.00
Case-Shiller – By the NumbersSeattle Area  Down 2.9% year-over-year  Peak was July 2007  Down 32.9% from peak  Currently a...
# Homes for Sale – April 2012City          Compared to   Compared to              March 2012     April 2011Seattle        ...
# of Sales – April 2012            City    Compared to   Compared to                    March 2012     April 2012Seattle  ...
Price Changes – April 2012                                              Median Sold      Median Sold            Median Sol...
Where is the Market Headed?● Supply of homes is at a five-year low and won’t increase  much more this year.● Foreclosures ...
Searching for a Home
Benefits of a MLS Powered Site ● All the homes for sale: 30% more listings ● You see what the agent sees: 4x the data ● Re...
Live Demo of Redfin’s Site
Finding an Agent
What to Ask Any Agent●   Is this your full-time job?●   Familiar with foreclosures or short-sales?●   Where were your last...
Make Sure He’s a Good Fit                                Click here                                when you               ...
Working with Redfin
How Our Team Works                                        AGENT                                        Responsible for you...
Now You are Ready to Tour ●   Up to six homes per tour in two hour blocks ●   Go on as many tours as you need ●   Led by f...
We Share Our Commission With You•   Applied to closing costs•   Refund is tax-free
Redfin’s Partner ProgramPartner agents are employed by other brokerages, but  have teamed up with us to provide Redfin-Cer...
We List Homes, Too!● More People See your Home   ► Premium placement on Redfin.com   ► Mobile apps target on-the-go buyers...
Break!
Mortgages
Getting Pre-Approved A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend you ●   Est...
Organize Your Assets  ●   Get ready for the down payment  ●   Cash accounts (liquid funds)  ●   401k, stocks, other invest...
Review Your Debt ● Pull credit report, look for errors ● Figure out how much monthly income goes towards debt:   28 – 33% ...
Start Shopping for LendersCompile a list of 3-4 lenders & brokersGood sources include:● Redfins partner lenders● Referrals...
Local Recommended Lenders               *In no way does Redfin               benefit financially from               recomm...
Current Average RatesType of Loan    May 3, 2012   May 10, 201230-Year Fixed     3.84%          3.83%15-Year Fixed     3.0...
Comparing Loan Estimates ● Gather loan estimates    ► A minimum of three, more is better    ► These aren’t final numbers, ...
Make Your Decision ● When possible, get a loan commitment ● Make alternative funds liquid (401k, stock) Good news! Loan pa...
Making Your Offer
Multiple Offer SituationsTips for Winning in a Bidding War   1. Just Win, Baby!! – Simply have the best offer.         1. ...
Overview of a Purchase            •Search homes online & tour            •Get pre-approved            •Find a dream homeFi...
Overview of a Purchase            •Search homes online & tour            •Get pre-approved            •Find a dream homeFi...
Overview of a Purchase            •Search homes online & tour            •Get pre-approved            •Find a dream homeFi...
Deal Room               Important               milestone                tracker  Your to do     list                     ...
Home Inspection HintsWatch out for:                   Look for and Check:•Galvanized steel pipes         •Chimney sweep fi...
SampleHUDA form that yourlender is required toprovide to you oneday before closing. Itlists the final closingcosts and fee...
Short-Sales & Bank Owned
What is a Short Sale? The owner owes more on the mortgage than the home is worth ●   Usually pre-foreclosure, but not alwa...
We Can Help With A Short Sale● See short sales with a Redfin agent● If you want to buy, work with a Redfin agent or a shor...
What is a Bank-Owned Property? A foreclosed home owned by a bank or lender Standard sale but: ● Verbal negotiations ● Long...
So… Where’s the Best Deal?●   Sellers who own their home outright●   Sellers who are relocating●   Estate Sales●   REO & S...
Key Takeaways
So What Now?●   Make sure it’s the right time for you●   Start browsing online●   Check out our Home Buying Guide and Even...
After Class…  Please fill out the survey. We will also you this slide  deck. We’d love to get your feedback so we can  imp...
