San Fernando Valley Home Buying Class - February 19

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San Fernando Valley Home Buying Class - February 19

  1. 1. Redfin’s Home Buying Class February 19, 2013 Woodland Hills Follow: @RedfinLosAngeles Like: http://www.facebook.com/RedfinLosAngelesSlide 1 of 50
  2. 2. Agenda ● To buy or not to buy ● Overview of purchase process ● Understanding the Market ● Touring ● Mortgages ● Break! ● Choosing an agent ● Redfin as a tool ● Short sales & foreclosures ● What to know about closingSlide 2 of 50
  3. 3. 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 commission Redfin VideoSlide 3 of 50
  4. 4. To Buy or Not to BuySlide 4 of 50
  5. 5. Why You Should Buy a Home ● You have a family and need room to grow ● You expect to stay put for 5 or more years ● You’re handy & and ready to invest ● You’ve saved up a down paymentSlide 5 of 50
  6. 6. Why You Shouldn’t Buy a Home ● You don’t have a good reason ● You can’t afford the down payment ● You can rent for much less ● You plan on moving soon ● You’re worried about job securitySlide 6 of 50
  7. 7. Understanding the Buying ProcessSlide 7 of 50
  8. 8. Overview of Purchase Process ( more details to follow) ● Information – learn as much as possible about the market, the neighborhood, price trends ● Tour some houses to get a general idea ● Interview Lenders- get pre-approved ● Choose an Agent ● Tour more seriously and find YOUR home ● Mutual Acceptance on your offer ● Home Inspection “Contingency” ● Financing and Appraisal “Contingencies” ● ClosingSlide 8 of 50
  9. 9. Understanding the MarketSlide 9 of 50
  10. 10. Woodland Hills Jan. Stats for HousesSlide 10 of 50
  11. 11. Woodland Hills Jan. Stats for Houses Tip: Local information can be found for any city, zip or county under “Stats and Trends” from the map page:Slide 11 of 50
  12. 12. LA County Jan. Stats for HousesSlide 12 of 50
  13. 13. LA County Jan. Stats for HousesSlide 13 of 50
  14. 14. 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 14 of 50
  15. 15. 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 15 of 50
  16. 16. Short Sales and Bank Owned NameSlide 16 of 50
  17. 17. 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 17 of 50
  18. 18. 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 18 of 50
  19. 19. TouringSlide 19 of 50
  20. 20. Making the Most of Your Tour 1. Bring a camera, notebook & tape measure 9. Peek into the attic 2. See how much sunlight the place gets 10. Bring a marble or two 3. Check the bathrooms for rot & mold 11. When sharing a wall, make sure it’s thick 4. Look for wavy or discolored wood siding 12. Ignore the appliances and carpets 5. Make sure water spouts drain away from 13. Check the closets house 14. Get the disclosure packet 6. Take stock of storage space 15. Compare the property’s tax records to the 7. Turn off any music playing in house listing details 8. Check for hardwood floorsSlide 20 of 50
  21. 21. 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 field agent ● Need to be verified ● No obligationSlide 21 of 55
  22. 22. MortgagesSlide 22 of 50
  23. 23. 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 23 of 50
  24. 24. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfins partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices *Know your lenderSlide 24 of 50
  25. 25. 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 ● What’s the difference between Pre-Approval and Pre-Qualification ● Good for 90 days, depending on lender ● Ask for a few different amounts ● Similar, yet different from pre-qualification ● 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 25 of 50
  26. 26. Comparing Loan Estimates ● Gather loan estimates ► A minimum of three, more is better ► 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 26 of 50
  27. 27. 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 payment ● Ask your lender if they have special loan programs ► Example: BB&T Chips ProgramSlide 27 of 50
  28. 28. Where Are Rates Headed? Type of Loan February 14, 2013 February 7, 2013 30-Year Fixed 3.53% 3.53% 15-Year Fixed 2.77% 2.77% 5/1 ARM 2.64% 2.63% 1-Year ARM 2.61% 2.53%Slide 28 of 50
  29. 29. Where Are Rates Headed?Slide 29 of 50
  30. 30. 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 30 of 50
  31. 31. 10-Minute Break 10 mins 5 mins End Let’s Get Started!Slide 31 of 50
  32. 32. 15-Minute Break 15 mins 7.5 mins End Let’s Get Started!Slide 32 of 50
  33. 33. Short Sales and Bank Owned MichelleSlide 33 of 50
  34. 34. 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 34 of 50
  35. 35. 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 35 of 50
  36. 36. Putting it all together to findYOUR homeSlide 36 of 50
  37. 37. Redfin.com - Benefits of MLS Powered (Multiple Listing Service) ● 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 homesSlide 37 of 50
  38. 38. Agent NotesSlide 38 of 50
  39. 39. CMA ToolSlide 39 of 50
  40. 40. Home Buying GuideSlide 40 of 50
  41. 41. Search by SchoolsSlide 41 of 50
  42. 42. Home Inspection Guide http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 42 of 50
  43. 43. Redfin Open Book ● Redfin Certified Providers ► Proven track record, vetted by Redfin ● We survey every client & post the good, bad, & ugly ● Read real reviews & find a great local team ► Inspectors ► Lenders ► Title Companies ► AttorneysSlide 43 of 50
  44. 44. Choosing the Right AgentSlide 44 of 50
  45. 45. Redfin’s Partner Program Partner agents are employed by other brokerages, but have teamed up with us to provide Redfin-Certified service to a wider range of customers. We’ll refer you to a partner agent when: ► A home is outside of our direct service area ► A home is below our price minimum ► We’re experiencing an unusually high customer demand We survey all partner agent clients ► All surveys are published on their Redfin page ► 97% of customers would recommend Redfin partnersSlide 45 of 50
  46. 46. What to Ask Any Agent ● Is this your full-time job? ● Familiar with foreclosures or short-sales? ● Where were your last five deals? ● Who else will be working with me? ● Will you show me all properties for sale? ● When am I committed to working with you? ● Has a client ever filed a complaint? ● How are you paid? ● Can I see some reviews of your work?Slide 46 of 50
  47. 47. Overview of a PurchaseSlide 47 of 50
  48. 48. 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 [10-17 days]Purchase Title review [5 days] Loan & Appraisal Contingency [17 days] Waiting for loan approval Escrow signing appointment Closing! Get keys and take possession! Receive Redfin refund Complete Redfin surveySlide 48 of 50
  49. 49. 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 49 of 50
  50. 50. Check out our local pages!Slide 50 of 50
  51. 51. AppendixSlide 51 of 50
  52. 52. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 52 of 50
  53. 53. HUD Settlement StatementSlide 53 of 50
  54. 54. 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 countySlide 54 of 50
  55. 55. 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 listingSlide 55 of 50
  56. 56. 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 infoSlide 56 of 50
  57. 57. 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 buyersSlide 57 of 50
  58. 58. 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 estateSlide 58 of 50
  59. 59. 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 goodSlide 59 of 50

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