Redfin’s Home Buying Class        September 17, 2012 Greenbelt, MD        Follow: @RedfinDC        Like: http://www.facebo...
Agenda     ●   To buy or not to buy     ●   Overview of purchase process     ●   Understanding the Market     ●   Touring ...
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; 9...
To Buy or Not to BuySlide 4 of 48
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 ●   Y...
Why You Shouldn’t Buy a Home  ●   You don’t have a good reason  ●   You can’t afford the down payment  ●   You can rent fo...
Understanding the    Buying ProcessSlide 7 of 48
Overview of Purchase Process  (more details to follow)  ● Information – learn as much as possible about the market, the   ...
Understanding the      MarketSlide 9 of 48
Case-Shiller: DC Area v. 20-City  300.00  250.00  200.00  150.00  100.00    50.00     0.00Slide 10 of 55
Case-Shiller – By the Numbers  Case-Shiller: DC Area    Up 3.9% year-over-year    Peak was May 2006    Down 24.4% from pea...
Prince George’s County August Stats for HousesSlide 12 of 48
National Market Trends ● Redfin’s data for 19 U.S. markets show June prices increasing   3.0% over last year ● CoreLogic r...
Short Sales and Bank OwnedSlide 14 of 48
What is a Short Sale?  The owner owes more on the mortgage than the home is worth  ● Usually pre-foreclosure, but not alwa...
What is a Bank-Owned Property?  ● A foreclosed home owned by a bank or lender  ● Standard sale but:     ► Verbal negotiati...
TouringSlide 17 of 48
Making the Most of Your Tour 1.     Bring a camera, notebook & tape measure   9.    Peek into the attic 2.     See how muc...
How Touring with Redfin Works       ● Up to six homes per tour in         two hour blocks       ● Go on as many tours     ...
MortgagesSlide 20 of 48
Review Your Financial Situation  To Buy or Not to Buy  ● Pull credit report, look for errors  ● Establish comfort level fo...
Start Shopping for Lenders  Compile a list of 3-4 lenders & brokers  Good sources include:  ● Redfins partner lenders  ● R...
Getting Pre-Approved     A pre-approval letter is a letter from a bank or a lender estimating how     much theyll lend you...
Comparing Loan Estimates     ● Gather loan estimates        ► A minimum of three, more is better        ► These aren’t fin...
Types of Loans  ● Conventional:     ► As low as 5% down     ► Fixed or adjustable rates, conforming or non-conforming  ● F...
Where Are Rates Headed?  Type of Loan    September 6, 2012   September 13, 2012  30-Year Fixed        3.55%               ...
Make Your Decision     ● When possible, get a loan commitment     ● Make alternative funds liquid (401k, stock)     Good n...
Break!Slide 28 of 48
Putting it all together to findYOUR homeSlide 29 of 48
Redfin.com-Benefits of a MLS Powered  Site     ● All the homes for sale: 30% more listings     ● You see what the agent se...
Highlights of Redfin’s Site  ● Search by zip code    or neighborhood  ● Saved searches/instant alerts  ● Agent notes  ● Do...
Open Book  ● Redfin Certified Providers  ● Every professional is reviewed and all reviews are shown  ● Search for local:  ...
Choosing the Right AgentSlide 33 of 48
Traditional vs. RedfinSlide 34 of 48
What to Ask Any Agent  ●   Is this your full-time job?  ●   Familiar with foreclosures or short-sales?  ●   Where were you...
Experience With Multiple Offers This occurs when inventory is down and buyer interest is up 5 Tips for Winning in a Biddin...
Redfin’s Partner Program   Partner agents are employed by other brokerages, but     have teamed up with us to provide Redf...
Home Inspection and  Other Contingencies  NameSlide 38 of 48
Home Inspection  ● We recommend that you have a home inspection  ● Cost runs $350 to $1200 depending upon the size of the ...
Other Contingencies  ●   Appraisal – Performed in conjunction with financing  ●   Financing  ●   Termite  ●   OtherSlide 4...
Closing – what you  need to know  NameSlide 41 of 48
Closing: HUD–1 Settlement  HUD-1 Settlement Statement – Lists all fees/charges/credits  By law, the final costs listed on ...
Title Companies  ● What does the title company do?    ► Prepares the final documents, including the HUD-1    ► Conducts th...
Closing: Title Insurance  ● Title insurance guarantees that the property is clear and    marketable  ● 2 types of title in...
Closing Day  ●   You’ll have a final walk-through on closing   ●   Closing typically takes 1 hour      day or just before ...
So What Now?  ●   Make sure it’s the right time for you  ●   Start browsing online  ●   Check out our Home Buying Guide an...
Thanks for Coming!  Please fill out the survey that was handed out at the beginning of  class. We appreciate the feedback!...
AppendixSlide 48 of 48
Appendix  ● Important forms/contracts  ● Favorite Real Estate ResourcesSlide 49 of 48
Some Of Our Favorite Sites  ●   Seattle Bubble: market analysis  ●   Curbed Seattle: cool houses  ●   Urbnlivn: for condo ...
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● G...
Favorite Links Cont.● Remodeling & renovations   ► DoItYourself.com: A few ads, but a useful clearinghouse of     informat...