Appendix
Appendix● Important forms/contracts● Favorite Real Estate Resources
Home Inspection HintsWatch out for:                   Look for and Check:•Galvanized steel pipes         •Chimney sweep fi...
SampleHUDA form that yourlender is required toprovide to you oneday before closing. Itlists the final closingcosts and fee...
Some Of Our Favorite Sites●   Seattle Bubble: market analysis●   Curbed Seattle: cool houses●   Urbnlivn: for condo shoppe...
HUD Settlement Statement
Favorite Real Estate Links● Property information   ► PropertyShark: Zoning data, title history, permits,     neighborhood ...
Favorite Homes For Sale Links ● Redfin: MLS + FSBO + REO, updated every 15 minutes,   with DOM, price history, Zestimate ●...
Favorite Data Links ● Case-Schiller Indices: Pricing trends by metropolitan area ● Altos Research: Median price trends and...
Favorite Mortgage Links ● Bankrate: Many ads, but is great for comparing local   lenders ● Zillows Mortgage Marketplace He...
Favorite Links● Loans for first-time home buyers   ► Federal Housing Administration (FHA)   ► Fannie Mae and Freddy Mac   ...
Favorite Links Cont.● Remodeling & renovations   ► DoItYourself.com: A few ads, but a useful clearinghouse of     informat...
Bellevue hbc 5 15 12
Bellevue hbc 5 15 12
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Bellevue hbc 5 15 12

  1. 1. Redfin’s Home Buying ClassMay 15, 2012 Bellevue, WA
  2. 2. AgendaConsidering…● To buy or not to buy● Market conditions● Searching for a homeLooking…● Finding a real estate agent● Working with RedfinBreak!Buying…● Mortgages● The offer and the deal● Short sales and bank owned
  3. 3. A Little Bit About Who We AreRedfin is a real estate brokerage that has helped over 20,000people 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 commission
  4. 4. To Buy or Not to Buy
  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 want a home that is difficult to rent● You’re handy & and ready to invest● You’ve saved up a down payment
  6. 6. Why You Shouldn’t Buy a Home● You don’t have a good reason like family or schools● You can’t afford the down payment● You can rent for much less● You plan on moving soon● You’re worried about job security
  7. 7. Market Conditions
  8. 8. Case-Shiller: Seattle Area v. 20-City 250.00 Seattle 20 City Composite 200.00 150.00 100.00 50.00 0.00
  9. 9. Case-Shiller – By the NumbersSeattle Area Down 2.9% year-over-year Peak was July 2007 Down 32.9% from peak Currently at April 2004 prices20-City Composite Down 3.5% year-over-year Peak was July 2006 Down 35.0% from peak Currently at November 2002 prices
  10. 10. # Homes for Sale – April 2012City Compared to Compared to March 2012 April 2011Seattle -4.2% -43.0%Bellevue +0.6% -36.8%Federal Way -10.2% -49.4%Issaquah -2.5% -33.0%Kent -12.1% -43.6%Kirkland -7.9% -54.4%Renton -7.6% -48.9%Shoreline -0.7% -42.2%Redmond -4.0% -48.9%
  11. 11. # of Sales – April 2012 City Compared to Compared to March 2012 April 2012Seattle +8.9% +2.7%Bellevue +2.2% +5.0%Federal Way +26.2% +38.4%Issaquah +8.5% +10.3%Kent -9.9% +39.7%Kirkland -1.6% +2.4%Renton -17.2% -12.2%Shoreline -6.2% +32.6%Redmond -12.5% +0.0%
  12. 12. Price Changes – April 2012 Median Sold Median Sold Median Sold Median ListedCity $/SqFt Change $/SqFt Change Price Apr 2012 Price Apr 2012 since March 2012 since Apr 2011Seattle $386,000 $375,000 +8.2% +6.2%Bellevue $459,000 $638,000 +3.0% -4.4%Federal Way $145,000 $222,000 -8.1% -11.7%Issaquah $326,000 $335,000 +3.3% -4.1%Kent $192,000 $240,000 +0.9% -5.1%Kirkland $365,000 $439,000 +8.9% -1.4%Renton $239,000 $255,000 +2.3% -2.2%Shoreline $232,000 $300,000 +3.2% -11.2%Redmond $384,000 $485,000 +7.9% +1.5%
  13. 13. Where is the Market Headed?● Supply of homes is at a five-year low and won’t increase much more this year.● Foreclosures have been driving price declines, and years of inventory remain. Investment groups might have impact.● Rents have been rising, making buying more attractive.● Market stabilizing, though likely 2-3 years before significant appreciation.● Rate increases - biggest issue for buyers
  14. 14. Searching for a Home
  15. 15. 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 homes
  16. 16. Live Demo of Redfin’s Site
  17. 17. Finding an Agent
  18. 18. 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?
