Redfin’s Home Buying Class        August 25, 2012 Cerritos        Follow: @RedfinLA        Like: http://www.facebook.com/R...
Agenda     ●   To buy or not to buy     ●   Overview of purchase process     ●   Understanding the Market     ●   Touring ...
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; 9...
To Buy or Not to BuySlide 4 of 61
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 ●   Y...
Why You Shouldn’t Buy a Home  ●   You can’t afford the down payment  ●   You can rent for much less  ●   You plan on movin...
Understanding the    Buying ProcessSlide 7 of 61
Overview of Purchase Process (more details to follow)  ● Information – learn as much as possible about the market, the    ...
Understanding the      MarketSlide 9 of 61
Cerritos July Stats for HousesSlide 12 of 61
Cerritos July Stats for HousesSlide 13 of 61
Long Beach July Stats for HousesSlide 14 of 61
Long Beach July Stats for HousesSlide 15 of 61
National Market Trends● Prices Soften Slightly, Still Up 3.2% Year Over Year● Inventory Down 28.1% Year Over Year    ► Cal...
National Market Trends ● One in Four Listings Is Under Contract in Less than 14   Days    ► Over a quarter (27.8%) of all ...
Multiple Offer Situations This occurs when inventory is down and buyer interest is up 5 Tips for Winning in a Bidding War ...
Where is the Local Market  Headed?  ● Go see the home as soon as you can!     ► First couple days on market  ● Homes that ...
Short Sales and Bank OwnedSlide 20 of 61
What is a Short Sale?  The owner owes more on the mortgage than the home is  worth  ● Usually pre-foreclosure, but not alw...
What is a Bank-Owned Property?  ● A foreclosed home owned by a bank or lender  ● Standard sale but:     ► Verbal negotiati...
TouringSlide 23 of 61
Making the Most of Your Tour 1.     Bring a camera, notebook & tape measure   8.    Check for hardwood floors 2.     See h...
How Touring with Redfin Works       ● Up to six homes per tour in         two hour blocks       ● Go on as many tours     ...
MortgagesSlide 26 of 61
Review Your Financial Situation  To Buy or Not to Buy  ● Pull credit report, look for errors  ● Establish comfort level fo...
Start Shopping for Lenders  Compile a list of 3 lenders & brokers  Good sources include:  ● Redfin Open Book     ► Redfin ...
Getting Pre-Approved     A pre-approval letter is a letter from a bank or a lender estimating how     much theyll lend you...
Comparing Loan Estimates     ● Gather loan estimates        ► A minimum of three, more is better        ► These aren’t fin...
Types of Loans  ● Conventional:     ► As low as 5% down     ► Fixed or adjustable rates, conforming or non-conforming  ● F...
Where Are Rates Headed?  Type of Loan    August 16, 2012   August 9, 2012  30-Year Fixed       3.62%            3.59%  15-...
Where Are Rates Headed?Slide 33 of 61
Break!Slide 34 of 61
10-Minute Break    10 mins             5 mins        End                 Let’s Get Started!Slide 35 of 61
15-Minute Break    15 mins             7.5 mins      End                 Let’s Get Started!Slide 36 of 61
Putting it all together to findYOUR homeSlide 37 of 61
Redfin.com - Benefits of MLS Powered          (Multiple Listing Service)     ● All the homes for sale: 30% more listings  ...
Highlights of Redfin’s Site  ● Search by zip code    or neighborhood  ● Saved searches/instant alerts  ● Agent notes  ● Do...
Agent NotesSlide 40 of 61
CMA ToolSlide 41 of 61
Home Buying GuideSlide 42 of 61
Home Inspection Guide           http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 43 of 61
Redfin Open Book  ● Redfin Certified Providers     ► Proven track record, vetted by Redfin  ● We survey every client & pos...
Redfin Open BookSlide 45 of 61
Choosing the Right AgentSlide 46 of 61
Redfin’s Partner Program   Partner agents are employed by other brokerages, but     have teamed up with us to provide Redf...
Traditional vs. RedfinSlide 48 of 61
What to Ask Any Agent  ●   Is this your full-time job?  ●   Familiar with foreclosures or short-sales?  ●   Where were you...
Experience With Multiple Offers This occurs when inventory is down and buyer interest is up 5 Tips for Winning in a Biddin...
Home Inspection and  Other ContingenciesSlide 51 of 61
Home Inspection  ● We recommend that you have a home inspection  ● Cost runs $350 to $1200 depending upon the size of the ...
Other Contingencies  ● Appraisal – Performed in conjunction with financing  ● Financing – Approval by underwriter; may hav...
Closing – what you  need to knowSlide 54 of 61
Closing: HUD–1 Settlement  HUD-1 Settlement Statement – Lists all fees/charges/credits  By law, the final costs listed on ...
Escrow Companies  ● What does the Escrow company do?    ► Prepares the final documents, including the HUD-1    ► Conducts ...
Closing Day  ●   You’ll have a final walk-through a few days   ●   Fund loan the day before closing      before closing   ...
So What Now?  ●   Make sure it’s the right time for you  ●   Start browsing online  ●   Check out our Home Buying Guide an...
Check out our local pages!Slide 60 of 61
Our next class!                      Mortgage Class                  Tuesday, August 28, 2012                     6:30pm –...
AppendixSlide 62 of 61
Appendix  ● Important forms/contracts  ● Favorite Real Estate ResourcesSlide 63 of 61
Some Of Our Favorite Sites  ●   Seattle Bubble: market analysis  ●   Curbed Seattle: cool houses  ●   Urbnlivn: for condo ...
HUD Settlement Statement
Favorite Real Estate Links● Property information   ► PropertyShark: Zoning data, title history, permits,     neighborhood ...