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Home buying class greenbelt - september 17 2012

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Home buying class greenbelt - september 17 2012

  1. 1. Redfin’s Home Buying Class September 17, 2012 Greenbelt, MD Follow: @RedfinDC Like: http://www.facebook.com/RedfinDCSlide 1 of 48
  2. 2. 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 48
  3. 3. 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 3 of 48
  4. 4. To Buy or Not to BuySlide 4 of 48
  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’re handy & and ready to invest ● You’ve saved up a down paymentSlide 5 of 48
  6. 6. 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 48
  7. 7. Understanding the Buying ProcessSlide 7 of 48
  8. 8. 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 48
  9. 9. Understanding the MarketSlide 9 of 48
  10. 10. Case-Shiller: DC Area v. 20-City 300.00 250.00 200.00 150.00 100.00 50.00 0.00Slide 10 of 55
  11. 11. Case-Shiller – By the Numbers Case-Shiller: DC Area Up 3.9% year-over-year Peak was May 2006 Down 24.4% from peak Currently at June 2004 prices Case-Shiller: 20-City Composite Up 0.5% year-over-year Peak was July 2006 Down 31.1% from peak Currently at July 2003 pricesSlide 11 of 48
  12. 12. Prince George’s County August Stats for HousesSlide 12 of 48
  13. 13. National Market Trends ● Redfin’s data for 19 U.S. markets show June prices increasing 3.0% over last year ● CoreLogic reported that May home prices increased 2.0% year-over-year, rising for the third consecutive month ● One in four homes under contract in less than two weeks ● Low rates and low inventory are creating the price pressure. ● The interest rate on a 30-year mortgage hit an all-time low last week of 3.56%. ● The number of homes for sale is down 19% from last year, and down nearly 50% in California and Seattle ● Completed foreclosures are down 27% from their 2010 peak, and seriously delinquent mortgages hit a three-year low.Slide 13 of 48
  14. 14. Short Sales and Bank OwnedSlide 14 of 48
  15. 15. 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 15 of 48
  16. 16. 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 ► Earnest money deposit usually held by listing agentSlide 16 of 48
  17. 17. TouringSlide 17 of 48
  18. 18. 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 18 of 48
  19. 19. 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 19 of 55
  20. 20. MortgagesSlide 20 of 48
  21. 21. Review Your Financial Situation To Buy or Not to Buy ● Pull credit report, look for errors ● Establish comfort level for monthly payment ● 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 ● Source of money ● Current employment statusSlide 21 of 48
  22. 22. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfins partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices *Know your lenderSlide 22 of 48
  23. 23. 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 ● What’s the difference between Pre-Approval and Pre-Qualification ● Good for 90 days, depending on lender ● Ask for a few different amounts ● Similar, yet different from pre-qualification ● Redfin asks that you get pre-approved before your third tour ● Are gift funds involved? ● How much do you have for a down payment? Information needed: ● W-2, two pay-stubs, tax returns, bank statementsSlide 23 of 48
  24. 24. 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)Slide 24 of 48
  25. 25. Types of Loans ● Conventional: ► As low as 5% down ► Fixed or adjustable rates, conforming or non-conforming ● Federal Housing Administration Loan (FHA): ► Always have mortgage insurance ► Buyers need only a 3.5% down payment ● VA Guaranteed Loan: ► Veterans, active duty personnel, reservists/national guard, surviving spouses ► No down payment ● Ask your lender if they have special loan programs ► Example: BB&T Chips ProgramSlide 25 of 48
  26. 26. Where Are Rates Headed? Type of Loan September 6, 2012 September 13, 2012 30-Year Fixed 3.55% 3.55% 15-Year Fixed 2.86% 2.85% 5/1 ARM 2.75% 2.72% 1-Year ARM 2.61% 2.61%Slide 26 of 48
  27. 27. 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.Slide 27 of 48
  28. 28. Break!Slide 28 of 48
  29. 29. Putting it all together to findYOUR homeSlide 29 of 48
  30. 30. Redfin.com-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 homesSlide 30 of 48
  31. 31. 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 31 of 48
  32. 32. Open Book ● Redfin Certified Providers ● Every professional is reviewed and all reviews are shown ● Search for local: ► Inspectors ► Lenders ► Title CompaniesSlide 32 of 48
  33. 33. Choosing the Right AgentSlide 33 of 48
  34. 34. Traditional vs. RedfinSlide 34 of 48
  35. 35. 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 35 of 48
  36. 36. 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 36 of 48
  37. 37. 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 37 of 48
  38. 38. Home Inspection and Other Contingencies NameSlide 38 of 48
  39. 39. 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 39 of 48
  40. 40. Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● OtherSlide 40 of 48
  41. 41. Closing – what you need to know NameSlide 41 of 48
  42. 42. 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 42 of 48
  43. 43. 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 43 of 48
  44. 44. 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 44 of 48
  45. 45. 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 45 of 48
  46. 46. 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 46 of 48
  47. 47. 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 http://www.redfin.com/buy-a-home/classes-and-eventsSlide 47 of 48
  48. 48. AppendixSlide 48 of 48
  49. 49. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 49 of 48
  50. 50. Some Of Our Favorite Sites ● Seattle Bubble: market analysis ● Curbed Seattle: cool houses ● Urbnlivn: for condo shoppers ● WalkScore: see what’s nearbySlide 50 of 48
  51. 51. HUD Settlement Statement
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. 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
  56. 56. 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
  57. 57. 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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