Redfin’s Home Buying Class How to take advantage of Low Prices, Low Rates, & High Rents June 27, 2011 Atlanta, GA
Agenda Considering… • To Buy or Not to Buy • Market Conditions • How to Move Up • Renting • Selling • Mortgages Looking… • Searching for Homes • Working with Redfin Buying… • The Offer and the Deal • Next StepsConsidering… Looking… Buying…
Why You Should Buy a Home • You’ve got a family, and need room to grow • You want deep roots • 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…
Why You Shouldn’t Buy a Home • You don’t have a good reason like family or schools • You can’t afford a 10% - 20% down payment • You can rent for much less • You plan on moving soon • You’re worried about job securityConsidering… Looking… Buying…
Case-Shiller: Atlanta v. 20-City Case-Shiller: Atlanta Area Down 4.6% year-over-year Peak was July 2007 Down 24.6% from peak Currently at April 2000 prices Case-Shiller: 20-City Composite Down 4.5% year-over-year Peak was July 2006 Down 32.2% from peak Currently at May 2003 pricesConsidering… Looking… Buying…
Atlanta July Stats for HomesConsidering… Looking… Buying…
Atlanta July Stats for Condos:Considering… Looking… Buying…
Atlanta-Area ForeclosuresArea Foreclosures Average Price % of HomesAtlanta 9,134 $119,940 0.25%Fulton County 10,450 $161,629 0.29%Georgia 78,925 $116,268 0.29%Nationally 1,618,130 $173,422 0.16%Considering… Looking… Buying…
Helping People Live Better! How to Choose When to Hire a Property Manager Presented by Mark LackeyCopyright Material 2006 - 2011Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Help to You Decide - Who should Manage the Property? THE OWNER PROPERTY MANAGEMENT COMPANY PROS: PROS: Increases the Cash Flow Less Headaches More Control Over Expenses Degree of Privacy Knowledge of the Tenant Less chance of Lawsuits Ability to Concentrate on Acquiring Other Investments CONS: CONS: Risks of Violating Landlord Tenant Law/ Lawsuits Costs More to Hire Expertise Allow a Bad Tenant’s Situation to Continue Have to Be Able to Trust too Long Get Personally InvolvedCopyright Material 2006 - 2011Mark Lackey & Anne Lackey, The REI Resource, LLC.
Questions to Consider: Are You Ready to Start a Business? Being a Landlord is a Business • Select an Entity Type • Set up with the Secretary of State • Get a Business License • Set up Banking AccountCopyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Consider: How Are You Going to Receive Rents?Security Issues / Concerns Here comes “RENT MAN” Never take cash!PO Box / Mail Boxes Etc. Copyright Material 2006 - 2008 Mark Lackey & Anne Lackey, The REI Resource, LLC.
Questions to Consider:Do You Feel Comfortable with Fair Housing Laws & Landlord Tenant Law? What Is Prohibited? In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap: • Refuse to rent or sell housing • Refuse to negotiate for housing • Make housing unavailable • Deny a dwelling • Set different terms, conditions or privileges for sale or rental of a dwelling • Provide different housing services or facilities • Falsely deny that housing is available for inspection, sale, or rental • For profit, persuade owners to sell or rent (blockbusting) or • Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing. Source – www.FairHousingLaw.orgCopyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Consider:How are you going to handle the paperwork? Applications Credit Information Leases Tenant Letters Lease Violations HOA Rules & Regulations Billing Statements & Payments Bank Statements Etc, etc, etc…Copyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Consider: What about the repairs? How will you handle repairs? Do you have a team of professionals to help? This is an actual house that tenants occupied before we took over.Copyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Consider:Can You (without hesitation) Evict Someone for Non-Payment? The question to ask yourself if you want to manage a property is “Can you evict your own mother on Christmas Eve in the snow with no boots?” If you can – you can property manage. If you can’t it is best to leave it to someone else. Adapted from Luther RagsdaleCopyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Consider: Do You Understand the Legal Process of Eviction? There are very specific rules for eviction. You must follow the process exactly or the case will be rejected by the courts. Have a good understanding before you begin. Treat everyone equally! Keep your paperwork in good order. Be prepared to present your case with all the facts.Copyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Questions to Consider:Isn’t it worth 10% to have someone else deal with these issues? Do you want to build wealth or build a business?Copyright Material 2006 - 2008Mark Lackey & Anne Lackey, The REIResource, LLC.
