San francisco hbc august 8, 2012
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San francisco hbc august 8, 2012






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  • Point out reviewsUpdating this page: This should be updated based on your Local Rec. Lender. Just go to the page click “Print Screen.” Come back to this page, click on the large image, click delete, and then right click and paste. Size the images so it fits the page. The right click again and click “Send to back.”
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  • Chart: rates rise or remain relatively unchanged? Experts and Bankrate analysts predict where mortgage rates are headed over the next week.This week (July 5-11), 31 percent of the panelists believe mortgage rates will rise over the next week or so; 38 percent think rates will fall; and 31 percent believe rates will remain relatively unchanged (plus or minus 2 basis points). Read more: Rate Trend Index - Mortgage Rate Trends -
  • Doug: Courtney and I update this slide to reflect the agent who is presenting and their team.

San francisco hbc august 8, 2012 San francisco hbc august 8, 2012 Presentation Transcript

  • Redfin’s Home Buying Class San Francisco August 8, 2012Slide 1 of 56
  • 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 56
  • 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 56
  • To Buy or Not to BuySlide 4 of 56
  • 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 56
  • 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 56
  • Understanding the Buying ProcessSlide 7 of 56
  • 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 56
  • Understanding the MarketSlide 9 of 56
  • Case-Shiller: San Francisco Area v. 20-City 250.00 San Francisco 20-City Composite 200.00 150.00 100.00 50.00 0.00Slide 10 of 55
  • Case-Shiller – By the Numbers San Francisco Area Down 1.4% year-over-year Peak was May 2006 Down 40% from peak Currently at December 2008 prices 20-City Composite Down 1.9% year-over-year Peak was July 2006 Down 34% from peak Currently at December 2002 pricesSlide 11 of 56
  • SF June Stats for HousesSlide 12 of 56
  • SF June Stats for HousesSlide 13 of 56
  • SF June Stats for CondosSlide 14 of 56
  • SF June Stats for CondosSlide 15 of 56
  • National Market Trends ● May ► price increase = 2.7% month over month ► Price increase = 2.2% year over year ► Inventory levels down 1.7% month over month ► Inventory levels down 23.5% year over year ► Sales volumes up 7.4% year over year ► Pending sales up 10.7% ► San Francisco price increase 5.5% MoM, 4.6% YoYSlide 16 of 56
  • Multiple Offer Situations This occurs when inventory is down and buyer interest is up 5 Tips for Winning in 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 limitsSlide 17 of 56
  • Short Sales and Bank OwnedSlide 18 of 56
  • 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 19 of 56
  • 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 20 of 56
  • TouringSlide 21 of 56
  • 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 22 of 56
  • 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 23 of 55
  • MortgagesSlide 24 of 56
  • Getting Pre-Approved Income oSalary—Past 30 days oHourly—Consistency and history oSelf-employed—Two year average Credit Assets o 660 for FHA o Down Payment o 680 for Conventional o Closing Costs o 720 for Rate Improvement o Cash ReservesSlide 25 of 56
  • Show Stable EmploymentSalaried Employee o W2’s are historic o Most recent paystubs o Raises count immediatelySelf-Employed o Two Year History o Same line of workHourly Wage Earner o Consistent hours over 1-2 year periodSlide 26 of 56
  • Organize Your Assets Lenders Will Require 2 Months of Statements ●Liquid ► Do not move money around—hard to paper trail ●Retirement Accounts ► Consider a 401k Loan ●Gift Funds ► Family members onlySlide 27 of 56
  • Review Your Debt | Credit HistoryKnow Current Credit Score Know Your Debt Tolerance●—$19.95 to get your ●Cost of rentingscore ●Tax benefits of home ownership●Use your mortgage lender’sreport ●Budget considerationsFix Errors Lender Tolerance May Be●Remove duplicates Different●Resolve disputes ●45% debt to income ratio is allowed●Reduce credit card debt●Do not open, close, or changecredit lines●Do not make large purchasesSlide 28 of 56
  • Choosing a Lender Pre-Approval letter ●Part of the offer ●Sellers want accountability Using Referrals ●From Redfin’s partner lenders ●From friends who recently financed a home ●From Realtor ●From Yelp, Berkeley Parents Network  Meet Your Lender!Slide 29 of 56
  • Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 30 of 56
  • 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: EOM programSlide 31 of 56
  • Where Are Rates Headed? Type of Loan July 26, 2012 August 2, 2012 30-Year Fixed 3.49% 3.55% 15-Year Fixed 2.80% 2.83% 5/1 ARM 2.74% 2.75% 1-Year ARM 2.71% 2.70%Slide 32 of 56
  • Where Are Rates Headed?Slide 33 of 56
  • 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 34 of 56
  • Make Your DecisionGet a Good Faith Estimate o Itemized List of Fees: o Origination o Credit report o Transfer Tax o Discount Fee o Title insurance o Recording o Processing o Escrow fees o Underwriting o Prepaid items Good news! Loan payments are made in arrears, so your first loan payment after closing will not be for almost two months!Slide 35 of 56
  • Break!Slide 36 of 56
  • Putting it all together to findYOUR homeSlide 37 of 56
  • - Benefits of a MLS (Multiple Listing Service) Powered ● 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 38 of 56
  • Highlights of Redfin’s Site ● Search by zip code or neighborhood ● Saved searches/instant alerts ● Agent notes ● Download results ● Price your home ● Forums ● Home buying guide ● Home inspection guide ● Any questions about the site?Slide 39 of 56
  • 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 ► Title Companies ► AttorneysSlide 40 of 56
  • Redfin Open BookSlide 41 of 56
  • Choosing the Right AgentSlide 42 of 56
  • Traditional vs. RedfinSlide 43 of 56
  • 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 44 of 56
  • Experience With Multiple Offers This occurs when inventory is down and buyer interest is up 5 Tips for Winning in 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 limitsSlide 45 of 56
  • 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 46 of 56
  • Home Inspection and Other Contingencies NameSlide 47 of 56
  • Home Inspection ● We recommend that you have a home inspection ● Cost runs $350 to $1200 depending upon the size of the house ● Your agent will accompany you ● Your time to evaluate the property ● What an inspection contingency covers and doesn’t cover ● Types of inspectionsSlide 48 of 56
  • Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● OtherSlide 49 of 56
  • Closing – what you need to knowSlide 50 of 56
  • Closing: HUD–1 Settlement HUD-1 Settlement Statement – Lists all fees/charges/credits By law, the final costs listed on your HUD-1 must be within 10% of the estimates provided on your Good Faith Estimate (GFE). ● Lender charges ► Includes origination fee, appraisal fee, credit report, insurance and tax escrows ● Title charges ► Includes settlement fee, and owner’s and lender’s title insurance ● Government charges ► Includes recording fees, recordation taxes and property taxesSlide 51 of 56
  • Title Companies ● What does the title company do? ► Prepares the final documents, including the HUD-1 ► Conducts the closing ► Examines and clears the title to the property ► Records the deed, mortgage and any other recordable instruments ► Issues title insurance to the lender and the buyerSlide 52 of 56
  • Closing: Title Insurance ● Title insurance guarantees that the property is clear and marketable ● 2 types of title insurance policies ► Limited (Standard)  Protection against pre-closing defects in title ► Enhanced (Eagle)  Costs 20% more than Standard policy  Covers post closing fraud, forgery, identity theft  Increases with value of the property up to 150% of original price  Includes coverage for: mechanic’s liens, invalid permits, forced removal of structure, unrecorded easements, unrecorded leases,Slide 53 of 56
  • Closing Day ● You’ll have a final walk-through on closing ● Closing typically takes 1 hour day or just before ● Get keys and take possession! ● What to bring: ► Government issued photo ID ► Certified checkSlide 54 of 56
  • 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 55 of 56
  • 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 56 of 56
  • AppendixSlide 57 of 56
  • Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 58 of 56
  • Some Of Our Favorite Sites ● Seattle Bubble: market analysis ● Curbed Seattle: cool houses ● Urbnlivn: for condo shoppers ● WalkScore: see what’s nearbySlide 59 of 56
  • 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 ► 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