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San Diego Home Buying Class - January 24
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San Diego Home Buying Class - January 24






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    San Diego Home Buying Class - January 24 San Diego Home Buying Class - January 24 Presentation Transcript

    • Redfin’s Home Buying Class January 24, 2013 San Diego, CA Follow: @RedfinSanDiego Like: http://www.facebook.com/RedfinSanDiegoSlide 1 of 42
    • 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 ● The right home for the right price No obligation Get back a portion of our commissionSlide 2 of 42
    • Understanding the MarketSlide 3 of 42
    • Case-Shiller: San Diego v. 20-City 300.00 San Diego 20-City Composite 250.00 200.00 150.00 100.00 50.00 0.00Slide 4 of 55
    • Case-Shiller – By the Numbers San Diego Up 4.1% year-over-year Peak was November 2005 Down 36% from peak Currently at March 2010 prices 20-City Composite Up 3 % year-over-year Peak was July 2006 Down 29% from peak Currently at May 2010 pricesSlide 5 of 42
    • San Diego Dec. Stats for Houses Tip: Local information can be found for any city, zip or county under “Stats and Trends” from the map page:Slide 6 of 42
    • San Diego Dec. Stats for HousesSlide 7 of 42
    • National Market Trends Multiple Offers - More than a Quarter of Listings Still Selling Fast ● In Dec. 27.5% of new listings were under contract in two weeks or less. ● This measure of how competitive the market is for buyers has been holding steady for the last seven months. ● Multiple offers are not only against 3 or 5 buyers, but more like 10, 20 and sometimes even 30 or moreSlide 8 of 42
    • National Market Trends ● The key metrics across 19 major metropolitan markets are: ► Prices 11.3% higher YoY (9th month in a row with increasing prices YoY) ► Inventory falls 33% YoY ► At the close of 2012 there were < 160,000 listings nationally ► Inventory been dropping YoY for 22 months in a rowSlide 9 of 42
    • MortgagesSlide 10 of 42
    • Review Your Financial Situation To Buy or Not to Buy ● Pull credit report, look for errors ● Establish comfort level for monthly payment ● Figure out how much monthly income goes towards debt: 28 – 33% healthy ● Pay down credit balances to 1/3rd ● Don’t open any new lines of credit ● Don’t buy any big ticket items ● Source of money ● Current employment statusSlide 11 of 42
    • Start Shopping for Lenders Compile a list of 3 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!Slide 12 of 42
    • Getting Pre-Approved A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend you ● Establishes what you can afford & makes offer process go faster ● Good for 90 days, depending on lender ● Ask for a few different amounts ● Redfin asks that you get pre-approved before your third tour ● Are gift funds involved? ● How much do you have for a down payment? Information needed: ● W-2, two pay-stubs, tax returns, bank statementsSlide 13 of 42
    • Comparing Loan Estimates ● Gather loan estimates ► A minimum of two ► These aren’t final numbers, but within a few thousand dollars ► 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)Slide 14 of 42
    • Types of Loans ● Conventional: ► As low as 5% down ► Fixed or adjustable rates, conforming or non-conforming ● Federal Housing Administration Loan (FHA): ► Always have mortgage insurance ► Buyers need only a 3.5% down payment ● VA Guaranteed Loan: ► Veterans, active duty personnel, reservists/national guard, surviving spouses ► No down paymentSlide 15 of 42
    • Where Are Rates Headed? Type of Loan January 10, 2013 January 3, 2013 30-Year Fixed 3.40% 3.34% 15-Year Fixed 2.66% 2.64% 5/1 ARM 2.67% 2.71% 1-Year ARM 2.60% 2.57%Slide 16 of 42
    • Where Are Rates Headed?Slide 17 of 42
    • Make Your Decision ● When possible, get a loan commitment ● Make alternative funds liquid (401k, stock) Good news! Loan payments are made in arrears, so your first loan payment won’t be for two months.Slide 18 of 42
    • 10-Minute Break 10 mins 5 mins End Let’s Get Started!Slide 19 of 42
    • 15-Minute Break 15 mins 7.5 mins End Let’s Get Started!Slide 20 of 42
    • Short Sales and Bank Owned MichelleSlide 21 of 42
    • What is a Short Sale? The owner owes more on the mortgage than the home is worth ● Usually pre-foreclosure, but not always ● Listed for less than what’s owed to the bank ● Requires 1 - 2 banks’ approval (usually 2) ● May have other liens (taxes, utilities, HOA) We Can Help With a Short Sale! ● See short sales with a Redfin agent ● If you want to buy, work with a Redfin agent or a short sale partner agent ● Redfin partner agents work for other brokerages but share Redfin’s commitment to customer service ● Get a 15% commission refundSlide 22 of 42
