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Redfin's Free Multiple Offer and Mortgage Class- Westchester
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Redfin's Free Multiple Offer and Mortgage Class- Westchester



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  • http://www.freddiemac.com/pmms/
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspxWill rates rise or remain relatively unchanged? This week (Nov. 7-13), half of the panelists believe mortgage rates will rise over the next week or so, one-third think rates will fall, and the rest believe rates will remain relatively unchanged (plus or minus 2 basis points).Read more: http://www.bankrate.com/news/rate-trends/mortgage.aspxRead more: Rate Trend Index - Mortgage Rate Trends - Bankrate.com http://www.bankrate.com/news/rate-trends/mortgage.aspx#ixzz2097YRlM8
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspx
  • We’ll stick around…


  • 1. Multiple Offer & Mortgage Class Presented by: Aaron Drucker & Nuno Ribeiro Redfin Westchester Team Scarsdale, NY October 30, 2013 Follow: @Redfin Like us: facebook.com/Redfin
  • 2. Redfin Westchester Team
  • 3. Working with Redfin
  • 4. 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 ► Switch Redfin agents ► Pause and re-start your search any time ► Tour on your schedule and pace ● Refund ► We’ll refund a portion of the commission back to you ● The Best Results ► Service: 97% would recommend us to a friend
  • 5. The Redfin Refund The Listing Agent gets 2.5% commission. You save with Redfin. You buy and pay for your dream home. The 5% sales commission is split. Your Buyers’ Agent gets 2.5% commission. Redfin keeps a portion as our fee.
  • 6. What We Have Accomplished ● 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 ● The right home for the right price ● No obligation ● Get back a portion of our commission
  • 7. Why All The Multiple Offers?
  • 8. Why all the Multiple Offers? 2013: Low Inventory 2013: Rising Prices
  • 9. 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
  • 10. 5 Tips for Winning a Bidding War 1. Make the competition eat your dust – sign up a redfin 2. 3. 4. 5. listing alert! Get pre-approved with a local lender & get underwriter approval Start the conversation early Write a letter & appeal to the seller Know your limits
  • 11. 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
  • 12. 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
  • 13. 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
  • 14. 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)
  • 15. 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
  • 16. 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
  • 17. 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?
  • 18. Pre-Commitment Letter
  • 19. 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
  • 20. 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
  • 21. 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!
  • 22. 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
  • 23. 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
  • 24. 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.
  • 25. 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!
  • 26. 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
  • 27. 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
  • 28. Mortgages
  • 29. Where Are Rates Headed? Type of Loan December 12, 2013 December 5, 2013 30-Year Fixed 4.42% 4.46% 15-Year Fixed 3.43% 3.47% 5/1 ARM 2.94% 2.99% 1-Year ARM 2.51% 2.59%
  • 30. Where Are Rates Headed?
  • 31. Get Pre-Approved ● A pre-approval letter is a letter from a bank or a lender letting the seller know your financing is in order ● The process helps you establish how much you can afford and allows you to make an offer with confidence ● Redfin asks that you get pre-approved before your third tour ● The process can be done in person or over the phone and in most cases a letter will be issued same day ● The pre-approval is good for 90 days, depending on lender
  • 32. Facts on Getting Pre-Approved ● Applications are usually free and credit checks should not cost more than $20 ● If you get multiple credit checks from multiple lenders within a 30 day period, this will only count as one credit check against your credit score ● The application does not bind you to a lender, loan or rate ● You will get a better idea of any other action items you need to complete before you can buy ● Gives you a chance to discuss different financing options ● A pre-approval letter is required by most sellers before the offer is considered
  • 33. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfin Open Book ► Redfin Certified lenders ► Reviews you can trust ● Your real estate agent ● Friends, family & co-workers ● Banks or credit unions you have accounts with ● Beware of out-of-state lenders!
  • 34. Open Book ● Redfin-Certified Providers ● Every professional is reviewed and all reviews are shown ● Search for local: ► Inspectors ► Lenders ► Attorneys
  • 35. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
  • 36. Review Your Situation Time to call the Lenders ● The Lenders will gather some basic information to: ● Determine qualified income ● Identify eligible assets ● Pull credit report, look for errors ● The purpose is to: ● Establish a comfort level for the monthly payment ● Identify and explore financing options ● Ensure that when the time is right the financing is ready
  • 37. Review Your Income and Debt ● Things to do: ► Establish a budget ► Pull credit report, look for errors or derogatory information ► Gather the 2 most current Tax Returns, W2’s, Pay Stubs ● Things to avoid: ► Opening new lines of credit ► Closing old lines of credit ► Buying big ticket items (car, furniture, engagement ring) ► Changing jobs
  • 38. Organize Your Assets ● How much do you have available and where is it coming from? ► Checking and Savings ► 401k Loan ► Sale of stock ► Gift funds? (restrictions apply) ► Proceeds from the sale of another home ► Distribution from an estate or trust ● Be prepared to provide a paper trail that reflects available balance and origin of funds
  • 39. Comparing GFE Results ● Gather Good Faith Estimates (loan quotes) ► 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)
  • 40. Make Your Decision ● Choose your lender wisely ► Lock your interest rate ► Review and return the Loan Application with any required documents promptly ► Be available to send any additional documentation as requested ► Stay informed and keep your finger on the pulse of the progress ► Be prepared with a contingency plan in the event there are any unexpected delays ► Buckle up and enjoy the ride
  • 41. After Class… Please fill out the survey handed out at the beginning of class. We’d love to get your feedback on how the class could improve. To get even more info on the home buying process, check out our home buying guide: http://redfin.com/home-buying-guide Interested in having Redfin host a free 1 hour home buying session at your company? Let us know. We’ll provide lunch!
  • 42. Thanks for Coming! Questions? Get in touch: Nuno Ribeiro Aaron Drucker nuno.ribeiro@redfin.com aaron.drucker@redfin.com