Redfin’s Distressed Properties ClassWhat you need to know before looking at Foreclosures, Short Sales and Auction Properti...
Agenda•   Market and pricing statistics•   What is a distressed home?•   Foreclosures•   Short sales•   Auctions•   Financ...
Quick Intros• Tamara Markey– Redfin Agent• Jim Tyner – Redfin Agent• Ken Pruitt – Home Solutions Group Lender
To Buy or Not to Buy
Reasons to buy or not buy?• Why would you buy a • Foreclosure? • Short sale?• Why wouldn’t you buy a • Foreclosure? • Shor...
Market Conditions
Case-Shiller: San Diego v. 20-City   300.00            Case-Shiller: San Diego Area            Down 4.5% year-over-year   ...
Distressed Properties
San Diego ForeclosuresArea               Foreclosures       Average Price        % of HomesSan Diego          6,648       ...
Types of Distressed Homes• Short Sales  • AKA: Pre-foreclosure  • Potential vs. Approved Short Sale• Foreclosures (Post-Co...
Short Sales•   How does a short sale work?•   Parties involved (see chart)•   Qualifying the short sale•   Short sale appr...
Short Sale Parties                                                        Short Sale                                      ...
Short Sale Approval Process
Short Sale Tid Bits• The rumor mill (old market)• Types of loans and liens  • Get the Prelim! (and read the fine print)• 9...
15 Questions to Ask the Listing Agent1.Is the property owned by and owner or investor?2.Has there been a trustee’s sale no...
Seller’s Short Sale Shoes•   Why do a short sale?•   Credit hit•   Emotions•   House maintenance•   Inspections•   Moving ...
Why Buy a Short Sale?• It’s the perfect home• You can wait 90-120 days minimum• If you don’t get it, you’ll be alrightOr…•...
Bank Owned Homes•   Contracts•   Addendums•   Timelines•   Home condition•   Listing agents•   Tenants
Why Buy a Bank Owned?•   Best price•   Not afraid of a remodel•   Comfortable with contracts•   Financially strong with li...
Buying at Auction•   County Auctions (steps)•   Organized Auctions•   Who buys homes at auction?•   What types of homes ar...
Financing
Financing• Pre-qualification vs pre-approval• Credit inquiries and FICO• Lender you trust  • Redfin Partner Lenders
Financing Options• Conventional loans • 30 year, 15 year, 5/1 ARM, etc• FHA • FHA health and safety requirements • Flippin...
Financing Steps• Preapproval• Select property • What is condition of property? • Flipping guidelines• When to lock in the ...
Interest Rates• Rates near all-time  lows• Loans are still  available, just harder  to get than before• Long-term, rates  ...
Where Are Rates Headed?
Searching for Distressed Homes
Finding Distressed Homes• Redfin • Shadow Inventory • Foreclosures (bank owned) • Short Sales• Government Sites • Homepath...
Searching on Redfin                                                      Redfin’s                                         ...
Add Homes to Your Favorites List  Order by  price,  listing date,  etc                             See your               ...
Working with RedfinWorking with Redfin
Working With Redfin is Different     Service       • Advocates: client-satisfaction bonuses, not commissions       • Trans...
Get pre-approved                Tour homes                Find dream home                Consult with agent, write offer  ...
Find a Home to TourConsidering…        Looking…   Buying…
Schedule a Tour or Add More HomesConsidering…    Looking…   Buying…
The Offer & The Deal
Negotiation Strategies - SS•   Recognize pricing strategy•   Ask lots of questions•   New listing•   Old listing•   Pre-ap...
Negotiation Strategies - REO• Round 1 •   New listing •   30 days old •   Price Reductions •   Keep it clean• Round 2 • Re...
Deal Room     Important              milestone               tracker Your to do    list                          Your team...
We Share Our Commission With You     •    We refund 15% - 50% of our commission to you (minimum home price of $120,000) su...
Attorneys, Title and Closing• Attorney represents buyer’s lender*• Deeds – Warranty Deed vs. Special Warranty Deed• Title ...
Home Inspections
Home Inspections• What to look for yourself• Missing components  • Big ticket items (AC, cabinets, appliances)  • Delibera...
Home Inspections• Most common concerns  • Roof  • Structural  • Plumbing  • Electrical  • HVAC  • Deferred Maintenance  • ...
Next Steps
So What Now?     •   Make sure it’s the right time for you     •   Get pre-approved & look for a lender     •   Ask to mee...