    • What is a Bank-Owned Property? ● A foreclosed home owned by a bank or lender ● Standard sale but: ► Verbal negotiations ► Long response times ► Repairs unlikely ► Legal addenda may require an attorney ► Limited or no disclosures ► Banks demand use of their own contracts ► Bank can back out any time until they’ve signed ► Contract often requires early release of earnest moneySlide 23 of 42
    • Putting it all together to findYOUR homeSlide 24 of 42
    • Highlights of Redfin’s Site ● Search by zip code or neighborhood ● Search by school ● Saved searches/instant alerts ● Agent notes ● Download results ● Price your home ● Forums ● Home buying guide ● Home inspection guide ● Any questions about the site?Slide 25 of 42
    • Search by SchoolsSlide 26 of 42
    • How Touring with Redfin Works ● Up to six homes per tour in two hour blocks ● Go on as many tours as you need ● Led by agent or associate agent ● Need to be verified ● No obligationSlide 27 of 55
    • Redfin Open Book ● Redfin Certified Providers ► Proven track record, vetted by Redfin ● We review every client & post the good, bad, & ugly ● Read real reviews & find a great local team ► Inspectors ► Lenders ► AttorneysSlide 28 of 42
    • The Offer & The DealSlide 29 of 42
    • Tour homes Find dream home Consult with agent, write offer Submit offer to listing agent Negotiations Success! Mutual Acceptance Earnest money [1%-3% within 3 business. days after offer acceptance ] Overview of a Inspection contingency [5-10 days] Purchase Financing contingency [17 days] Final walk thru - details Closing! Get keys and take possession! Receive Redfin refund Complete Redfin surveySlide 30 of 42
    • What Next…Under Agreement! ● Schedule Home Inspection ► Look for pdf. reports with photos ► Ask us or use personal references ► Mention if you want tests perform: Radon- canister or computer? Lead Paint Water ► Have a check or CC ready ► Shop around – priced by sqft. and # of bedrooms ► Stay involved – home education ► Ice Dams? Flooding?Slide 31 of 42
    • Home Inspection Hints Watch out for: Look for and Check: •Galvanized steel pipes •Chimney sweep fireplace •Double-paned windows •Knob and tube wiring inspection •Well ventilated attic •Cracks in foundation •Check all included •Stairs have handrails appliances •Mold, mildew or signs of •Check water pressure leaking near walls or floorsSlide 32 of 42
    • Multiple Offers ● This occurs when inventory is down and buyer interest is up ● 5 Tips for Winning in a Bidding War ► Make the competition eat your dust ► Get pre-approved with a local lender & get underwriter approval ► Start the conversation early ► Write a letter & appeal to the seller ► Know your limitsSlide 33 of 42
    • Express Loan Program ● Loan Contingency 14-21 days is standard – 9 Days Shouldn’t be shortened unless the lender can work quickly. ● Appraisal Contingency Part of the loan contingency for financed offers Lender may reappraise near end of underwriting ● Inspection Contingency 7 days is standard - 2-3 Days Inspections can be scheduled quicklySlide 34 of 42
    • Pre-Commitment LetterSlide 35 of 42
    • Earnest Money ● Deposited after offer acceptance, 2nd deposit due with P&S (5% of purchase price) ● Applied towards your down payment & closing costs ● Could be in jeopardy if you cancel after removing contingencies ● A higher deposit makes for a stronger offer ● Go BIG and put down 5% with the offer!Slide 36 of 42
    • Personal Touch Write a heart-felt letter to seller Include a bit about you, your family, your profession Mention actual attributes of the property Send your agent a family photo to include. Won’t help with a bank owned propertySlide 37 of 42
    • Slide 38 of 42
    • Slide 39 of 42
    • So What Now? ● Make sure it’s the right time for you ● Start browsing online ● Check out our Home Buying Guide and Events page ● Find the right agent ● Look for a lender and get pre-approved ● Start seeing homes ● Make an offer & close the dealSlide 40 of 42
    • Thanks for Coming! 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 http://www.redfin.com/buy-a-home/classes-and-eventsSlide 41 of 42
    • AppendixSlide 42 of 42
    • Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 43 of 42
    • HUD Settlement Statement
    • 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 Homes For Sale Links ● Redfin: MLS + FSBO + REO, updated every 15 minutes, with DOM, price history, Zestimate ● craigslist: Major FSBO source that Redfin doesn’t have ● HotPads: Foreclosure heat maps ● RealtyTrac: Foreclosure market detail, subscription required for full reports ● Brokerage site of listing agents: more photos of the listing
    • Favorite Data Links ● Case-Schiller Indices: Pricing trends by metropolitan area ● 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 Mortgage Links ● 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● 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