  19. 19. Make Sure He’s a Good Fit Click here when you decide See all deals & reviews
  20. 20. Working with Redfin
  21. 21. How Our Team Works AGENT Responsible for your success Writes your offer Handles negotiations YOU FIELD AGENT COORDINATOR Takes you to see homes Schedules tours See 50+ homes a week Prepares paperwork Works with escrowConsidering… Looking… Buying…
  22. 22. Now You are Ready to Tour ● Up to six homes per tour in two hour blocks ● Go on as many tours as you need ● Led by field agent ● No obligation
  23. 23. We Share Our Commission With You• Applied to closing costs• Refund is tax-free
  24. 24. Redfin’s Partner ProgramPartner agents are employed by other brokerages, but have teamed up with us to provide Redfin-Certified service to a wider range of customersWe’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 demandWe survey all partner agent clients ► All surveys are published on their Redfin page ► 97% of customers would recommend Redfin partners
  25. 25. We List Homes, Too!● More People See your Home ► Premium placement on Redfin.com ► Mobile apps target on-the-go buyers ► Professional Flyers● You’ll Know It All at Every Step ► Email all buyers who see your home ► See how many people have viewed your home ► Advise you at every step in the process● Agent’s are Paid on Satisfaction ► Honest Agents ► No pressure advice ► Time spent serving YOU!
  26. 26. Break!
  27. 27. Mortgages
  28. 28. 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 statements
  29. 29. Organize Your Assets ● Get ready for the down payment ● Cash accounts (liquid funds) ● 401k, stocks, other investments ● Gift funds? (max. allowed varies) ● Move funds around early
  30. 30. Review Your Debt ● Pull credit report, look for errors ● 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 ● Co-borrower will need to do the same
  31. 31. Start Shopping for LendersCompile a list of 3-4 lenders & brokersGood sources include:● Redfins partner lenders● Referrals from friends, family & co-workers● Banks or credit unions you have accounts at● A large, national bank with an advertised rate● Your real estate agent● Online review sites, such as Yelp
  32. 32. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
  33. 33. Current Average RatesType of Loan May 3, 2012 May 10, 201230-Year Fixed 3.84% 3.83%15-Year Fixed 3.07% 3.05%5/1 ARM 2.85% 2.81%1-Year ARM 2.70% 2.73%
  34. 34. 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)
  35. 35. Make Your Decision ● When possible, get a loan commitment ● Make alternative funds liquid (401k, stock) Good news! Loan payments are made in arrears, so your first loan payment won’t be for two months.
  36. 36. Making Your Offer
  37. 37. Multiple Offer SituationsTips for Winning in a Bidding War 1. Just Win, Baby!! – Simply have the best offer. 1. Cash is King. 2. Escalate your price? Know your limits. 3. Tighten your timelines. 4. Remove some contingencies? 2. Get pre-approved with a local lender & underwriter. 3. What’s important to the seller? 4. Write a letter & appeal to the seller.
