Home Buying Class - Boston - October 19, 2011
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  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspx
  • Point out reviewsUpdating this page: This should be updated based on your Local Rec. Lender. Just go to the page click “Print Screen.” Come back to this page, click on the large image, click delete, and then right click and paste. Size the images so it fits the page. The right click again and click “Send to back.”
  • 1. Important milestone tracker – click on these for more in depth infoDeal room provides you with step by step updates on where you are at in the process after you have made an offer 2. Get updates from your agent when they have made changes to your Deal Room
  • You should not be reading all of these. Pick you top three and chat about those.
  • You should add your own key take aways for this and every class

Home Buying Class - Boston - October 19, 2011 Presentation Transcript

  • 1. Redfin’s Home Buying Class September 28, 2011 Somerville, MA
  • 2. A Little Bit About Who We AreA Technology Company Becomes a Customer-ServiceCompany• In the beginning… • Team: engineers, working for free • Goal: give consumers data once limited to Realtors • Result: first to put listings on a map• And nothing really changed • Consumers got the same old service… • At the same old price• So Redfin changed • A website became a brokerage • A technology company became a service company
  • 3. A Little Bit About What We DoRedfin is a brokerage that’s usingtechnology and a customer-service focus tochange the real estate game in theconsumer’s favor.• What: a brokerage• How we are different: • Technology • Customer-service• Why: we want to change the game
  • 4. What We Have AccomplishedRedfin is a real estate brokerage that hashelped over 20,000 people buy or sell ahome; 97% would refer us to a friend.• Customers, not commissions• Informed decisions• The right home for the right priceNo obligationGet back up to 33% of our commission
  • 5. To Buy or Not to Buy
  • 6. Why You Should Buy a Home • You need room to grow • You want to stay put for 5+ years • You want a type of property that is difficult to rent • You’re handy, and ready to invest your time in your home • You’ve saved up a down paymentConsidering… Looking… Buying…
  • 7. Why You Shouldn’t Buy a Home • You can’t afford a 10% - 20% down payment (FHA exception*) • You can rent for much less • You plan on moving soon • You’re worried about job securityConsidering… Looking… Buying…
  • 8. Market Conditions
  • 9. Case-Shiller: Boston v. 20-City 250.00 Case-Shiller: Boston Down 1.9% year-over-year Peak was September 2005 200.00 Down 14.6% from peak Currently at September 2003 prices 150.00 100.00 Case-Shiller: 20-City Composite Down 4.1% year-over-year 50.00 Peak was July 2006 Down 30.9% from peak Currently at June 2003 prices 0.00Considering… Looking… Buying…
  • 10. Middlesex September Stats for SF Homes:Considering… Looking… Buying…
  • 11. Middlesex SF September Market StatsConsidering… Looking… Buying…
  • 12. Suffolk Stats for Condos:Considering… Looking… Buying…
  • 13. September Suffolk Condo StatsConsidering… Looking… Buying…
  • 14. Cambridge Stats for Condos:Considering… Looking… Buying…
  • 15. Cambridge September Stats for Condos:Considering… Looking… Buying…
  • 16. Newton Stats for SF Homes:Considering… Looking… Buying…
  • 17. Newton September Stats for SF Homes:Considering… Looking… Buying…
  • 18. Where to find data…Considering… Looking… Buying…
  • 19. Is it a good time to buy? Maybe.• Unemployment continues to drop/stabilize (7.4% for August)• Stock Market stabilizes/rises consistently• Rates will be low (Fed says thru 2013)• Elections will bring instability• Jumbo Loan amount changes• FHA limit changesConsider buying more home than you need and grow into itMonitor the rental prices for your areasIt is all about your time frame! 5 years plus please…
  • 20. How to Search for a Home
  • 21. Why Redfin’s Search is Better • 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 • Agent Insights: You know what we knowConsidering… Looking… Buying…
  • 22. Redfin Demo
  • 23. Now You are Ready to Tour • Up to 6 homes per tour in 2 hour blocks • Go on as many tours as you would like • Led by Agent or Field Agent • No commitmentConsidering… Looking… Buying…
  • 24. Break!
