Home Buying Class - Irvine, CA 3.20.2012

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  • 1. Redfin’s Home Buying ClassRedfin s March 20, 2012 Irvine, CA
  • 2. Agenda Considering… • Who we are • To buy or not to buy • Market conditions Looking… Looking • Finding a real estate agent • Working with Redfin g Break! Buying… • M t Mortgages • The offer and the deal • Short sales and bank ownedConsidering… Looking… Buying…
  • 3. A Little Bit About Who We AreRedfin is a brokerage that’s usingtechnology and a customer-service ft h l d t i focus t tochange the real estate game in theconsumer’s f ’ favor.
  • 4. 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
  • 5. Working With Redfin is DifferentService • Advocates: client-satisfaction bonuses, not commissions • Transparency: informed decisionsTeam • Pause and re-start your search any time • Tour on your schedule and pace • No obligationRefund • You get part of our commission back!The Best Results • Service: 97% would recommend us to a friend
  • 6. To Buy or Not to Buy
  • 7. 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 You’ve saved up a down paymentConsidering… Looking… Buying…
  • 8. 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 You’re worried about job securityConsidering… Looking… Buying…
  • 9. Market Conditions
  • 10. Irvine February Stats for HousesConsidering… Looking… Buying…
  • 11. NorthwoodConsidering… Looking… Buying…
  • 12. WoodburyConsidering… Looking… Buying…
  • 13. Turtle RockConsidering… Looking… Buying…
  • 14. Where is the Market Headed? • Supply of homes is at a five-year low and may not increase the rest of the year • Rents have been rising, making buying more attractive • Market stabilizing, though likely 2-3 years 23 before significant appreciation • Rate increases - biggest issue for buyersConsidering… Looking… Buying…
  • 15. What is Mello-Roos?• Mello-Roos is a special tax assessed to homeowners in a community as repayment for bonds used to fund the infrastructure within their community. ( y (i.e. maintenance for streets, water, , , sewage, electricity, schools and parks)• Q: How Long Does Mello-Roos Typically Last? Mello Roos • 20 to 30 years from the original build date is about average.• Q: How Much Is It Typically? • Depending on the year of construction, it can range anywhere from $25 to over $300 per month
  • 16. Mello-Roos Amount for a Home• Go to Tax.ocgov.com• Click on “Pay or Review your Property Taxes” on Pay Taxes the left hand side• Type in the property address• Click the Parcel Number• Click “View Original Bill” View Bill
  • 17. Finding an Agent g g
  • 18. What to Ask Any Agent • Is this your full-time job? • Familiar with foreclosures or short sales? short-sales? • Where were your last five deals? • Who l Wh else will b working with me? ill be ki ith ? • Will you show me all properties for sale? • When Wh am I committed to working with you? i d ki ih ? • Has a client ever filed a complaint? • How are you paid?Considering… Looking… Buying…
  • 19. Make Sure She’s a Good Fit Click here Cli k h when you decide See all deals & reviewsConsidering… Looking… Buying…
  • 20. Working with RedfinWorking with Redfin g
  • 21. How Our Team Works AGENT COORDINATOR Responsible for your success Schedules tours Writes your offer Prepares paperwork Handles negotiations Works with escrow COORDINATOR FIELD AGENT Schedules tours Takes you to see homes Prepares paperwork See 50+ homes a week Works with escrowConsidering… Looking… Buying…
  • 22. We Share Our Commission With You We refund back part of our commission to you! • Subject to lender approval • Applied to closing costs • Refund is tax-freeConsidering… Looking… Buying…
  • 23. How-To TourWith Redfin Demo
  • 24. Find a Home to TourConsidering… Looking… Buying…
  • 25. Schedule a Tour or Add More HomesConsidering… Looking… Buying…
  • 26. Fill Out Time and NotesConsidering… Looking… Buying…
  • 27. Confirm Basic Info & Coordinator Will Call to ScheduleConsidering… Looking… Buying…
  • 28. 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 obligationConsidering… Looking… Buying…
  • 29. Break!