Thanks For Coming!  Please fill out the survey we’ll send tomorrow    along with the slide deck. We’d love to get  your fe...
Thanks for Coming!
HUD Settlement Statement
Favorite Real Estate Links • Property Information  • PropertyShark: Zoning data, title history,    permits, neighborhood d...
Favorite Real Estate Links: Listings   • Redfin: MLS + FSBO + REO, updated every 15     minutes, with DOM, price history, ...
Favorite Real Estate Links: Pricing Data  • Case-Schiller Indices: Pricing trends by    metropolitan area  • HouseMath: Co...
Favorite Real Estate Links: Mortgage   • Bankrate: Many ads, but is great for comparing     local lenders   • Zillows Mort...
Favorite Links • Loans for First-Time Home-Buyers  • Federal Housing Administration (FHA)  • Fannie Mae and Freddy Mac  • ...
Favorite Links Cont. • Remodeling & Renovations  • DoItYourself.com: A few ads, but a useful    clearinghouse of informati...
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San Diego Distressed Properties - 1.30.2012

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San Diego Distressed Properties - 1.30.2012

  1. 1. Redfin’s Distressed Properties ClassWhat you need to know before looking at Foreclosures, Short Sales and Auction Properties January 30, 2012 San Diego, CA
  2. 2. Agenda• Market and pricing statistics• What is a distressed home?• Foreclosures• Short sales• Auctions• Financing• Finding distressed homes• Negotiation strategies• Home inspections• Attorneys, title and closing
  3. 3. Quick Intros• Tamara Markey– Redfin Agent• Jim Tyner – Redfin Agent• Ken Pruitt – Home Solutions Group Lender
  4. 4. To Buy or Not to Buy
  5. 5. Reasons to buy or not buy?• Why would you buy a • Foreclosure? • Short sale?• Why wouldn’t you buy a • Foreclosure? • Short sale?
  6. 6. Market Conditions
  7. 7. Case-Shiller: San Diego v. 20-City 300.00 Case-Shiller: San Diego Area Down 4.5% year-over-year 250.00 Peak was November 2005 Down 38.9% from peak Currently at October 2002 prices 200.00 150.00 100.00 Case-Shiller: 20-City Composite Down 3.4% year-over-year 50.00 Peak was July 2006 Down 32.2% from peak Currently at May 2003 prices 0.00Considering… Looking… Buying…
  8. 8. Distressed Properties
  9. 9. San Diego ForeclosuresArea Foreclosures Average Price % of HomesSan Diego 6,648 $280,830 0.16%San Diego County 18,561 $299,903 0.39%California 257,480 $236,256 0.32%Nationally 1,351,960 $182,462 0.26%Considering… Looking… Buying…
  10. 10. Types of Distressed Homes• Short Sales • AKA: Pre-foreclosure • Potential vs. Approved Short Sale• Foreclosures (Post-County Foreclosure) • AKA: Bank-owned, REO, lender owned • Fannie, Freddie, Ginnie & HUD• Auctions• Estate Sales
  11. 11. Short Sales• How does a short sale work?• Parties involved (see chart)• Qualifying the short sale• Short sale approval process (see chart)• Timelines (Contingencies and Closing)• False contracts• Approval notice
  12. 12. Short Sale Parties Short Sale Bank #1 Attorney Customer Short Sale Care Departmen Litigation Center t Closer BPO Mortgage Appraiser Insurer Escrow Assistant Mortgage Negotiator Investor #1Sellers Bank #2 Mortgage Investor #2 Short Sale Listing Customer Departmen Litigation Closing Agent Care Center Buyers t Departmen t BPO Mortgage Redfin Home Buyer’s Appraiser Insurer Agent Appraiser Inspectors Lender Mortgage Negotiator Underwrite Investor #1 r Mortgage Investor Investor #2 Guidelines Closing Departmen t
  13. 13. Short Sale Approval Process
  14. 14. Short Sale Tid Bits• The rumor mill (old market)• Types of loans and liens • Get the Prelim! (and read the fine print)• 90 day non-refundable earnest• 15% Redfin Rebate on Short Sales• Questions to ask before writing an offer
  15. 15. 15 Questions to Ask the Listing Agent1.Is the property owned by and owner or investor?2.Has there been a trustee’s sale notice issued?3.How many short sales have you closed?4.Do you have the seller’s completed short sale package in your possession?5.Have you ordered the preliminary title report?6.Are there any non-mortgage liens attached to the property?7.How many loans are on the home?8.Who are the lenders/banks?9.Are any of the loans a line of credit?10.Do you have any offers?11.Have you had any previous offers?12.Have you received an acceptance letter?13.Has the broker’s price opinion (BPO) been conducted? (if yes, when)14.Have you been assigned a negotiator?15.What has motivated the sellers to do a short sale?
