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Westchester Home Buying Class October 24 2012
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Westchester Home Buying Class October 24 2012

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  • 5 minute break timer.To begin the timer, when in presentation view on the slide, click advance once and you will see the red appear from left to right. When the entire bar is red your break is up!
  • Doug: Courtney and I update this slide to reflect the agent who is presenting and their team.
  • Transcript

    • 1. Redfin’s Home Buying Class Presented by: Aaron Drucker October 24, 2012 Westchester Email- aaron.drucker@redfin.com Follow: @RedfinNewYork Like: http://www.facebook.com/RedfinNewYorkSlide 1 of 49
    • 2. My Background Real Estate Experience: Over 7 years in real estate at different positions: 1. Salesperson 2. Associate Broker 3. Team Leader 4. Training Manager 5. NY Manager/Principal Broker- Present Transaction Experience: 1. Closed 17 transactions as a salesperson/associate broker. Negotiated over 60 transactions as team leader/training manager. Education: 1. BA from the State University of New York at Suny Purchase 2. M.S in Real Estate Development at NYU (Currently attending)Slide 2 of 49
    • 3. 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 3 of 49
    • 4. 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  Get back a portion of our commissionSlide 4 of 49
    • 5. To Buy or Not to BuySlide 5 of 49
    • 6. 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 6 of 49
    • 7. 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 7 of 49
    • 8. Understanding the Buying ProcessSlide 8 of 49
    • 9. 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 9 of 49
    • 10. Understanding the MarketSlide 10 of 49
    • 11. New York vs 20 City Composite 250.00 200.00 150.00 100.00 50.00 New York 20-City Composite 0.00Slide 11 of 49
    • 12. Case-Shiller – By the Numbers Case-Shiller: New York Area (All of NY including 5 boroughs) Down 2.1% year-over-year Peak was June 2006 Down 24.3% from peak Currently at January 2004 prices Case-Shiller: 20-City Composite Up 0.5% year-over-year Peak was July 2006 Down 31.1% from peak Currently at July 2003 pricesSlide 12 of 49
    • 13. Westchester County August Stats for CondosSlide 13 of 49
    • 14. Westchester County August Stats for HousesSlide 14 of 49
    • 15. National Market Trends ● Redfin’s data for 19 U.S. markets show June prices increasing 3.0% over last year ● CoreLogic reported that May home prices increased 2.0% year-over-year, rising for the third consecutive month ● One in four homes under contract in less than two weeks ● Low rates and low inventory are creating the price pressure. ● The interest rate on a 30-year mortgage hit an all-time low last week of 3.56%. ● The number of homes for sale is down 19% from last year, and down nearly 50% in California and Seattle ● Completed foreclosures are down 27% from their 2010 peak, and seriously delinquent mortgages hit a three-year low.Slide 15 of 49
    • 16. Where is the Local Market Headed? ● Inventory is down slightly, but absorption rate is still 15 months. ● Rents have been rising, making buying more attractive. ● Market stabilizing, though likely 1-1.5 years before we see appreciation. ● Interest Rate increases - biggest issue for buyers ● Unemployment in Westchester is 6.3%. Well below the national average of 7.8%.Slide 16 of 49
    • 17. TouringSlide 17 of 49
    • 18. 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. Ignore the appliances and carpets house 13. Check the closets 6. Take stock of storage space 7. Turn off any music playing in houseSlide 18 of 49
    • 19. 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 verifiedSlide 19 of 55
    • 20. MortgagesSlide 20 of 49
    • 21. 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 – 35% 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 21 of 49
    • 22. Start Shopping for Lenders Compile a list of 2-3 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 22 of 49
    • 23. 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 23 of 49
    • 24. 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 24 of 49
    • 25. 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 programs ► Example: BB&T Chips ProgramSlide 25 of 49
    • 26. Current Average Rates Type of Loan September 27, 2012 October 4, 2012 30-Year Fixed 3.40% 3.36% 15-Year Fixed 2.73% 2.69% 5/1 ARM 2.71% 2.72% 1-Year ARM 2.60% 2.57%Slide 26 of 49
    • 27. 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 27 of 49
    • 28. Redfin Video http://www.youtube.com/watch?feature=p layer_embedded&v=hDGj7jN9w24Slide 28 of 49
    • 29. 10-Minute Break 10 mins 5 mins End Let’s Get Started!Slide 29 of 49
    • 30. Putting it all together to findYOUR homeSlide 30 of 49
    • 31. Recent Media ArticlesSlide 31 of 49
    • 32. 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 32 of 49
    • 33. 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 33 of 49
    • 34. Open Book ● Redfin Certified Providers ● Every professional is reviewed and all reviews are shown ● Search for local: ► Inspectors ► Lenders ► Title CompaniesSlide 34 of 49
    • 35. Choosing the Right AgentSlide 35 of 49
    • 36. Traditional vs. RedfinSlide 36 of 49
    • 37. 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 37 of 49
    • 38. 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 38 of 49
    • 39. 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 39 of 49
    • 40. Home Inspection and Other Contingencies NameSlide 40 of 49
    • 41. 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 41 of 49
    • 42. Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● OtherSlide 42 of 49
    • 43. Closing – what you need to know NameSlide 43 of 49
    • 44. 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/Attorney charges ► Includes settlement fee, and owner’s and lender’s title insurance. Also, attorney’s charge a fee to their respective clients. ● Government charges ► Includes recording fees, recordation taxes and property taxesSlide 44 of 49
    • 45. Attorney’s do the closing ● What do the attorney’s 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 45 of 49
    • 46. Closing: Title Insurance ● Title insurance guarantees that the property is clear and marketable ● 2 types of title insurance policies ► Limited (Standard)  Protection against pre-closing defects in title ► Enhanced (Eagle)  Costs 20% more than Standard policy  Covers post closing fraud, forgery, identity theft  Increases with value of the property up to 150% of original price  Includes coverage for: mechanic’s liens, invalid permits, forced removal of structure, unrecorded easements, unrecorded leases,Slide 46 of 49
    • 47. Closing Day ● You’ll have a final walk-through on closing ● Closing typically takes 1 hour day or just before ● Get keys and take possession! ● What to bring: ► Government issued photo ID ► Certified checkSlide 47 of 49
    • 48. 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 48 of 49
    • 49. 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 49 of 49
    • 50. AppendixSlide 50 of 49
    • 51. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 51 of 49
    • 52. HUD Settlement Statement
    • 53. 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
    • 54. 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
    • 55. 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