  • 30. Mortgages
  • 31. 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 days • Ask for a few different amounts • Redfin asks that you g p y get pre-approved before y pp your third tour • Similar, yet different from pre-qualification Information needed: I f ti d d • W-2, two pay-stubs, tax returns, bank statementsConsidering… Looking… Buying…
  • 32. Organize Your Assets • Get ready for the down payment • Cash C h accounts (li id f d ) (liquid funds) • 401k, stocks, other investments • Gift funds? (max. allowed varies) • Move funds around earlyConsidering… Looking… Buying…
  • 33. Review Your Debt • Pull credit report, look for errors • Fi Figure out hhow much monthly i h hl income goes towards debt: 28 – 33% healthy • Pay down credit balances to 1/3rd • Don’t open any new lines of credit p y • Don’t buy any big ticket items • Co borrower will need to do the same Co-borrowerConsidering… Looking… Buying…
  • 34. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: • Redfins partner lenders Redfin s • Referrals from friends, family & co-workers • Banks or credit unions you have accounts at • A large, national bank with an advertised rate • Y Your real estate agent l t t t • Online review sites, such as YelpConsidering… Looking… Buying…
  • 35. Local Recommended Lenders *In *I no way does R dfi d Redfin benefit financially from recommending lenders – we just think they’re great lenders!Considering… Looking… Buying…
  • 36. Current Average Rates Type of Loan March 15, 2012 March 8, 2012 30-Year Fixed 3.92% 3.88% 15-Year Fixed 3.16% 3.13% 5/1 ARM /1 2.83% 2 83% 2.81% 2 81% 1-Year ARM 2.79% 2 79% 2.73% 2 73%Considering… Looking… Buying…
  • 37. Where Are Rates Headed? Looking… Buying…
  • 38. 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 b side side-by-side • Discount & origination points • Interest rates • Insurance premiums (FHA, PMI) • APR (interest rates + fees + points + PMI)Considering… Looking… Buying…
  • 39. Make Your Decision • When possible, get a loan commitment • M k alternative f d li id (401k stock) Make l i funds liquid (401k, k) Good news! Loan payments are made in arrears, so your first loan payment won’t be for , y p y two months.Considering… Looking… Buying…
  • 40. Making Your Offer g
  • 41. Getting The House You WantYour agent:• Researches seller & listing agent g g • Reviews agent-only comments • Studies sellers situation • Contacts listing agent• Prepares a comparative market analysis and discusses • Where do you want to start? • Where do you want to end up?• Writes up your offer • Inspection contingency • Financing contingency• Submits offer• Negotiates on your behalf
  • 42. Home Inspections
  • 43. Home Inspections• What to look for yourself y• Missing components • Big ticket items (AC, cabinets, appliances) (AC cabinets • Deliberate damage & safety (electrical)• Severe neglect• Walls, floors and ceilings inside the home should be checked for the presence of water damage
  • 44. Home Inspections p• Most common concerns • Roof • Structural • Pl bi Plumbing • Electrical • HVAC • Deferred Maintenance • Substandard Repairs • Termites • Mold
  • 45. Recommended inspectors• Matt Henderson • S Summit Home I it H Inspection ti • 714-296-4423 • matthend1@yahoo.com• Derick Fouts • Cornerstone Inspections • 714-496-4971 • dfouts@cornerstone-inspects.com
  • 46. Closing Costs• Closing costs typically run about 2 to 4% of the purchase price It is very important to meet with price. a lender in the beginning of your home search and look at the costs involved so you can make y wise decisions.• Ask the lender for a good faith estimate• All of your closing costs will be spelled out in your final closing statement provided by the escrow company.
  • 47. Get pre-approved Tour homes Find dream home Consult with agent, write offer Submit offer to listing agent Negotiations Success! Mutual Acceptance Earnest money [Within 3 days]Overview of a Inspection contingency [17 days]Purchase Prelim contingency [17 days] Loan contingency [17 days] Appraisal Contingency [17 days] Walk through Closing! Get keys and take possession! y p Receive Redfin credit Complete Redfin survey
  • 48. Deal Room Important milestone tracker Your to do list Your team of agents
  • 49. Short-SalesShort Sales & Bank Owned
  • 50. 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 what s • Requires 1 - 2 banks’ approval (usually 2) • May have other liens (taxes utilities HOA) (taxes, utilities,Considering… Looking… Buying…
  • 51. We Can Help With A Short Sale • See short sales with a Redfin agent • If you want to buy, work with a R dfi b k i h 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 refundConsidering… Looking… Buying…
  • 52. Bank-Owned Properties A foreclosed home owned by a bank or lender • Also known as REO’s • Highest and best offer g • Long response times • Banks demand use of their own contracts • Legal addenda may require an attorney • Limited or no disclosures • Property sold in “As Is” conditionConsidering… Looking… Buying…
  • 53. So What Now? • Make sure it’s the right time for you • Start browsing online S b i li • Find the right agent • Get pre-approved & look for a lender • Start seeing homes • Make an offer & close the dealConsidering… Looking… Buying…
  • 54. Additional Classes in OC• Home Selling Class • Tomorrow from 6PM to 8PM in this room• Investment Property Webinar • Thursday from 12PM to 1PM u sday o• Short Sale & Reo Webinar • Friday from 12PM to 1PM y• Contract Class • Next Tuesday from 6:30PM to 8:30PM y
  • 55. After Class… Please fill out the survey we’ll send this week along with these slides We’d love to get your slides. We d feedback so we can improve. To get even more info on the home buying p ocess, check process, c ec out ou home buy g gu de our o e buying guide: Redfin.com/home-buying-guideConsidering… Looking… Buying…
  • 56. Thank You for Coming!
  • 57. HUD Settlement Statement
  • 58. Favorite Real Estate Links• Property information • P PropertyShark: Z i d t titl hi t t Sh k 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. Favorite Homes For Sale Links• Redfin: MLS + FSBO + REO, updated every 15 minutes with DOM, price history minutes, DOM history, Zestimate• craigslist: M j FSBO source th t R dfi i li t Major that Redfin doesn’t have• HotPads: Foreclosure heat maps• RealtyTrac: Foreclosure market detail, y , subscription required for full reports• Brokerage site of listing agents: more photos of the listing
  • 60. Favorite Data Links• Case-Schiller Indices: Pricing trends by metropolitan area• Altos Research: Median price trends and days on market by city, b t some complain d k t b it but l i data is unreliable• MSN Home Affordability Calculator: Based on your income & credit score• SmartMoneys Home Buying Worksheet: Similar to the MSN calculator, but requires , q more info
  • 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, g g , yp g g , credit reports, and a series of mortgage calculators• The Mortgage Professor: Bare bones information on mortgages, definitions of common terms myriad of mortgage terms, calculators• HUD FHA page: Most reliable explanation of FHA loans, good site for first-time buyers
  • 62. Favorite Links• Loans for first-time home buyers • F d lH Federal Housing Ad i i t ti (FHA) i Administration • 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. Favorite Links Cont.• Remodeling & renovations • D ItY DoItYourself.com: A few ads, but a useful lf f d b t f l clearinghouse of information on remodeling • National Association of Home B ilders Builders (NAHB): Articles on remodeling your home, most are good