  16. 16. Seller’s Short Sale Shoes• Why do a short sale?• Credit hit• Emotions• House maintenance• Inspections• Moving Aid
  17. 17. Why Buy a Short Sale?• It’s the perfect home• You can wait 90-120 days minimum• If you don’t get it, you’ll be alrightOr…• You like emotional roller-coasters
  18. 18. Bank Owned Homes• Contracts• Addendums• Timelines• Home condition• Listing agents• Tenants
  19. 19. Why Buy a Bank Owned?• Best price• Not afraid of a remodel• Comfortable with contracts• Financially strong with liquid capital
  20. 20. Buying at Auction• County Auctions (steps)• Organized Auctions• Who buys homes at auction?• What types of homes are at auction?• What are the prices like?• What is involved with buying at auction?• What is an absolute auction?• Due Diligence prior to auction• Tip - Write down your Max-bid
  21. 21. Financing
  22. 22. Financing• Pre-qualification vs pre-approval• Credit inquiries and FICO• Lender you trust • Redfin Partner Lenders
  23. 23. Financing Options• Conventional loans • 30 year, 15 year, 5/1 ARM, etc• FHA • FHA health and safety requirements • Flipping guidelines• Rehab loans (203k)• Homepath loans
  24. 24. Financing Steps• Preapproval• Select property • What is condition of property? • Flipping guidelines• When to lock in the rate • Short sale • Bank owned• Mortgage process
  25. 25. Interest Rates• Rates near all-time lows• Loans are still available, just harder to get than before• Long-term, rates must go up – but no one can say when
  26. 26. Where Are Rates Headed?
  27. 27. Searching for Distressed Homes
  28. 28. Finding Distressed Homes• Redfin • Shadow Inventory • Foreclosures (bank owned) • Short Sales• Government Sites • Homepath.com and Homesteps.com • Hudhomestore.com • IRS• Look down the street
  29. 29. Searching on Redfin Redfin’s Find Forums open houses Exclude Search short recent sales sales Download to ExcelConsidering… Looking… Buying…
  30. 30. Add Homes to Your Favorites List Order by price, listing date, etc See your notesConsidering… Looking… Buying…
  31. 31. Working with RedfinWorking with Redfin
  32. 32. 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…
  33. 33. 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
  34. 34. Find a Home to TourConsidering… Looking… Buying…
  35. 35. Schedule a Tour or Add More HomesConsidering… Looking… Buying…
  36. 36. The Offer & The Deal
  37. 37. Negotiation Strategies - SS• Recognize pricing strategy• Ask lots of questions• New listing• Old listing• Pre-approved short sale• Team up with listing agent• Meet the sellers• Be realistic
  38. 38. Negotiation Strategies - REO• Round 1 • New listing • 30 days old • Price Reductions • Keep it clean• Round 2 • Repairs • Health and safety • Stolen goods • Lender Required Repairs
  39. 39. Deal Room Important milestone tracker Your to do list Your team of agents
  40. 40. We Share Our Commission With You • We refund 15% - 50% of our commission to you (minimum home price of $120,000) subject to the approval of your lender and the home seller • Applied to closing costs • Refund is tax-freeConsidering… Looking… Buying…
  41. 41. Attorneys, Title and Closing• Attorney represents buyer’s lender*• Deeds – Warranty Deed vs. Special Warranty Deed• Title Search • Chain of title • Last minute liens • Title insurance • Lender’s Policy • Owner’s Policy• Closing Paperwork• Possession and keys
  42. 42. Home Inspections
  43. 43. Home Inspections• What to look for yourself• Missing components • Big ticket items (AC, cabinets, appliances) • Deliberate damage & safety (electrical)• Severe neglect• What an inspector won’t find and won’t test • Hidden defects • Untested system defects
  44. 44. Home Inspections• Most common concerns • Roof • Structural • Plumbing • Electrical • HVAC • Deferred Maintenance • Termites • Mold • Cosmetic
  45. 45. Next Steps
  46. 46. 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…
  47. 47. Thanks For Coming! Please fill out the survey we’ll send tomorrow along with the slide deck. 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
  48. 48. Thanks for Coming!
  49. 49. HUD Settlement Statement
  50. 50. 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
  51. 51. 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
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. 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
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