Market Trends Class - San Diego, CA
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Market Trends Class - San Diego, CA

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  • http://blog.redfin.com/blog/2013/03/february-real-time-home-price-tracker.html
  • TOP LEFT: This can all be found at http://www.redfin.com/research/reports/real-time-price-tracker#.UqjWWIaO61sPrices showed unexpected resilience with a small 0.9 percent month-over-month decline compared to a 0.4 percent drop last year. Year-over-year prices are up a solid 15.3 percent across the 19 markets.Month-over-month price increases were seen in Las Vegas, Long Island, Philadelphia, Phoenix, Riverside, and San Francisco, with Sacramento unchanged. Year-over-year increases were seen in all 19 metros with Las Vegas, Sacramento, and Riverside leading the way with 30 percent year-over-year median sale price increases.TOP RIGHT: Sales Volume Solid, But West Sees Year-over-year DropThe number of homes sold across the 19 markets showed some unexpected strength in light of the Federal Government shutdown. Home sales were up 0.6 percent year over year and down one percent month over month. Even with the large numbers of federal employees, Washington, D.C. had a two percent month-over-month increase in home sales.While national sales were relatively strong, there was substantial weakness in home sales volume in the West. Las Vegas, Los Angeles, Phoenix, Portland, Riverside, Sacramento, San Diego, San Jose, and Ventura all had fewer homes sold in October 2013 compared to October 2012. The lack of inventory is taking its toll on the number of homes being sold.Bottom: Inventory Struggles to Find its FootingWhile there were a number of promising housing market metrics in October for the housing market, inventory showed a sharply negative trend. The number of homes for sale in October was down 5.5 percent from September and inventory was down 10.4 percent year over year.
  • http://www.freddiemac.com/pmms/
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspx

Market Trends Class - San Diego, CA Market Trends Class - San Diego, CA Presentation Transcript

  • How to Finance Your Home Jordan Clarke Redfin San Diego Coastal Team December 12, 2013 San Diego, CA @Redfin Facebook.com/Redfin Slide 1 of 44
  • Agenda ● ● ● ● ● ● ● ● ● ● A little bit about Redfin Redfin Price Tracker Listing inventory Homes sold New listings Monthly supply All cash deals Multiple offers Staging Is this the recovery? Slide 2 of 44
  • 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 ● Right home for the right price  No obligation  Commission credit Slide 3 of 44
  • The Redfin Refund The Listing Agent gets 3% commission. You save with Redfin. You buy and pay for your dream home. Slide 4 of 44 The 6% sales commission is split. Your Buyers’ Agent gets 3% commission. Redfin keeps a portion as our fee.
  • Yesterday’s prices were a historic joke. ...and not a very funny one. Slide 5 of 44
  • National Market Trends October Highlights: ● Housing market is showing stability and resilience through the seasonal slowdown. ● 19-market median sale price is up 15.3% YoY, down .9% MoM ● Home sales up .6% YoY with 74,363 homes sold this month ● Inventory continues to be low, down 10.4% YoY, 5.5% MoM ● 7 of the 19 markets had MoM price gains in October, all markets up YoY Slide 6 of 44
  • National Market Trends Slide 7 of 44
  • Where Are Rates Headed? Type of Loan Dec 5, 2013 Nov 27, 2013 30-Year Fixed 4.46% 4.29% 15-Year Fixed 3.47% 3.30% 5/1 ARM 2.99% 2.94% 1-Year ARM 2.59% 2.60% Slide 8 of 44
  • Today’s Market: Great for Sellers ...if you can afford to sell. Slide 9 of 44
  • Multiple Offers 6.7% of homes sold in October in San Diego were ALL-CASH deals Slide 10 of 44
  • Multiple Offers 63% of Redfin offers faced competition (October 2013 in San Diego) 56.1% in September 2012 83.9% October 2012 Slide 11 of 44
  • Multiple Offers 25.6% of Redfin offers were over asking (October 2013, San Diego) Slide 12 of 44
  • Multiple Offers 20% Winning offers had a cover letter (October 2013, San Diego) Slide 13 of 44
  • Multiple Offers Slide 14 of 44
  • Why all the Multiple Offers? What’s driving the sudden demand for homes?  Interest rates still at historical lows  Recent IPOs  “Paper millionaires” have cashed out to buy homes  Foreign investors, all-cash buyers  Buyers are not shying away from bidding wars  LOW INVENTORY Months of Supply – The time it would take to sell through all the homes on the market, given the current pace of sales  In a balanced market, Months of Supply is between 5-6 months --- Anything less is a seller’s market Slide 15 of 44
