Redfin’s Multiple Offer Class
Host: Loren Haley~ April 1, 2014
Follow: @Redfin
Like: http://www.facebook.com/Redfin
Presen...
Meet Redfin’s Silicon Valley Team
Agenda
● Why All the Multiple Offers?
● Getting Ready to Make an Offer
● Writing a Winning Offer
 Price
 Terms
 Getting...
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%...
Understanding the
Market
Santa Clara County Homes for Sale
Area Overview for Santa Clara County
Market Trends
Why all the Multiple Offers?
What’s driving the sudden demand for homes?
● Interest rates still at historical lows
● Recen...
Local Market Trends: San Jose
January 2013: Bidding Wars
● 58.1% homes faced competition
 Up from 52.8% Month-Over-Month
...
Local Market Trends: San Jose
● % of New Listings Under Contact in 2 weeks
► November 2013: 48.6%
► October 2013: 48.0%
► ...
What Trends Are We Noticing?
● Homes are being listed at strategically low prices
► So properties are selling way above li...
5 Tips for Winning a Bidding War
1. Make the competition eat your dust
2. Get pre-approved with a local lender & get under...
Get Ready!
Obtain a Pre-Approval Letter
● Your Lender is part of our Team!
● Ask your loan officer how they can help you i...
Get Ready!
Let’s Do our Homework
● Buyer’s agent should call the listing agent, to find out what
the sellers situation is ...
Get Ready!
Know the Numbers
● Knowing what to offer and being confident in your offer price
makes the process less stressf...
Get Ready!
Documentation
● Having your finances and other required documents in order
prior to making an offer can acceler...
Writing a Winning Offer
Offer Price - Price & Terms are the King & Queen of
Winning in Multiple Offer Situations
● Study C...
Writing a Winning Offer
Highest & Best
● In a multiple offer situation you may have only one shot at
offering and no oppor...
Writing a Winning Offer
Terms - Understand & offer the terms that seller desires
● Contingencies protect the buyer and giv...
Writing a Winning Offer
Personal Touch
● Including a short letter to the seller and a picture may help
the seller connect ...
Pre-Commitment Letter
Financing
● Cash
► Cash offers can close in just a few days as there is no
approval process.
► Strongest of all financing ...
Financing (continued)…
● Making the seller comfortable with your ability to purchase
their property is key to getting your...
Use a Redfin Preferred Lender!
*In no way does Redfin
benefit financially from
recommending lenders –
we just think they’r...
Inspections: To Waive or Not To?
● Pre-Inspection
► Out $300 - $1000 and may not get the house
► Timing can be difficult
►...
Earnest Money
● Deposited after offer acceptance, 2nd deposit due with P&S
(5% of purchase price)
● A higher EMD shows you...
Closing & Possession
● Chat with your lender and see how quick they can close.
Flexibility with closing can make a huge di...
How Redfin Helps
● Redfin agents close more deals than an average agent, we
know the market and how to get the job done.
●...
Future Events!
Thanks for Coming!
Questions? Get in touch:
Loren Haley loren.haley@redfin.com
Check out our upcoming classes:
http://www....
Redfin San Jose Multiple Offer Class  4.1.14
Redfin San Jose Multiple Offer Class  4.1.14
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Redfin San Jose Multiple Offer Class 4.1.14

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  • http://www.redfin.com/research/reports/real-time-bidding-wars#.UtCOgfRDuAgUpdate with your market’s info
  • http://www.redfin.com/research/reports/real-time-fastest-markets/2013/homebuyer-speed-holds-steady-in-november-with-27-percent-of-homes-selling-in-two-weeks-or-less.html#.UtCPIfRDuAgUpdate with your market
  • We’ll stick around…
  • Redfin San Jose Multiple Offer Class 4.1.14

    1. 1. Redfin’s Multiple Offer Class Host: Loren Haley~ April 1, 2014 Follow: @Redfin Like: http://www.facebook.com/Redfin Presented by: Redfin’s Silicon Valley Team
    2. 2. Meet Redfin’s Silicon Valley Team
    3. 3. Agenda ● Why All the Multiple Offers? ● Getting Ready to Make an Offer ● Writing a Winning Offer  Price  Terms  Getting personal ● Financing ● Inspections ● Earnest Money ● Closing ● How Redfin Helps
    4. 4. 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
    5. 5. Understanding the Market
    6. 6. Santa Clara County Homes for Sale
    7. 7. Area Overview for Santa Clara County
    8. 8. Market Trends
    9. 9. 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
    10. 10. Local Market Trends: San Jose January 2013: Bidding Wars ● 58.1% homes faced competition  Up from 52.8% Month-Over-Month  Down from 70.4 Year-Over-Year ● Features of Winning Offers:  All Cash: 6.7%  Waived Financing: 40.0%  Waived Inspection: 40.0%  Had cover letter: 40.0%
    11. 11. Local Market Trends: San Jose ● % of New Listings Under Contact in 2 weeks ► November 2013: 48.6% ► October 2013: 48.0% ► November 2012: 55.5% ● Median Number of Days on Market Until Pending ► November 2013: 14 ► October 2013: 14 ► November 2012: 12
    12. 12. What Trends Are We Noticing? ● Homes are being listed at strategically low prices ► So properties are selling way above list price ► Base your offer price on comps & trends – NOT on list price ● Deadlines are being set to accept & review offers ► Sellers usually review offers after about 7 days on market ► To give property exposure and create buzz amongst buyers ● Multiple offers are not only against 3 or 5 buyers, but more like 10, 20 and sometimes even 30 others ● Some buyers are waiving their inspection contingency
    13. 13. 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
    14. 14. 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
    15. 15. 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
    16. 16. 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 Example: $5,000 more equals $?/month ● Know when to walk away - you can’t control what someone else is willing to pay
    17. 17. 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)
    18. 18. 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
    19. 19. 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
    20. 20. 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?
    21. 21. 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
    22. 22. Pre-Commitment Letter
    23. 23. Financing ● Cash ► Cash offers can close in just a few days as there is no 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
    24. 24. 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
    25. 25. Use a Redfin Preferred Lender! *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
    26. 26. Inspections: To Waive or Not To? ● Pre-Inspection ► 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? ● Waived Inspection ► High Risk ► Waiving contingencies is not advisable
    27. 27. Earnest Money ● Deposited after offer acceptance, 2nd deposit due with P&S (5% of purchase price) ● 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 (seller can’t keep more than 5%) ● A higher deposit makes for a stronger offer ● Go BIG and put down 5% with the offer!
    28. 28. 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
    29. 29. How Redfin Helps ● Redfin agents close more deals than an average agent, we know the market and how to get the job done. ● 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
    30. 30. Future Events!
    31. 31. Thanks for Coming! Questions? Get in touch: Loren Haley loren.haley@redfin.com Check out our upcoming classes: http://www.redfin.com/buy-a-home/classes-and-events

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