First Time Home Buyer Class - October 17th - Lafayette
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First Time Home Buyer Class - October 17th - Lafayette






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First Time Home Buyer Class - October 17th - Lafayette First Time Home Buyer Class - October 17th - Lafayette Presentation Transcript

  • Redfin’s First Time Home Buyer Class October 17, 2012 Lafayette, CA Follow: @RedfinSanFrancisco Like: 1 of 66
  • Agenda ● To buy or not to buy ● Overview of purchase process ● Understanding the Market ● Touring ● Mortgages ● Break! ● Choosing an agent ● Redfin as a tool ● Short sales & foreclosures ● What to know about closingSlide 2 of 66
  • 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 commission Redfin VideoSlide 3 of 66
  • To Buy or Not to BuySlide 4 of 66
  • 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 66
  • 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 66
  • Understanding the Buying ProcessSlide 7 of 66
  • 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 66
  • Understanding the MarketSlide 9 of 66
  • Case-Shiller: San Francisco Area v. 20-City 250.00 San Francisco 20-City Composite 200.00 150.00 100.00 50.00 0.00Slide 10 of 55
  • Case-Schiller – By the Numbers San Francisco Area Up 3% year-over-year Peak was May 2006 Down 36% from peak Currently at April 2010 prices 20-City Composite Up .5% year-over-year Peak was July 2006 Down 31% from peak Currently at July 2011 pricesSlide 11 of 66
  • Lafayette Sept. Stats for HousesSlide 12 of 66
  • Lafayette Sept. Stats for HousesSlide 13 of 66
  • Walnut Creek Sept. Stats forHousesSlide 14 of 66
  • Walnut Creek Sept. Stats forHousesSlide 15 of 66
  • National Market Trends● Prices Soften Slightly, Still Up 3.2% Year Over Year● Inventory Down 28.1% Year Over Year ► California still falling faster than everywhere else. ► Fewer bank-owned listings for sale, and fewer conventional sales on the market. ► Homeowners can’t afford to sell with prices at or near a five-year low in most markets. ► Stabilizing home prices and low interest rates have slowed foreclosures.Slide 16 of 66
  • National Market Trends ● One in Four Listings Is Under Contract in Less than 14 Days ► Over a quarter (27.8%) of all single-family houses that debuted in the first 3.5 weeks of July were off the market in under two weeks.Slide 17 of 66
  • Multiple Offer Situations 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 18 of 66
  • Multiple Offer Situations 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 19 of 66
  • Where to find data…Slide 20 of 66
  • What Happens After You Find a Home You Love?Slide 21 of 66
  • 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?Slide 22 of 66
  • Traditional vs. RedfinSlide 23 of 66
  • Make Sure He/She’s a Good Fit Click here when you decide See all deals & reviewsSlide 24 of 66
  • Partners in the Process AGENT TOUR Responsible for your success COORDINATOR Writes your offer Schedules tours Handles negotiations Prepares paperwork TRANSACTION FIELD AGENT COORDINATOR Takes you to see homes Prepares paperwork Sees 50+ homes a week Works with escrowSlide 25 of 66
  • Short Sales and Bank OwnedSlide 26 of 66
  • 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) 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 refundSlide 27 of 66
  • 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 moneySlide 28 of 66
  • TouringSlide 29 of 66
  • 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 30 of 66
  • 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 31 of 55
  • MortgagesSlide 32 of 66
  • Getting Pre-Approved Income oSalary—Past 30 days oHourly—Consistency and history oSelf-employed—Two year average Credit Assets o 660 for FHA o Down Payment o 680 for Conventional o Closing Costs o 720 for Rate Improvement o Cash ReservesSlide 33 of 66
  • Show Stable EmploymentSalaried Employee o W2’s are historic o Most recent paystubs o Salaryincreases count immediatelySelf-Employed o Two Year History (Tax Years) o Same line of work (strategic)Hourly Wage Earner o Consistent hours over 1-2 year periodSlide 34 of 66
  • Organize Your Assets Lenders Will Require 2 Months of Statements ●Liquid ► Do not move money around—hard to paper trail ●Retirement Accounts ► Consider a 401k Loan ●Gift Funds ► Family members onlySlide 35 of 66