  • What trends are we noticing?  San Diego became more competitive in October with 63% of offers going up against 56.1 in Sept.  Across the 22 markets, personal cover letters as a competitive strategy increased to 23.7% of successful Redfin offers.  San Diego was home to the highest % of all cash offers iwht 6.7% of Redfin’s winning bidders paying all cash. LA was 2nd with 6.3%  While many Americans paused their home-buying and selling plans during the shutdown, overall demand in October was more robust than expected, with home tours and offers rebounding once the government reopened Slide 16 of 44
  • 5 Tips for Winning 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 limits Slide 17 of 44
  • Get Ready! Obtain a Pre-Approval Letter Your Lender is part of our Team!  Ask your loan officer how they can help you in a competitive situation (shorter contingency period, quick closing?)  Request that your LO be available to speak with the listing agent  Get a preapproval letter with your maximum approval amount, you can customize later if necessary  Use a lender with local expertise- in a competitive situation it can be the difference between winning and losing  Get full underwriter approval --No pre-qualification letters please Slide 18 of 44
  • Get Ready! Let’s Do our Homework  Buyer’s agent should call the listing agent, to find out what the sellers situation is & why they are selling  What are the sellers’ motivations?  Will they need to remain at the property after closing?  Do they need a quick sale?  Request for copies of disclosures and reports  Find out how many disclosure packages have been sent out to other buyers, has there been heavy traffic?  Is there an offer due date? How should offers be submitted – via email, drop off at listing office or in person?  Build rapport with listing agent and check scouting report Slide 19 of 44
  • Get Ready! Know the Numbers - Knowing what to offer and being confident in your offer price makes the process less stressful.  Run a Comparative Market Analysis (CMA)  Understand pricing for the area  Determine your maximum price  Calculate payment difference at incremental price points  $5,000 more equals $?/month  Know When To Walk Away  You can’t control what someone else is willing to pay Slide 20 of 44
  • Get Ready! Documentation Having your finances and other required documents in order prior to making an offer can accelerate the process. Here’s what we’ll need at a minimum to include with your offer:  Pre-Approval Letter  Not a pre-qualification  Proof of Funds  Bank statement, 401k, brokerage statement  Earnest Money Deposit Check  Just a copy (picture, scan or fax) Slide 21 of 44
  • Writing a Winning Offer Offer Price - Price & Terms are the King & Queen of Winning in Multiple Offer Situations  Study Comparables  Understand pricing trends in the area  Base your offer on the comparables – not the listing price especially if it is strategically low  List Price to Sales Price Ratio for the Area  How much negotiating room is there?  Days on Market  Fewer DOM – sellers are less flexible  More DOM – sellers are usually more motivated/open to negotiating  Know the Sellers Current Loan Situation Slide 22 of 44
  • Writing a Winning Offer Highest & Best In a multiple offer situation you may have only one shot at offering and no opportunity to further negotiate  Blind betting – you don’t know what the other offers are  What is the maximum price you are willing to pay for this property?  How much do you really want this property?  Determine your walk away price  Go in with your Highest Price and Best Terms right from the start Slide 23 of 44
  • Writing a Winning Offer TERMS - Understand & offer the terms that seller desires  Contingencies protect the buyer and gives the option to negotiate further, or cancel the transaction if no agreement is reached.  Inspection Contingency – Typically 7 to 12 days  Financing Contingency - Typically 14 to 17 days  Appraisal Contingency - Typically 14 to 17 days  Shorter contingency periods makes your offer stronger & shows how serious you are as buyers  Need a Home Warranty? Seller Rent Back? Slide 24 of 44
  • Pre-Commitment Letter Slide 25 of 44
  • Slide 26 of 44
