1. The Escrow PeriodRedfin Home Buying ClassSouthern Los AngelesJuly 18, 2012
2. AGENDAREDFIN● Why we’re different● How the Redfin rebate works● Our team & how we workESCROW PERIOD● Mutual Acceptance● What is escrow & what is their role● Escrow timeline from Mutual Acceptance to ClosingMORTGAGES● What is your lender’s role● Loan process & turnaround times● Required conditions, appraisals, underwriting review● Final approval, loan docs - Funding & ClosingBREAKESCROW PROCESS● Introduction to our Transaction Coordinator – what is her role● Deal Room To-do List● Inspections & inspection contingency Period● Disclosures & signing required documents● Final walk-through, closing & keys!
3. A Little Bit About Who We AreRedfin is a real estate brokerage that has helped over 20,000people 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 Video
4. What is my Redfin Rebate Amount?
5. Make Sure She’s a Good Fit
6. Partners in the Process AGENT TOUR Responsible for your success COORDINATOR Writes your offer Schedules tours Handles negotiations Prepares paperwork TRANSACTION FIELD AGENT COORDINATOR Takes you to see homes Prepares paperwork Sees 50+ homes a week Works with escrow
7. Overview •Search homes online & tour •Get pre-approved •Find a dream homeFinding •Consult with agent, write offerYour Home •Submit offer to listing agent •Negotiations •Success! •Earnest money •Inspection contingency Mutual •Title review Acceptance •Financing contingency •Waiting for loan approval •Escrow signing appointment •Get keys and take possession! Closing •Receive Redfin refund •Complete Redfin Survey
8. Day 0 Mutual AcceptanceMutual Acceptance Submit Earnest Money Deposit to Escrow● The point when both the buyer and seller agree on the price and terms of a deal; both parties have signed the purchase agreement & counter offers. Day 10-12 Inspection Contingency● We are officially in contract!● The Escrow period typically takes 30 days Day 14-17 Loan & Appraisal● Escrow is a neutral party who takes in the buyer’s money and Contingency distributes the seller’s money at the end. Escrow works equally for the buyer and seller Loan Docs to Escrow● Escrow handles the transfer of the buyers loan documents Buyers Signing Appointment and property taxes and works with a buyers lender and real estate agent to make sure that the title of the home is clear of Day 25-28 liens before the transfer of ownership Final Walk-Through Final Down Payment● Escrow officer prepares the HUD-1 settlement form that lists the costs of the transactions that both the buyer and sellers Funding must pay at closing Closing/Recording Possession & keys! Day 30
10. We’re Officially In Contract!Redfin will notify your lender of this immediatelyYour final lender choice is needed within 24 hours● Copies of ratified Purchase Agreement, Counter Offers, Addendums are provided to lender by Redfin’s Transaction Coordinator● Timeline & important dates are established & confirmed● Escrow is contacted for introduction – request for Preliminary Title Report and Borrowers Fees● Listing agent is contacted for introduction● Rate can be locked anytime now
11. Loan Officer Sets up File (24-72 hours)● This time frame depends on how long it takes for borrowers to return requested/required documents● File reviewed for any documentation that needs updating and email sent to borrower regarding these items● Run DU again (Desktop Underwriting = Automated Underwriting)● Escrow fees entered into application and disclosures sent to borrower for signatures ► We need these back ASAP; can’t submit loan to underwriter without them● Appraisal is ordered● File is sent to lender’s processing team
12. Lender Processing (24-72 hours)● Time frame depends on loan value● Mortgage Consultant (front end) reviews thoroughly● Checks Fraud guard, USPS address site, etc● Contacts borrowers for any missing items● Sends appraisal upon receipt to borrower for review● Runs DU (Desktop Underwriter) against the file prior to sending to Underwriting Department● Sends file to underwriting for review by live underwriter
13. Underwriter review (2-5 days)● Time frame & turnaround time depends on volume● Underwriter will review file and DU (Desktop Underwriter) results● Confirms document contains all required items and meets all program and investor guidelines● Issues conditional approval with conditions needed to clear loan & obtain final approval (with no conditions)
14. Lender Processing (1-5 days)● Time frame depends on how long it takes to obtain the necessary conditions● Loan Consultant (Back end Processor) reviews approval for any required conditions● Contacts borrower for any conditions needed● Handles all internal conditions● Confirms insurance is in place for purchase● Sends in conditions to underwriter to clear conditions● File is issues a CTC status (Clear to Close)● Loan docs are ordered to be sent to escrow for borrower’s signatures
15. ● Closer draws up loan docs to be sent to escrow● Escrow officer sends closer HUD-1 (closing statement) to ensure no new fees have been added since initial disclosure● HUD-1 approval issued● Escrow officer sends LO estimated settlement statement to review with borrowers prior to signing● Borrowers get wire set up to send to escrow company (Cashier’s check is also acceptable)● Borrowers sign loan docs with escrow officer● Escrow sends all signed docs and any prior to funding conditions back to closer for final review● Closer funds loan 1 day before close of escrow date● Escrow company records the new ownership the next day, this is the close of escrow
16. 10 minute BREAK !
17. 10-Minute Break10 mins 5 mins End Let’s Get Started!
