South Coastal OC Home Buying Class 2.19

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South Coastal OC Home Buying Class 2.19

  1. 1. Redfin’s Home Buying Class February 19, 2013 Aliso Viejo, CA Follow: @RedfinOC Like: http://www.facebook.com/RedfinOCSlide 1 of 56
  2. 2. 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 About Redfin VideoSlide 2 of 56
  3. 3. To Buy or Not to BuySlide 3 of 56
  4. 4. 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 4 of 56
  5. 5. Why You Shouldn’t Buy a Home ● You can’t afford the down payment ● You can rent for much less ● You plan on moving soon ● You’re worried about job securitySlide 5 of 56
  6. 6. Understanding the MarketSlide 6 of 56
  7. 7. Case-Shiller: Los Angeles Area v. 20-City 300.00 Los Angeles 20-City Composite 250.00 200.00 150.00 100.00 50.00 0.00Slide 7 of 55
  8. 8. Case-Shiller – By the Numbers Los Angeles Area Up 7.7% year-over-year Peak was September 2006 Down 36% from peak Currently at May 2004 prices 20-City Composite Up 5.5% year-over-year Peak was July 2006 Down 29% from peak Currently at September 2003 pricesSlide 8 of 56
  9. 9. Aliso Viejo Jan. Stats for HousesSlide 9 of 56
  10. 10. Aliso Viejo Jan. for Houses Tip: Local information can be found for any city, zip or county under “Stats and Trends” from the map page:Slide 10 of 56
  11. 11. Orange County Dec. Stats for HousesSlide 11 of 56
  12. 12. Orange County Jan. Stats for HousesSlide 12 of 56
  13. 13. Orange County Jan. for Houses Tip: Local information can be found for any city, zip or county under “Stats and Trends” from the map page:Slide 13 of 56
  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 56
  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 56
  16. 16. Multiple Offer SituationsSlide 16 of 56
  17. 17. 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
  18. 18. Pre-Approval LetterSlide 18 of 56
  19. 19. Earnest Money ● Typically 3% of offer price ● Deposited 3 business days after offer acceptance ● 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 19 of 56
  20. 20. 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 20 of 56
  21. 21. Slide 21 of 56
  22. 22. Slide 22 of 56
  23. 23. What to do? ● Go see the home as soon as you can! ► First couple days on market ● Homes that are priced well, and move-in ready, may sell in days. ● Expect to be up against multiple offers (5-10+), some cash offers ● Get pre approval early onSlide 23 of 56
  24. 24. TouringSlide 24 of 56
  25. 25. 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 25 of 56
  26. 26. Making the Most of Your Tour 1. Bring a camera, notebook & tape measure 8. Check for hardwood floors 2. See how much sunlight the place gets 9. Peek into the attic 3. Check the bathrooms for rot & mold 10. Bring a marble or two 4. Look for wavy or discolored wood siding 11. When sharing a wall, make sure it’s thick 5. Make sure water spouts drain away from 12. Check the closets house 13. Compare the property’s tax records to the 6. Take stock of storage space listing details 7. Turn off any music playing in houseSlide 26 of 56
  27. 27. 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 27 of 55
  28. 28. MortgagesSlide 28 of 56
  29. 29. 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 of highest balance ● Don’t open any new lines of credit ● Don’t buy any big ticket items ● Source of money ● Current employment statusSlide 29 of 56
  30. 30. 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 30 of 56
  31. 31. 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 31 of 56
  32. 32. 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 32 of 56
  33. 33. 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 33 of 56
  34. 34. 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 34 of 56
  35. 35. Where Are Rates Headed?Slide 35 of 56
  36. 36. 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 36 of 56
  37. 37. 10-Minute Break 10 mins 5 mins End Let’s Get Started!Slide 37 of 56
  38. 38. 15-Minute Break 15 mins 7.5 mins End Let’s Get Started!Slide 38 of 56
  39. 39. Short Sales and Bank Owned MichelleSlide 39 of 56
  40. 40. 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 40 of 56
  41. 41. 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 41 of 56
  42. 42. Putting it all together to findYOUR homeSlide 42 of 56
  43. 43. 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 43 of 56
  44. 44. Agent NotesSlide 44 of 56
  45. 45. CMA ToolSlide 45 of 56
  46. 46. Home Buying GuideSlide 46 of 56
  47. 47. Search by SchoolsSlide 47 of 56
  48. 48. Home Inspection Guide http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 48 of 56
  49. 49. 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 49 of 56
  50. 50. Choosing the Right AgentSlide 50 of 56
  51. 51. 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 51 of 56
  52. 52. 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 52 of 56
  53. 53. Overview of a PurchaseSlide 53 of 56
  54. 54. 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 54 of 56
  55. 55. 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
  56. 56. Check out our local pages! Facebook.com/RedfinOC Twitter.com/RedfinOC Forums.Redfin.comSlide 56 of 56
  57. 57. Future Events!Slide 57 of 56
  58. 58. AppendixSlide 58 of 56
  59. 59. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 59 of 56
  60. 60. HUD Settlement Statement
  61. 61. 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
  62. 62. 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
  63. 63. 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
  64. 64. 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
  65. 65. 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
  66. 66. 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

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