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  • Financing ● Cash ► Cash offers can close in just a few days as there is no loan approval process. ► Strongest of all financing options ● Conventional ► 5% or more down payment. Few restrictions on condition of home, buyer has good credit. ► Strong second best financing option ● FHA / VA ► Least down payment (as little as 0%-3.5%), lender may require repairs, longest closing period. Lower credit ok. ► Also viable financing options Slide 28 of 44
  • Writing a Winning Offer Financing (continued)… Making the seller comfortable with your ability to purchase their property is key to getting your financed offer accepted.  Present a Solid Pre-Approval    Get a Loan Commitment – this will set you ahead of almost all other offers Show the maximum amount you qualify for List your FICO scores, DTI’s, etc. if possible  Use a Lender with Local Presence & Expertise   Easy to contact and part of our team Offer to have lender speak directly to Listing Agent (LA) and/or seller Slide 29 of 44
  • Writing a Winning Offer Use a Redfin Preferred Lender *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders! Slide 30 of 44
  • Writing a Winning Offer Closing & Possession Closing - Chat with your lender and see how quick they can close. Flexibility with closing can make a huge difference Take Possession At closing or does the seller need a Rent Back?  The seller may needs to stay longer but want to close sooner to have access to the funds  Seller pays buyers PITI while occupying the home after settlement  Deposit & Rent is held at escrow upon closing  Usually a max of 30 days – anything more requires lender approval Slide 31 of 44
  • Writing a Winning Offer Personal Touch Including a short letter to the seller and a picture may help the seller connect and consider your offer.  Include a bit about you, your family, your profession.  Comment on the things you liked about the seller’s home.  Send your agent a family photo to include.  Won’t help with a bank owned properties or investor sellers Slide 32 of 44
  • Inspections: To Waive or Not To? ● Pre-Inspection(not that common in our market) ► Out $300 - $1000 and may not get the house ► Timing can be difficult ► Seller may not allow ● Post-Inspection ► May scare sellers – They usually want a truly As-Is sale ► Deal can quickly fall apart ► What’s reasonable to negotiate further? Health and Safety ● Waived Inspection ► High Risk ► Waiving contingencies is not advisable but buyers are doing it. Slide 33 of 44
  • Earnest Money ● Deposited after offer acceptance at beginning of escrow ● A higher EMD shows you are serious buyers and could make the sellers consider your offer more ● To be submitted to escrow within 3 business days of acceptance – include copy with offer ● The check is cashed, held at escrow & applied to your down payment at closing ● Refunded if you cancel as a result of a contingency ● Could be in jeopardy if you cancel after you’ve removed all contingencies ● A higher deposit makes for a stronger offer ● Go BIG and put down 5% with the offer! Slide 34 of 44
  • Closing & Possession ● Chat with your lender and see how quick they can close. Flexibility with closing can make a huge difference ● Take Possession ● At closing or does the seller need a Rent Back? ● The seller may needs to stay longer but want to close sooner to have access to the funds ● Seller pays buyers PITI while occupying the home after settlement ● Deposit & Rent is held at escrow upon closing ● Usually a max of 30 days – anything more requires lender approval, rental agreement contract Slide 35 of 44
  • How Redfin Helps ● Redfin agents close more deals than an average agent, we know the market and how to get the job done. We are advocates for our clients ● Help determine market price - CMA, trends and stats ● Understand the listing agent’s negotiation style ► average discount ► market time and ► offer process ● Established relationships with listing agents - we know what questions to ask, what to say, when to say it ● Write crisp, clean offer quickly (Docusign) ● Team structure allows agent to focus on writing your offer Slide 36 of 44
  • This is the “Recovery” Slide 37 of 44
  • Consumer Confidence Slide 38 of 44
  • After Class… 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: www.redfin.com/events Questions? Get in touch: Jordan Clarke jordan.clarke@redfin.com Slide 39 of 44