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Home Buying Class - May 8, 2012 - Northbrook

Home Buying Class - May 8, 2012 - Northbrook






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    Home Buying Class - May 8, 2012 - Northbrook Home Buying Class - May 8, 2012 - Northbrook Presentation Transcript

    • May 8, 2012 NorthbrookSlide 1 of 55
    • Agenda ● To buy or not to buy ● Market conditions ● Searching for a home ● Finding a real estate agent ● Working with Redfin ● Mortgages ● The offer and the deal ● Short sales and bank ownedSlide 2 of 55
    • 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 ► Redfin agents paid salary plus bonus ► Bonus is based on customer review ● Informed decisions ● The right home for the right price  No obligation  Get back a portion of our commissionSlide 3 of 55
    • Redfin Start-up to NowSlide 4 of 55
    • Markets Served March 2012Slide 5 of 55
    • To Buy or Not to BuySlide 6 of 55
    • 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 ● ●Slide 7 of 55
    • ● ● ● You can rent for much less ● You plan on moving soon ●Slide 8 of 55
    • Market ConditionsSlide 9 of 55
    • Case-Shiller: Chicago Area v. 20-City 250.00 200.00 150.00 100.00 Chicago Area 20-City Composite 50.00 0.00Slide 10 of 55
    • Case-Shiller By the Numbers Chicago Area Down 6.9% year-over-year Peak was September 2006 Down 37.5% from peak Currently at June 2000 prices 20-City Composite Down 3.5% year-over-year Peak was July 2006 Down 35% from peak Currently at November 2002 pricesSlide 11 of 55
    • Northbrook March Stats for HousesSlide 12 of 55
    • Northbrook March Stats for CondosSlide 13 of 55
    • National Market Trends ● Multiple Offers ► 74% of offers in OC faced competition in March, 51% in DC ► Offers increased 50% nationwide but closings only increased by 17% ► Competition is up for getting offers accepted ● Tale of 2 markets ► Prices are mostly soft for condos and townhomes ► Entry level and mid range houses are selling like hotcakes ● Nationally, prices are down 3.8% ● Number of homes for sale is down 27% from March last yearSlide 14 of 55
    • Where is the Local Market Headed? ● Supply of homes is at a five- rest of the year ● Rents have been rising, making buying more attractive ● Market stabilizing, though likely 2-3 years before significant appreciation ● Rate increases - biggest issue for buyersSlide 15 of 55
    • 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 16 of 55
    • Searching for a HomeSlide 17 of 55
    • Overview •Search homes online & tour •Get pre-approved •Find a dream home Finding •Consult with agent, write offer Your Home •Submit offer to listing agent •Negotiations •Success! •Initial earnest money •Inspection contingency Mutual •Attorney contingency Acceptance •Earnest money balance •Financing contingency •Waiting for loan approval •Final walk-through •Get keys and take possession! Closing •Receive Redfin refund •Complete Redfin SurveySlide 18 of 55
    • 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 19 of 55
    • - touring with RedfinSlide 20 of 55
    • Finding an AgentSlide 21 of 55
    • 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? ● When am I committed to working with you? ● Has a client ever filed a complaint? ● How are you paid?Slide 22 of 55
    • Partner agents are employed by other brokerages, but have teamed up with us to provide Redfin-Certified service to a wider range of customers ► A home is outside of our direct service area ► A home is below our price minimum ► We survey all partner agent clients ► All surveys are published on their Redfin page ► 97% of customers would recommend Redfin partnersSlide 23 of 55
    • Traditional vs. RedfinSlide 24 of 55
    • Click here when you decide See all deals & reviewsSlide 25 of 55
    • Working with RedfinSlide 26 of 55
    • How Our Team Works AGENT Responsible for your success Writes your offer Handles negotiations YOU COORDINATOR FIELD AGENT Schedules tours Takes you to see homes Prepares paperwork See 50+ homes a week Works with escrowSlide 27 of 55
    • We Share Our Commission With YouSlide 28 of 55
    • 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 obligationSlide 29 of 55
    • MortgagesSlide 30 of 55
    • 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 statementsSlide 31 of 55
    • 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 earlySlide 32 of 55
    • 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 ● ● ● Co-borrower will need to do the sameSlide 33 of 55
    • Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good 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 YelpSlide 34 of 55
    • Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 35 of 55
    • Where Are Rates Headed?Slide 36 of 55
    • Comparing Loan Estimates ● Gather loan estimates ► 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)Slide 37 of 55
    • 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 firstSlide 38 of 55
    • Making Your OfferSlide 39 of 55
    • Getting The House You Want Your agent: ● Researches seller & listing agent ● Prepares a comparative market analysis and discusses ● Writes up your offer ● Submits offer ● Negotiates on your behalfSlide 40 of 55
    • Overview of a Purchase •Search homes online & tour •Get pre-approved •Find a dream home Finding •Consult with agent, write offer Your Home •Submit offer to listing agent •Negotiations •Success! •Initial Earnest money •Inspection contingency Mutual •Attorney contingency Acceptance •Earnest money balance •Financing contingency •Waiting for loan approval •Get keys and take possession! Closing! •Receive Redfin refund •Complete Redfin SurveySlide 41 of 55
    • Deal Room Important milestone tracker Your to do list Your team of agentsSlide 42 of 55
    • 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 •Check all included •Stairs have handrails •Mold, mildew or signs of appliances leaking near walls or floors •Check water pressureSlide 43 of 55
    • Short-Sales & Bank OwnedSlide 44 of 55
    • What is a Short Sale? The owner owes more on the mortgage than the home is worth ● Usually pre-foreclosure, but not always ● ● Requires 1 - ● May have other liens (taxes, utilities, HOA)Slide 45 of 55
    • 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 ● Get a 15% commission refundSlide 46 of 55
    • What is a Bank-Owned Property? A foreclosed home owned by a bank or lender Standard sale but: ● Long response times ● Repairs unlikely ● Limited or no disclosures ● Banks demand use of their own contracts ●Slide 47 of 55
    • ● Sellers who own their home outright ● Sellers who are relocating ● Estate Sales ● Homes on the market more than 90 daysSlide 48 of 55
    • Key TakeawaysSlide 49 of 55
    • So What Now? ● ● 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 dealSlide 50 of 55
    • Upcoming Events ● Home Inspection Class ►Tuesday May 29 th , 6:30 ► at Old Orchard ►June, watch for Home Lending Class Slide 51 of 55
    • AppendixSlide 52 of 55
    • Appendix ● Sample HUD, or Residential Real Estate Closing Statement ● Favorite Real Estate ResourcesSlide 53 of 55
    • 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 ● 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 ► 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
    • 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