  38. 38. Overview of a Purchase •Search homes online & tour •Get pre-approved •Find a dream homeFinding •Consult with agent, write offerYour 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 (25-30 days) •Waiting for underwriting approval •Escrow signing appointment Closing! •Receive Redfin refund closing credit •Get keys and take possession! •Complete Redfin Survey
  39. 39. Overview of a Purchase •Search homes online & tour •Get pre-approved •Find a dream homeFinding •Consult with agent, write offerYour 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 (25-30 days) •Waiting for underwriting approval •Escrow signing appointment Closing! •Receive Redfin refund closing credit •Get keys and take possession! •Complete Redfin Survey
  40. 40. Overview of a Purchase •Search homes online & tour •Get pre-approved •Find a dream homeFinding •Consult with agent, write offerYour 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 (25-30 days) •Waiting for underwriting approval •Escrow signing appointment Closing! •Receive Redfin refund closing credit •Get keys and take possession! •Complete Redfin Survey
  41. 41. Deal Room Important milestone tracker Your to do list Your team of agents
  42. 42. Home Inspection HintsWatch out for: Look for and Check:•Galvanized steel pipes •Chimney sweep fireplace •Double-paned windows•Knob and tube wiring inspection •Well ventilated attic •Check all included •Stairs have handrails•Mold, mildew or signs of appliances leaking near walls or floors •Check water pressure
  43. 43. SampleHUDA form that yourlender is required toprovide to you oneday before closing. Itlists the final closingcosts and fees foryour loan.By law, the final costslisted on your HUD-1must be within 10% ofthe estimatesprovided on yourGood Faith Estimate(GFE).
  44. 44. Short-Sales & Bank Owned
  45. 45. 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)
  46. 46. We Can Help With A Short Sale● See short sales with a Redfin agent● If you want to buy, work with a Redfin agent or a short sale partner agent● Redfin partner agents work for other brokerages but share Redfin’s commitment to customer service● Get a 15% commission refund
  47. 47. What is a Bank-Owned Property? A foreclosed home owned by a bank or lender Standard sale but: ● Verbal negotiations ● Long response times ● Repairs unlikely ● Legal addenda may require an attorney ● Limited or no disclosures ● Banks demand use of their own contracts ● Bank can back out any time until they’ve signed ● Contract often requires early release of earnest money
  48. 48. So… Where’s the Best Deal?● Sellers who own their home outright● Sellers who are relocating● Estate Sales● REO & Short Sales if “Best Deal” means lowest price
  49. 49. Key Takeaways
  50. 50. 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● Get pre-approved & look for a lender● Start seeing homes● Make an offer & close the deal
  51. 51. After Class… Please fill out the survey. We will also you this slide deck. 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: Redfin.com/home-buying-guideConsidering… Looking… Buying…
  52. 52. Appendix
  53. 53. Appendix● Important forms/contracts● Favorite Real Estate Resources
  54. 54. Home Inspection HintsWatch out for: Look for and Check:•Galvanized steel pipes •Chimney sweep fireplace •Double-paned windows•Knob and tube wiring inspection •Well ventilated attic •Check all included •Stairs have handrails•Mold, mildew or signs of appliances leaking near walls or floors •Check water pressure
  55. 55. SampleHUDA form that yourlender is required toprovide to you oneday before closing. Itlists the final closingcosts and fees foryour loan.By law, the final costslisted on your HUD-1must be within 10% ofthe estimatesprovided on yourGood Faith Estimate(GFE).
  56. 56. Some Of Our Favorite Sites● Seattle Bubble: market analysis● Curbed Seattle: cool houses● Urbnlivn: for condo shoppers● WalkScore: see what’s nearby
  57. 57. HUD Settlement Statement
  58. 58. 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
  59. 59. 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
  60. 60. 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
  61. 61. 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
  62. 62. Favorite Links● Loans for first-time home buyers ► Federal Housing Administration (FHA) ► Fannie Mae and Freddy Mac ► CalHFA: California State agency that helps certain buyers● Government sites ► Federal Trade Commission: Articles & alerts for home- buyers. ► Dept. of Justice: Role of competition in real estate
  63. 63. 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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