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  • 1. Redfin’s Home Buying Class April 18, 2013 Diamond Bar, CA Follow: @RedfinLA Like: http://www.facebook.com/RedfinLASlide 1 of 62
  • 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 ● Right home for the right price No obligation Commission credit About Redfin VideoSlide 2 of 62
  • 3. To Buy or Not to BuySlide 3 of 62
  • 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 62
  • 5. Understanding the MarketSlide 5 of 62
  • 6. Diamond Bar Stats for Houses Area overview last 90 daysSlide 6 of 62
  • 7. Story of 2013: Rising Prices Tip: Local information can be found for any city, zip or county under “Stats and Trends” from the map page:Slide 7 of 62
  • 8. LA County March Stats for HousesSlide 8 of 62
  • 9. LA County March Stats for HousesSlide 9 of 62
  • 10. National Market Trends The key metrics across 19 major metropolitan markets are: ● Home prices were up 13% from a year ago and 2.4% month over month. ● Closed sales were up 2.3% from February 2012 and 0.7% from January. ● More than one-third of new listings are now going under contract within 14 days of their debut. Last month, 30.3% of homes sold that quickly. Redfin recently published a list of the country’s fastest real estate markets, highlighting “real estate flash sales,” homes that went under contract in 24 hours or less. ● Inventory fell 32% from last year, but picked up slightly (1.1 %) from January.Slide 10 of 62
  • 11. National Market TrendsSlide 11 of 62
  • 12. Multiple Offer SituationsSlide 12 of 62
  • 13. Crafting Your Offer ● Evaluate – Your agent will provide you with information about market conditions and recent sales in the area ● Consider the situation – The seller’s preferences, days on the market, and other interest will influence the process. ● Decide on price & strategy with your agent ● Common contingencies & terms: ► Earnest Money ► Inspection ► Financing ► Appraisal ► Title ReviewSlide 13 of 62
  • 14. Multiple Offer Situations Tips for Winning in a Bidding War: 1. Just Win, Baby! Simply have the best offer. • Cash is King. • Tighten your timelines. • Remove some contingencies? 2. Get pre-approved with a local lender. 3. What’s important to the seller? 4. Write a letter & appeal to the seller.Slide 14 of 62
  • 15. 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 16 of 62
  • 16. 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 17 of 62
  • 17. Slide 19 of 62
  • 18. Dig Into the Details Redfin holds classes several classes where you can learn more: ● What Happens Next? ● Multiple Offer ● Inspection ● Mortgage ● Short Sale http://www.redfin.com/buy-a-home/classes-and-eventsSlide 20 of 62
  • 19. 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. ● Start the conversation early ● Expect to be up against multiple offers (5-10+), some cash offers ● Get pre approval early onSlide 21 of 62
  • 20. TouringSlide 22 of 62
  • 21. 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 23 of 62
  • 22. 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 24 of 62
  • 23. 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 25 of 55
  • 24. Your Redfin CreditSlide 26 of 62
  • 25. 15-Minute Break 15 mins 7.5 mins End Let’s Get Started!Slide 27 of 62
  • 26. MortgagesSlide 28 of 62
  • 27. Review Your Financial Situation ● Pull credit report, look for errors ● Establish comfort level for monthly payment ● Figure out how much monthly income goes towards debt - typically 28 – 40% healthy ● Pay down credit balances to 1/3rd of high limit ● Don’t open any new lines of credit ● Don’t buy any big ticket items ● Determine source of funds ● Current employment statusSlide 29 of 62
  • 28. Pulling Credit: Is it harmful? ● Your credit report must be reviewed by a lender before you can obtain a pre-approval ● If you know your score, a lender should be able to give you ballpark pricing for their loan products ● Maintaining a pre-approval has a negligible impact on your credit score ● Don’t allow lots of lenders to pull your credit score repeatedlySlide 30 of 62
  • 29. 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 62
  • 30. 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 32 of 62
  • 31. 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 officesSlide 33 of 62
  • 32. Where Are Rates Headed? Type of Loan April 11, 2013 April 4, 2013 30-Year Fixed 3.43% 3.54% 15-Year Fixed 2.65% 2.74% 5/1 ARM 2.62% 2.65% 1-Year ARM 2.62% 2.63%Slide 34 of 62
  • 33. Where Are Rates Headed?Slide 35 of 62
  • 34. 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 62
  • 35. Learn more about mortgages http://www.redfin.com/buy-a-home/classes-and-eventsSlide 37 of 62
  • 36. Short Sales and Bank OwnedSlide 38 of 62
  • 37. 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 39 of 62
  • 38. 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 40 of 62
  • 39. So… Where’s the Best Deal? ● Sellers who own their home outright ● Sellers who are relocating ● Estate Sales ● REO & Short Sales if “Best Deal” means lowest priceSlide 41 of 62
  • 40. Putting it all together to findYOUR homeSlide 42 of 62
  • 41. 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 62
  • 42. Agent NotesSlide 44 of 62
  • 43. CMA ToolSlide 45 of 62
  • 44. Search by SchoolsSlide 46 of 62
  • 45. Home Inspection Guide http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 47 of 62
  • 46. 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 48 of 62
  • 47. Choosing the Right AgentSlide 49 of 62
  • 48. Choosing the Right Agent: What to Ask ● 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 51 of 62
  • 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 52 of 62
  • 50. Steps in Buying a Home Research Search Offer Escrow & Closing Neighborhoods Define Preferences Comparables Earnest Money Real Estate Agents Saved Search Draft Offer Docs Inspection Mortgage Options Home Tours Negotiate Loan application Preapproval Open Houses Mutual Acceptance Title Review Consider your needs Appraisal Financing Approval Closing & KeysSlide 53 of 62
  • 51. Check out our local pages!Slide 55 of 62
  • 52. Future Events!Slide 56 of 62
  • 53. 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
  • 54. 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
  • 55. 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
  • 56. 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
  • 57. 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
  • 58. 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