Redfin’s Home Buying Class        October 25, 2012 Culver City, CA        Follow: @RedfinLosAngeles        Like: http://ww...
Agenda ● To buy or not to buy ● Understanding the buying process ● Understanding the Market ● Short sales & bank owned ● T...
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 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 ●   Y...
Why You Shouldn’t Buy a Home  ●   You don’t have a good reason  ●   You can’t afford the down payment  ●   You can rent fo...
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  ...
Understanding the      MarketSlide 9 of 56
Case-Shiller: Los Angeles Area v. 20-City  300.00             Los Angeles             20-City Composite  250.00  200.00  1...
Case-Shiller – By the Numbers  Los Angeles Area    Up .6% year-over-year    Peak was September 2006    Down 38% from peak ...
Culver City Sept. Stats for Houses       Tip:       Local information can be found for any city, zip       or county under...
Culver City Sept. Stats for HousesSlide 13 of 56
LA County Sept. Stats for HousesSlide 14 of 56
LA County Sept. Stats for HousesSlide 15 of 56
National Market Trends  Multiple Offers  ● More than a Quarter of Listings Still Selling Fast       ► For the month of Sep...
National Market Trends  ● The key metrics across 19 major metropolitan markets are:       ► Home prices in September incre...
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 Owned  NameSlide 19 of 56
What is a Short Sale?  The owner owes more on the mortgage than the home is worth  ● Usually pre-foreclosure, but not alwa...
What is a Bank-Owned Property?  ● A foreclosed home owned by a bank or lender  ● Standard sale but:     ► Verbal negotiati...
TouringSlide 22 of 56
Making the Most of Your Tour 1.     Bring a camera, notebook & tape measure   9.    Peek into the attic 2.     See how muc...
How Touring with Redfin Works       ● Up to six homes per tour in         two hour blocks       ● Go on as many tours     ...
Break!Slide 25 of 56
MortgagesSlide 26 of 56
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 3-4 lenders & brokers  Good sources include:  ● Redfins partner lenders  ● R...
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    October 18, 2012   October 11, 2012  30-Year Fixed       3.37%              3.39%...
Where Are Rates Headed?Slide 33 of 56
Make Your Decision     ● When possible, get a loan commitment     ● Make alternative funds liquid (401k, stock)     Good n...
Putting it all together to findYOUR homeSlide 35 of 56
Redfin.com-Benefits of a MLS Powered  Site     ● All the homes for sale: 30% more listings     ● You see what the agent se...
Highlights of Redfin’s Site  ● Search by zip code    or neighborhood  ● Saved searches/instant alerts  ● Agent notes  ● Do...
Agent NotesSlide 38 of 56
CMA ToolSlide 39 of 56
Home Buying GuideSlide 40 of 56
Home Inspection Guide           http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 41 of 56
Open Book  ● Redfin Certified Providers  ● Every professional is reviewed and all reviews are shown  ● Search for local:  ...
Choosing the Right AgentSlide 43 of 56
Traditional vs. RedfinSlide 44 of 56
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...
Redfin’s Partner Program   Partner agents are employed by other brokerages, but     have teamed up with us to provide Redf...
Home Inspection and  Other ContingenciesSlide 48 of 56
Home Inspection  ● We recommend that you have a home inspection  ● Cost runs $300 to $1200+ depending upon the size of the...
Other Contingencies  ●   Appraisal – Performed in conjunction with financing  ●   Financing  ●   Termite  ●   OtherSlide 5...
Closing – what you  need to knowSlide 51 of 56
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?    ► Neutral third party company that handles the exchange of      mo...
Title Companies  ● What does the title company do?    ► Prepares the final documents, including the HUD-1    ► Conducts th...
So What Now?  ●   Make sure it’s the right time for you  ●   Start browsing online  ●   Check out our Home Buying Guide an...
Thanks for Coming!  Please fill out the survey that was handed out at the beginning of  class. We appreciate the feedback!...
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 ...