18. Escrow Process● Sometimes the easy part is getting the house! The real work is when the escrow period begins.● We will guide you through escrow● Our whole team will be there for you from beginning to end● We work with your lender, the title company, inspection companies, and listing agent to ensure everything goes smoothly
19. What does Lucy Do? Remains in Contact with your Lender Open Escrow Keys! Order your inspections Coordinates Final Walk-Through Coordinates all our visits with listing agent Disclosures & Reports Signed
20. Transaction Coordinators Tasks● Opening Escrow – submitting Earnest Money Deposit on time● Booking Inspections – General Property, Pest, Roof, Foundation, etc● Disclosures & Reports – obtaining signatures● Keeping in touch with your lender ► Ensure the appraisal is ordered ASAP & listing agent is contacted by the appraiser ► Status updates on loan & appraisal● Loan Doc Signing/ Final Funds amount and due date● Final walk-through● Closing, Possession & keys!
21. Redfin’s Deal Room● What is the deal room?● How to access the deal room● Information about the deal – real time● Timeline at the top of the page● My To-Do List ► check tasks off the list as they are completed ► See what tasks your agent & TC have completed● The Newsfeed/Email me updates
22. Redfin Buyer’s Deal Room Transaction TimelineYour To-Do List withDue Dates Check Tasks as Completed Your Redfin Team
23. Your Agent’s RoleYour best interest is our priority at all timesYour agent will be your advocate & negotiate on your behalf● Go over disclosures and reports, point out red flags● Advise on contingency removal deadlines ► Primary focus is to keep you & your deposit protected ► Your contingencies are there to protect you and give you the option to negotiate further or cancel the transaction ► Your lender is our guide for your financing & appraisal contingency removal – a good lender is VERY important ► Final decision is yours ► Once all contingencies have been removed, if you cancel the deal for any reason, you may lose your earnest money deposit
24. Inspection Contingency Period● Property INVESTIGATION period – order inspections and investigate further: schools, permits, square footage, HOA, taxes, etc, and acknowledge all disclosures & reports provided by seller● It is the buyers responsibility to investigate & verify until satisfied● Typically a 10-12 day period● Review inspection reports in detail and discuss possible next steps● On inspection contingency deadline our response is due, not necessarily the removal of contingency ► Remove inspection contingency if ready ► Request for extension if further inspections or estimates are needed ► Negotiate further, request for repairs or credit ► Seller are not obliged to accept any requests (repairs, credit or extension) ► If no agreement is made with seller, cancel the transaction & get your earnest money deposit back
25. Loan & Appraisal ContingencyYour lender is our guide & will advise on the status of your loan & appraisal… and if it is safe to remove contingencies● Typically a 14 -17 day period● Buyers must decide which lender to use within 24 hours after mutual acceptance● We will remain in close contact with your lender throughout● Buyers should also remain in contact with lenders and provide all necessary documents as soon as they are requested● Appraisal is ordered by your lender as soon as possible ► We cannot speak to appraiser directly especially regarding value ► The appraisal is a requirement of your loan ► The appraised value must be at least at the same amount of our purchase agreement or more
26. Issues with AppraisalYour appraisal contingency gives you the option to negotiate further or cancel the deal if no agreement is reachedLow Appraisal:● Determines the maximum amount a lender will lend on the property● Re-negotiate the purchase price with the seller ► Seller is not obliged to lower the price to the appraised value ► Sometimes buyer & seller meet in the middle ► Someone will need to cover the difference in value● If no agreement is reached, the buyer has the option to cancel the deal and get the full deposit backProperty Condition:● Appraiser may note issues they’ve spotted at the property● They may require inspections and repairs to be made before funding● Could be a deal breaker
27. Loan & Appraisal Continued● On the loan and appraisal contingency deadline our response is due, not necessarily the removal of contingency● This is Lender driven ► Remove the loan & appraisal contingency if ready ► Request for extension if more time is needed by lender ► Remove one contingency & extend the other ► Negotiate further as necessary if appraisal issues come up ► Seller are not obliged to accept any requests (change of sales price or extension) ► If no agreement is made with seller, cancel the transaction & get your earnest money deposit back
28. All Contingencies Removed● YAY! At this point, you are officially in “Pending” status● The seller stops showing the property & obtaining back up offers● Once all contingencies are removed, you are fully committed to the purchase of this property!● Your lender will work on sending loan docs to escrow for you to sign● If you need to cancel after this point, you may lose your earnest money deposit
29. Next Steps to Closing● Once loan docs are at escrow, they will contact buyers directly to coordinate the signing appointment● Sign at the title office or by mobile notary at a location& time of your choice● Final down payment will be due at the signing in cashier’s check or wire transfer, escrow officer will confirm amount● Do your Final Walk-through ► Allows you to verify the property’s condition is the same as when you agreed to buy it. ► Allows you to verify that all agreed upon repairs have been completed● After this you’re pretty much done!
30. Closing● Once you’re done signing the loan docs the title company & Your lender take if from there● Your loan will fund one day before our scheduled close of escrow date● Title will send the necessary documents to the County office to record the sale● Once we get confirmation from title that the sale has been recorded – this is our close of escrow● Buyers get the keys to their new home!● Congratulations!!!
31. Overview •Search homes online & tour •Get pre-approved •Find a dream homeFinding •Consult with agent, write offerYour Home •Submit offer to listing agent •Negotiations •Success! •Earnest money •Inspection contingency Mutual •Title review Acceptance •Financing contingency •Waiting for loan approval •Escrow signing appointment •Get keys and take possession! Closing •Receive Redfin refund •Complete Redfin Survey
32. After Class● Please fill out the survey● You will also receive a survey via email● We’ll send this week along with these slides● We’d love to get your feedback so we can improve.Questions: firstname.lastname@example.org THANK YOU!!!