  • 25. Mortgages
  • 26. Get Pre-Approved • A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend a borrower • Help you establish how much you can afford and makes offer process go faster • Information needed: • W-2, two pay-stubs, tax returns (get them ready), bank statements • The process only takes a few days while banks get everything verified • The approval is good for 90 days, depending on lender • Ask for a few different amounts • Redfin asks that you get pre-approved before your third tourConsidering… Looking… Buying…
  • 27. Facts on Getting Pre-Approved • Applications are usually free and credit checks should not cost more than $20 • If you get multiple credit checks from multiple lenders within a 30 day period, this will only count as one credit check against your credit score • The application does not bind you to a lender, loan or rate • You will get a better idea of any other action items you need to complete before you can buy • Gives you a chance to discuss different financing options • Your pre-approval stays valid as long as your finances constant (check with your lender to see if they have limits on this) • Being pre-approved is required by sellers to consider offersConsidering… Looking… Buying…
  • 28. Organize Your Assets • Get ready for the down payment • Cash accounts (liquid funds) • 401(k), stocks, other investments • Gift funds? (Max. allowed varies) • Move funds around before you start shoppingConsidering… Looking… Buying…
  • 29. Review Your Debt • Pull credit report, look for errors • Figure out how much monthly income goes towards paying off debt: 28 – 33% healthy • Pay down balances to 1/3rd of credit available • Don’t open any new lines of credit • Don’t buy any big ticket items • Co-borrower will need to do the sameConsidering… Looking… Buying…
  • 30. Start Shopping for Lenders Compile a list of 4-6 lenders & brokers Good sources include: • Redfins partner lenders • Referrals from friends, family & co-workers • Banks or credit unions you have accounts with • A large, national bank with an advertised rate • Your real estate agent • Online review sites, such as Yelp • BEWARE OF OUT OF STATE LENDERS!!!Considering… Looking… Buying…
  • 31. Comparing GFE Results • Gather Good Faith Estimates (loan quotes) • A minimum of three, more is better • 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)Considering… Looking… Buying…
  • 32. Make Your Decision • When possible, get a loan commitment • Lock your interest rate (30 - 60 days) • 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. You’ll have one month of no payments.Considering… Looking… Buying…
  • 33. Current Average Rates Type of Loan October 6, 2011 October 13, 2011 30-Year Fixed 3.94% 4.12% 15-Year Fixed 3.26% 3.37% 5/1 ARM 2.96% 3.06% 1-Year ARM 2.95% 2.90%Considering… Looking… Buying…
  • 34. Change to Jumbo Loan Limits One-Unit Limit until One-Unit LimitCounty name Sept. 30 starting Oct. 1Barnstable $462,500 $417,000Bristol $475,000 $426,650Dukes $729,750 $625,500Essex $523,750 $465,750Middlesex $523,750 $465,750Nantucket $729,750 $625,500Norfolk $523,750 $465,750Plymouth $523,750 $465,750Suffolk $523,750 $465,750
  • 35. Change to FHA Loan Limits One-Unit Limit until One-Unit LimitCounty name Sept. 30 starting Oct. 1Barnstable $462,500 $405,950Bristol $475,000 $426,650Dukes $729,750 $625,500Essex $523,750 $465,750Middlesex $523,750 $465,750Nantucket $729,750 $625,500Norfolk $523,750 $465,750Plymouth $523,750 $465,750Suffolk $523,750 $465,750
  • 36. Where Are Rates Headed?
  • 37. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Considering… Looking… Buying…
  • 38. Working with RedfinWorking with Redfin
  • 39. Working With Redfin is Different Service • Advocates: client-satisfaction bonuses, not commissions • Transparency: informed decisions • Best Agents: The right home for the right price No obligation • Switch Redfin agents • Pause and re-start your search any time • Tour on your schedule and pace Refund • You get up to 33% the commission The Best Results • Service: 97% would recommend us to a friendConsidering… Looking… Buying…
  • 40. How Commissions Work Example: You buy a home for $500,000 Traditional Agents Commission Seller’s Agent (2.5%) $12,500 Buyer’s Agent (2.5%) $12,500 Redfin Agents Commission Seller’s Agent (2.5%) $12,500 Redfin (66.67%) $8,334 Redfin Buyer (33.33%) $4,166 • Redfin refunds 33% of the buyer’s agent commission • Applied to closing costs • Remainder paid as a check within 10 days of closing • Refund is tax-free • Minimum Redfin fee: $6,000Considering… Looking… Buying…
  • 41. How Our Team WorksAgent•Responsible for your Field Agentssuccess•Writes your offer •Assists with Tours•Handles inspection •Assists inspections•Handles negotiations •Answers Questions You Coordinator •Schedules tours •Coordinates Agents •Answers QuestionsConsidering… Looking… Buying…
  • 42. The Offer & The Deal