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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West LA Home Buying Class October 25, 2012

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West LA Home Buying Class October 25, 2012

  1. 1. Redfin’s Home Buying Class October 25, 2012 Culver City, CA Follow: @RedfinLosAngeles Like: http://www.facebook.com/RedfinLosAngelesSlide 1 of 56
  2. 2. Agenda ● To buy or not to buy ● Understanding the buying process ● Understanding the Market ● Short sales & bank owned ● Touring ● Break! ● Mortgages ● Redfin as a tool ● Choosing an Agent ● Home inspection and other contingencies ● What to know about closingSlide 2 of 56
  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 56
  4. 4. To Buy or Not to BuySlide 4 of 56
  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 56
  6. 6. 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
  7. 7. Understanding the Buying ProcessSlide 7 of 56
  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 56
  9. 9. Understanding the MarketSlide 9 of 56
  10. 10. 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 10 of 55
  11. 11. Case-Shiller – By the Numbers Los Angeles Area Up .6% year-over-year Peak was September 2006 Down 38% from peak Currently at February 2011 prices 20-City Composite Up .5% year-over-year Peak was July 2006 Down 31% from peak Currently at July 2011 pricesSlide 11 of 56
  12. 12. Culver City Sept. Stats for Houses Tip: Local information can be found for any city, zip or county under “Stats and Trends” from the map page:Slide 12 of 56
  13. 13. Culver City Sept. Stats for HousesSlide 13 of 56
  14. 14. LA County Sept. Stats for HousesSlide 14 of 56
  15. 15. LA County Sept. Stats for HousesSlide 15 of 56
  16. 16. National Market Trends Multiple Offers ● More than a Quarter of Listings Still Selling Fast ► For the month of September through the, 27.1% 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. ► And from here on out, the inventory crunch will only get worse. With less than eight weeks before Thanksgiving, few sellers will jump into the market now, so supply will keep falling. ► Multiple offers are not only against 3 or 5 buyers, but more like 10, 20 and sometimes even 30 or moreSlide 16 of 56
  17. 17. National Market Trends ● The key metrics across 19 major metropolitan markets are: ► Home prices in September increased 5.4% year over year, and were down 0.8% month over month. ► The number of homes for sale declined 29.3% from September 2011 to September 2012, and by 4.3% since August. ► Home sales increased 4% from last year, and fell 17% since August—a typical seasonal decline. ► The percentage of listings that sold within 14 days of their debut held steady in September at 27%. ► Home prices in September were 5 percent higher than a year earlier.Slide 17 of 56
  18. 18. 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 18 of 56
  19. 19. Short Sales and Bank Owned NameSlide 19 of 56
  20. 20. 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 20 of 56
  21. 21. 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 21 of 56
  22. 22. TouringSlide 22 of 56
  23. 23. 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 23 of 56
  24. 24. 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 24 of 55
  25. 25. Break!Slide 25 of 56
  26. 26. MortgagesSlide 26 of 56
  27. 27. 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 56
  28. 28. 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 offices *Know your lenderSlide 28 of 56
  29. 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 ● 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 56
  30. 30. 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 56
  31. 31. 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 programsSlide 31 of 56
  32. 32. Where Are Rates Headed? Type of Loan October 18, 2012 October 11, 2012 30-Year Fixed 3.37% 3.39% 15-Year Fixed 2.66% 2.70% 5/1 ARM 2.75% 2.73% 1-Year ARM 2.60% 2.59%Slide 32 of 56
  33. 33. Where Are Rates Headed?Slide 33 of 56
  34. 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 34 of 56
  35. 35. Putting it all together to findYOUR homeSlide 35 of 56
  36. 36. Redfin.com-Benefits of a MLS Powered Site ● 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 36 of 56
  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 37 of 56
  38. 38. Agent NotesSlide 38 of 56
  39. 39. CMA ToolSlide 39 of 56
  40. 40. Home Buying GuideSlide 40 of 56
  41. 41. Home Inspection Guide http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 41 of 56
  42. 42. Open Book ● Redfin Certified Providers ● Every professional is reviewed and all reviews are shown ● Search for local: ► Inspectors ► Lenders ► Escrow CompaniesSlide 42 of 56
  43. 43. Choosing the Right AgentSlide 43 of 56
  44. 44. Traditional vs. RedfinSlide 44 of 56
  45. 45. 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 45 of 56
  46. 46. 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 46 of 56
  47. 47. 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 56
  48. 48. Home Inspection and Other ContingenciesSlide 48 of 56
  49. 49. Home Inspection ● We recommend that you have a home inspection ● Cost runs $300 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 49 of 56
  50. 50. Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● OtherSlide 50 of 56
  51. 51. Closing – what you need to knowSlide 51 of 56
  52. 52. 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 52 of 56
  53. 53. Escrow Companies ● What does the Escrow company do? ► Neutral third party company that handles the exchange of money and documents once mutual acceptance is reached on an offer ► Prepares the final documents, including the HUD-1 ► Conducts the closing ► Issues title insurance to the lender and the buyerSlide 53 of 56
  54. 54. 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 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. 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 http://www.redfin.com/buy-a-home/classes-and-eventsSlide 56 of 56
  57. 57. AppendixSlide 57 of 56
  58. 58. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 58 of 56
  59. 59. 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
  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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