Selling your Home with Redfin• Perfect debut • Staging: invest in the house, not fees • Professional photos & video tour: optimized for online• Pricing: a science, not an art• Marketing blitz • Website syndication: 30+ sites • Private placement • Service: open house, private tours, sign, Supra Lockbox, flyers• Sustained effort • Showing feedback, bi-weekly updates • Real-time traffic dashboard • Experienced Contract Negotiations
Pro Photos Make A Big Difference After price, the #1 factor for driving tours: photos
90% of Buyers Search Online 365,000 visits in Atlanta for May 2011 (Source: Internal records) #1 real estate brokerage search site Atlanta (Source: Hitwise) #1 real estate search site in the US (Source: Hitwise)
Pricing Strategies What if we over price? What if we under price?• Fewer showings • Stand out from competition• Miss out on serious buyers • More buyers, auction potential• Long days on market • Lower carrying costs• Need price-reduction plan • Risk: one buyer• More likely to receive lowball offers• Hope: one buyer• Appraisal issues
Financing Your New Home• FIRST – Get preapproved • Before you list your home • Before you search for a new home • Before you go under contract
Prior Residence Impact onFinancing• Timing is everything• Three options • Sell before you buy • Buy before you sell • Buy and retain prior as rental
Qualifying for Mortgage with aPrior ResidenceRules have changed• Can use rental income only in specific situations• May depend on equity in your current home• Get preapproved so you know your options!
What Redfin Is All AboutOur Mission: To use technology and a customerservice focus to make buying & selling homes better forconsumers.The Redfin Difference: Service, Not Sales• Agents 100% focused on clients, not prospecting • Every client surveyed, every response published • Every agent paid on client satisfactionWhat You Get:• Experienced Agents and Team• Service at every step• Agents focused on your goals, not theirs
What Makes Redfin Differerent • 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 homesConsidering… Looking… Buying…
Searching on Redfin Find Redfin’s open Forums houses Exclude Search short recent sales salesConsidering… Looking… Buying…
Home Details Page Add to History of the Different Favorites property map views Local school info Mortgage Calculator
Add Homes to Your Favorites List Order by price, listing date, etc See your notesConsidering… Looking… Buying…
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 • Unlimited tours, no commitment • Pause and re-start your search any time Refund • You get up to 50% the commission The Best Results • Service: 97% would recommend us to a friendConsidering… Looking… Buying…
How Our Team Works Agent Field Agents •Responsible for your •Takes you on success home tours •Writes your offer •Attends •Handles inspection inspections •Handles negotiations You Coordinator •Schedules tours •Works on escrow •Prepares paperworkConsidering… Looking… Buying…
Find a Home to TourConsidering… Looking… Buying…
Schedule a Tour or Add More HomesConsidering… Looking… Buying…
Fill Out Time and NotesConsidering… Looking… Buying…
Coordinator Will Call to ScheduleConsidering… Looking… Buying…
Now You are Ready to Tour You • Up to six homes per tour in two hour blocks • Go on as many tours as you would like • Led by field agent • No commitmentConsidering… Looking… Buying…
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 • Comparative market analysis • Offer strategy for price and terms• Crafts Offer to Purchase • Inspection contingency • Financing & Appraisal contingency• Submits offer• Negotiates terms
Deal Room Important milestone tracker Your to do list Your team of agents
How Commissions Work Example: You buy a home for $500,000 Traditional Agents Commission Seller’s Agent (3%) $15,000 Buyer’s Agent (3%) $15,000 Redfin Agents Commission Seller’s Agent (3%) $15,000 Redfin (1.5%) $7,500 Redfin Buyer (1.5%) $7,500 • Redfin refunds 50% 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…
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 [5-14 days]Purchase Title review [5 days] Financing contingency [20-28 days] Appraisal Contingency [14-21 days] Pre-closing Walk Closing! Get keys and take possession! Receive Redfin credit Complete Redfin survey
So What Now? • Make sure it’s the right time for you • Get pre-approved & look for a lender • Ask to meet with an agent • Search for homes & start touring • Make an offer & close the deal THANK YOU FOR YOUR TIME!!!Considering… Looking… Buying…
Thanks For Coming!Please fill out the survey we’ll send tomorrow along with the slide deck. We’d love to getyour feedback on how the class couldimprove.To get even more info on the home buying process, check out our home buying guide:http://redfin.com/home-buying-guide
Appendix:•Important forms/contracts•Favorite Real Estate Resources
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 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
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
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
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 • What to Look for in an Inspection • American Society of Home Inspectors (ASHI): Good consumer FAQ & virtual home inspection