  • 43. Tour homes Find dream home Consult with agent, write offer Submit offer to listing agent Negotiations Success! Mutual Acceptance Earnest money [$1000]Overview of a Success! Mutual Acceptance Inspection contingency [5-10 days]Purchase P&S Review [10-14 days] 5% of Purchase Price Financing contingency [20-25] Final walk thru - details Closing! Get keys and take possession! Receive Redfin refund Complete Redfin survey
  • 44. Your Agent Negotiates Deal• Researches seller • Reviews agent-only comments • Contacts listing agent • Studies listing agent negotiating patterns • Studies sellers situation and motivations• Discusses with you • Do you want a comparative market analysis? • Where do you want to start? • Where do you want to end up?• Crafts Offer to Purchase • Inspection contingency • Financing contingency• Submits offer• Negotiates terms
  • 45. The Offer to Purchase• Binding contract to purchase real estate at a specific price within a specific timeline. • Typically good for 24-48 hours • $1000 check submitted with contract • Framework for P&S • Verbal contracts are not binding in RE!• Important Dates • Inspection Contingency (5-10 days) • Purchase and Sales Agreement (7-14 days) • Financing contingency (7-10 days before closing) • Closing (30-60 days)• Additional Terms • Inclusion/Exclusions • Additional spaces (parking/storage/roof decks…) • Condo docs, budgets, minutes, assessments…
  • 46. Deal Room Important milestone tracker Your to do list Your team of agents
  • 47. What Next…Under Agreement! • Schedule Home Inspection • Look for pdf. reports with photos • Ask us or use personal references • Mention if you want tests perform: • Radon- canister or computer? • Lead Paint • Water • Have a check or CC ready • Shop around – priced by sqft. and # of bedrooms • Stay involved – home education • Ice Dams? Irene?Considering… Looking… Buying…
  • 48. Home Inspection Hints Watch out for: Look for and Check: •Galvanized steel pipes •Chimney sweep fireplace •Double-paned windows •Knob and tube wiring inspection •Well ventilated attic •Cracks in foundation •Check all included •Stairs have handrails appliances •Mold, mildew or signs of •Check water pressure leaking near walls or floorsConsidering… Looking… Buying…
  • 49. What Next…Lawyers! • Get a Lawyer – They’ll have one so should you! • Ask about pricing up front – flat fee • What they will be doing? – services • Are they a RE attorney? • Who will I be working with? • How long have you been doing this? • Will you work as the bank’s attorney? • Contingencies…Considering… Looking… Buying…
  • 50. What Next…Are we there yet? • Purchase And Sales Contract • Negotiated by your RE attorney • “The guts of the deal” • Inspection Items –Yes/No • Deposit Money Required (5% typical in MA) • Personal check acceptable • Goes to Listing Broker/Seller Att. escrow account • Redfin Rebate!!! - closing costs, reduction… • 4 signed and initialed copies + check • Copy to your lender ASAPConsidering… Looking… Buying…
  • 51. Finally…. Massive Debt • Close contact with your Lender • Appraisal – order it quickly, ask for copy • Private Mortgage Insurance – ask early/often • Commitment Letter (15-30 days out) • Clean copy w/no contingencies • Home Insurance -required • Movers – book up quickly • Final Walk Through • Closing – checklist/inspection itemsConsidering… Looking… Buying…
  • 52. So What Now? • Make sure it’s the right time for you • Get pre-approved & look for a lender • Search for homes • Find the right agent & start touring • Make an offer & close the dealConsidering… Looking… Buying…
  • 53. After Class… Please fill out the survey we’ll send this week along with this slide deck. We’d love to get your feedback on how the class could improve. To get even more info on the home buying process, check out our home buying guide: http://redfin.com/home-buying-guideConsidering… Looking… Buying…
  • 54. Appendix:•Important forms/contracts•Favorite Real Estate Resources
  • 55. HUD Settlement Statement
  • 56. Favorite Real Estate Links • Property Information • PropertyShark: Zoning data, title history, permits, neighborhood data; navigation is clunky • Mass Land Records: Mortgages, liens, permits.. • Boston Magazine: Best Places to Live • Neighborhood Information • WalkScore: Proximity to points of interest • Trulia Heat Maps: Median prices across a county
  • 57. Favorite Real Estate Links: Listings • Redfin: MLS + FSBO + REO, updated every 15 minutes, with DOM, price history, Zestimate • craigslist: Major FSBO source that Redfin cant crawl • HotPads: Foreclosure heat maps • Brokerage site of listing agents: more photos of the listing • RealtyTrac: Foreclosure market detail, subscription required for full reports
  • 58. Favorite Real Estate Links: Pricing Data • Case-Schiller Indices: Pricing trends by metropolitan area • HouseMath: Compares a housing investment to a stock market investment • 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
  • 59. Favorite Real Estate Links: Mortgage • 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
  • 60. 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
  • 61. 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 • What to Look for in an Inspection • American Society of Home Inspectors (ASHI): Good consumer FAQ & virtual home inspection