  • Review Your Debt | Credit HistoryKnow Current Credit Score Know Your Debt Tolerance● pay to get ●Cost of rentingyour score; no affect on scores ●Tax benefits of home ownership●Use your mortgage lender’s report;limit multiple checks ●Budget considerationsFix Errors Lender Tolerance May Be●Remove duplicates Different●Resolve disputes ●45% DTI, Fannie Mae●Reduce credit card debt (33%) ●43% DTI, Jumbo●Do not open, close, or change ●50% DTI, FHAcredit lines●Do not make large purchasesSlide 36 of 66
  • Pre-approval ScenarioRon Renter $400,000 LoanoEarns $6,500/month o30/Yr Fixed, 3.75%oHas car payment $300 = $1,852oWants to buy a home for oProperty Taxes$500,000 o1.41% on purchase priceoHas 20% down payment = $588 ($7,050/yr) o $6,500 x 45% = $2,925 oHomeowners Insurance o $2,700 – 300 (other = $100 ($1,200/yr) debt) oTotal: $1852+588+100 = Qualified $2,540/Month!= Allowed $2,625/Month!Slide 37 of 66
  • Choose a Lender Pre-Approval Letter is Critical ●Part of the offer ●Sellers want accountability, Local lenders preferred Using Referrals to find your lender ●From Redfin’s partner lenders ●From friends who recently financed a home ●From Realtor Research Your Lender ●Check Yelp, Berkeley Parents Network, Google ●Schedule a meeting by phone or in personSlide 38 of 66
  • Understand Your CostsGet a Good Faith Estimate o Itemized List of Fees: o Lender: Appraisal, Credit, Processing, Underwriting, Points o Escrow: Title Insurance, Documents, Notary Public o Government: Recording fee, Transfer Tax o Prepaid Items: Mortgage Interest, Homeowner’s insurance, impounds Good news! Loan payments are made in arrears, so your first loan payment will not be for almost two months!Slide 39 of 66
  • Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 40 of 66
  • Current Average Rates Type of Loan October 4, 2012 October 11, 2012 30-Year Fixed 3.36% 3.39% 15-Year Fixed 2.69% 2.70% 5/1 ARM 2.72% 2.73% 1-Year ARM 2.57% 2.59%Slide 41 of 66
  • Break!Slide 42 of 66
  • Putting it all together to findYOUR homeSlide 43 of 66
  • - Benefits of a MLS (Multiple Listing Service) Powered ● 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 44 of 66
  • 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 45 of 66
  • Redfin Open Book ● Redfin Certified Providers ► Proven track record, vetted by Redfin ● We review every client & post the good, bad, & ugly ● Read real reviews & find a great local team ► Inspectors ► Lenders ► Title Companies ► AttorneysSlide 46 of 66
  • Redfin Open BookSlide 47 of 66
  • Agent NotesSlide 48 of 66
  • CMA ToolSlide 49 of 66
  • Home Buying GuideSlide 50 of 66
  • Home Inspection Guide 51 of 66
  • Choosing the Right AgentSlide 52 of 66
  • Traditional vs. RedfinSlide 53 of 66
  • 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 54 of 66
  • 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 55 of 66
  • 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 56 of 66
  • Home Inspection and Other ContingenciesSlide 57 of 66
  • Home Inspection ● We recommend that you have a home inspection ● Cost runs $350 to $1200 depending upon the size of the house ● Your agent will accompany you ● Your time to evaluate the property ● What an inspection contingency covers and doesn’t cover ● Types of inspectionsSlide 58 of 66
  • Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● OtherSlide 59 of 66
  • Closing – what you need to knowSlide 60 of 66
  • 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 61 of 66
  • Title Companies ● What does the title company do? ► Prepares the final documents, including the HUD-1 ► 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 62 of 66
  • Closing: Title Insurance ● Title insurance guarantees that the property is clear and marketable ● 2 types of 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 63 of 66
  • 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 checkSlide 64 of 66
  • 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 65 of 66
  • 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 66 of 66
  • AppendixSlide 67 of 66
  • Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 68 of 66
  • Some Of Our Favorite Sites ● Seattle Bubble: market analysis ● Curbed Seattle: cool houses ● Urbnlivn: for condo shoppers ● WalkScore: see what’s nearbySlide 69 of 66
  • HUD Settlement Statement
  • 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
  • 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
  • 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
  • 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
  • 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
  • Favorite Links Cont.● Remodeling & renovations ► 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