Favorite Homes For Sale Links ● Redfin: MLS + FSBO + REO, updated every 15 minutes,   with DOM, price history, Zestimate ●...
Favorite Data Links ● Case-Schiller Indices: Pricing trends by metropolitan area ● Altos Research: Median price trends and...
Favorite Mortgage Links ● Bankrate: Many ads, but is great for comparing local   lenders ● Zillows Mortgage Marketplace He...
Favorite Links● Loans for first-time home buyers   ► Federal Housing Administration (FHA)   ► Fannie Mae and Freddy Mac● G...
Favorite Links Cont.● Remodeling & renovations   ► DoItYourself.com: A few ads, but a useful clearinghouse of     informat...
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South la hbc august 25, 2012

  1. 1. Redfin’s Home Buying Class August 25, 2012 Cerritos Follow: @RedfinLA Like: http://www.facebook.com/RedfinLASlide 1 of 61
  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 61
  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 61
  4. 4. To Buy or Not to BuySlide 4 of 61
  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 61
  6. 6. 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 6 of 61
  7. 7. Understanding the Buying ProcessSlide 7 of 61
  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 61
  9. 9. Understanding the MarketSlide 9 of 61
  10. 10. Cerritos July Stats for HousesSlide 12 of 61
  11. 11. Cerritos July Stats for HousesSlide 13 of 61
  12. 12. Long Beach July Stats for HousesSlide 14 of 61
  13. 13. Long Beach July Stats for HousesSlide 15 of 61
  14. 14. National Market Trends● Prices Soften Slightly, Still Up 3.2% Year Over Year● Inventory Down 28.1% Year Over Year ► California still falling faster than everywhere else. ► Fewer bank-owned listings for sale, and fewer conventional sales on the market. ► Homeowners can’t afford to sell with prices at or near a five-year low in most markets. ► Stabilizing home prices and low interest rates have slowed foreclosures.Slide 16 of 61
  15. 15. National Market Trends ● One in Four Listings Is Under Contract in Less than 14 Days ► Over a quarter (27.8%) of all single-family houses that debuted in the first 3.5 weeks of July were off the market in under two weeks.Slide 17 of 61
  16. 16. 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 18 of 61
  17. 17. Where is the Local Market Headed? ● 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 19 of 61
  18. 18. Short Sales and Bank OwnedSlide 20 of 61
  19. 19. 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 ● Get a 15% commission refundSlide 21 of 61
  20. 20. 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 22 of 61
  21. 21. TouringSlide 23 of 61
  22. 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 61
  23. 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. 24. MortgagesSlide 26 of 61
  25. 25. 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 27 of 61
  26. 26. 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 28 of 61
  27. 27. 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 29 of 61
  28. 28. 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 30 of 61
  29. 29. 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 31 of 61
  30. 30. Where Are Rates Headed? Type of Loan August 16, 2012 August 9, 2012 30-Year Fixed 3.62% 3.59% 15-Year Fixed 2.88% 2.84% 5/1 ARM 2.76% 2.77% 1-Year ARM 2.69% 2.65%Slide 32 of 61
  31. 31. Where Are Rates Headed?Slide 33 of 61
  32. 32. Break!Slide 34 of 61
  33. 33. 10-Minute Break 10 mins 5 mins End Let’s Get Started!Slide 35 of 61
  34. 34. 15-Minute Break 15 mins 7.5 mins End Let’s Get Started!Slide 36 of 61
  35. 35. Putting it all together to findYOUR homeSlide 37 of 61
  36. 36. 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 38 of 61
  37. 37. 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 61
  38. 38. Agent NotesSlide 40 of 61
  39. 39. CMA ToolSlide 41 of 61
  40. 40. Home Buying GuideSlide 42 of 61
  41. 41. Home Inspection Guide http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 43 of 61
  42. 42. 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 44 of 61
  43. 43. Redfin Open BookSlide 45 of 61
  44. 44. Choosing the Right AgentSlide 46 of 61
  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 47 of 61
  46. 46. Traditional vs. RedfinSlide 48 of 61
  47. 47. 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 49 of 61
  48. 48. 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 50 of 61
  49. 49. Home Inspection and Other ContingenciesSlide 51 of 61
  50. 50. 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 52 of 61
  51. 51. Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing – Approval by underwriter; may have conditions ● Termite Report & Disclosures ● Title ReportSlide 53 of 61
  52. 52. Closing – what you need to knowSlide 54 of 61
  53. 53. 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 55 of 61
  54. 54. Escrow Companies ● What does the Escrow 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 56 of 61
  55. 55. Closing Day ● You’ll have a final walk-through a few days ● Fund loan the day before closing before closing ● Get keys and take possession on the day of ● Sign loan docs a few days before closing closing. ► Government issued photo ID ► Certified check or wireSlide 58 of 61
  56. 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 59 of 61
  57. 57. Check out our local pages!Slide 60 of 61
  58. 58. Our next class! Mortgage Class Tuesday, August 28, 2012 6:30pm – 8:30pm Redfin’s Long Beach Officehttp://www.redfin.com/buy-a-home/classes-and-eventsSlide 61 of 61
  59. 59. AppendixSlide 62 of 61
  60. 60. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 63 of 61
  61. 61. Some Of Our Favorite Sites ● Seattle Bubble: market analysis ● Curbed Seattle: cool houses ● Urbnlivn: for condo shoppers ● WalkScore: see what’s nearbySlide 64 of 61
  62. 62. HUD Settlement Statement
  63. 63. 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
  64. 64. 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
  65. 65. 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
  66. 66. 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
  67. 67. 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
  68. 68. 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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