Redfin’s First Time Home Buyer   Class  January 9, 2012 Pleasanton  Follow: @RedfinSanFrancisco  Like: http://www.facebook...
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 don’t have a good reason  ●   You can’t afford the down payment  ●   You can rent fo...
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
Case-Shiller: San Francisco Area v. 20-City  250.00           San Francisco           20-City Composite  200.00  150.00  1...
Case-Shiller – By the Numbers  San Francisco Area    Up 7.5% year-over-year    Peak was May 2006    Down 34% from peak    ...
Pleasanton Stats for HousesSlide 12 of 61
Pleasanton Nov.Stats for HousesSlide 13 of 61
Livermore Nov. Stats for HousesSlide 14 of 61
Livermore Nov. 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 ...
Multiple Offer Situations This occurs when inventory is down and buyer interest is up 5 Tips for Winning in a Bidding War ...
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 alwa...
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   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     ...
MortgagesSlide 26 of 61
Getting Pre-Approved                                Income                                oSalary—Past 30 days            ...
Show Stable EmploymentSalaried Employee   o W2’s are historic   o Most recent paystubs       o    Salaryincreases count im...
Organize Your Assets          Lenders Will Require 2 Months of Statements          ●Liquid                 ► Do not move m...
Review Your Debt | Credit HistoryKnow Current Credit Score           Know Your Debt Tolerance●Mycreditreport.com: pay to g...
Pre-approval ScenarioRon Renter                    $400,000 LoanoEarns $6,500/month           o30/Yr Fixed, 3.75%oHas car ...
Choose a Lender Pre-Approval Letter is Critical ●Part of the offer ●Sellers want accountability, Local lenders preferred U...
Understand Your CostsGet a Good Faith Estimate   o Itemized List of Fees:   o Lender: Appraisal, Credit, Processing, Under...
Local Recommended Lenders                 *In no way does Redfin                 benefit financially from                 ...
Current Average Rates  Type of Loan    January 3, 2013   December 27, 2012  30-Year Fixed       3.34%              3.35%  ...
Where Are Rates Headed?Slide 36 of 61
Break!Slide 37 of 61
Putting it all together to findYOUR homeSlide 38 of 61
Redfin.com - Benefits of a MLS  (Multiple Listing Service) Powered     ● All the homes for sale: 30% more listings     ● Y...
Highlights of Redfin’s Site  ● Search by zip code    or neighborhood  ● Saved searches/instant alerts  ● Agent notes  ● Do...
Redfin Open Book  ● Redfin Certified Providers     ► Proven track record, vetted by Redfin  ● We review every client & pos...
Redfin Open BookSlide 42 of 61
Agent NotesSlide 43 of 61
CMA ToolSlide 44 of 61
Home Buying GuideSlide 45 of 61
Home Inspection Guide           http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 46 of 61
Choosing the Right AgentSlide 47 of 61
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...
Redfin’s Partner Program   Partner agents are employed by other brokerages, but     have teamed up with us to provide Redf...
Home Inspection and  Other Contingencies  NameSlide 52 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  ●   Termite  ●   OtherSlide 5...
Closing – what you  need to knowSlide 55 of 61
Closing: HUD–1 Settlement  HUD-1 Settlement Statement – Lists all fees/charges/credits  By law, the final costs listed on ...
Title Companies  ● What does the title company do?    ► Prepares the final documents, including the HUD-1    ► Conducts th...
Closing: Title Insurance  ● Title insurance guarantees that the property is clear and    marketable  ● 2 types of title in...
Closing Day  ●   You’ll have a final walk-through on closing   ●   Closing typically takes 1 hour      day or just before ...
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 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...
Upcoming SlideShare
Loading in …5
×

First Time Home Buyer Class - January 9 - Pleasanton

331 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
331
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

First Time Home Buyer Class - January 9 - Pleasanton

  1. 1. Redfin’s First Time Home Buyer Class January 9, 2012 Pleasanton Follow: @RedfinSanFrancisco Like: http://www.facebook.com/RedfinFranciscoSlide 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 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 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. Case-Shiller: San Francisco Area v. 20-City 250.00 San Francisco 20-City Composite 200.00 150.00 100.00 50.00 0.00Slide 10 of 55
  11. 11. Case-Shiller – By the Numbers San Francisco Area Up 7.5% year-over-year Peak was May 2006 Down 34% from peak Currently at September 2008 prices 20-City Composite Up 3% year-over-year Peak was July 2006 Down 29% from peak Currently at September 2009 pricesSlide 11 of 61
  12. 12. Pleasanton Stats for HousesSlide 12 of 61
  13. 13. Pleasanton Nov.Stats for HousesSlide 13 of 61
  14. 14. Livermore Nov. Stats for HousesSlide 14 of 61
  15. 15. Livermore Nov. Stats for HousesSlide 15 of 61
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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 19 of 61
  20. 20. Short Sales and Bank OwnedSlide 20 of 61
  21. 21. 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 21 of 61
  22. 22. 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
  23. 23. TouringSlide 23 of 61
  24. 24. 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 24 of 61
  25. 25. 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
  26. 26. MortgagesSlide 26 of 61
  27. 27. Getting Pre-Approved Income oSalary—Past 30 days oHourly—Consistency and history oSelf-employed—Two year average Credit Assets o 660 for FHA o Down Payment o 680 for Conventional o Closing Costs o 720 for Rate Improvement o Cash ReservesSlide 27 of 61
  28. 28. Show Stable EmploymentSalaried Employee o W2’s are historic o Most recent paystubs o Salaryincreases count immediatelySelf-Employed o Two Year History (Tax Years) o Same line of work (strategic)Hourly Wage Earner o Consistent hours over 1-2 year periodSlide 28 of 61
  29. 29. Organize Your Assets Lenders Will Require 2 Months of Statements ●Liquid ► Do not move money around—hard to paper trail ●Retirement Accounts ► Consider a 401k Loan ●Gift Funds ► Family members onlySlide 29 of 61
  30. 30. Review Your Debt | Credit HistoryKnow Current Credit Score Know Your Debt Tolerance●Mycreditreport.com: pay to get ●Cost of rentingyour score; no affect on scores ●Tax benefits of home ownership●Use your mortgage lender’s report;limit multiple checks ●Budget considerationsFix Errors Lender Tolerance May Be●Remove duplicates Different●Resolve disputes ●45% DTI, Fannie Mae●Reduce credit card debt (33%) ●43% DTI, Jumbo●Do not open, close, or change ●50% DTI, FHAcredit lines●Do not make large purchasesSlide 30 of 61
  31. 31. Pre-approval ScenarioRon Renter $400,000 LoanoEarns $6,500/month o30/Yr Fixed, 3.75%oHas car payment $300 = $1,852oWants to buy a home for oProperty Taxes$500,000 o1.41% on purchase priceoHas 20% down payment = $588 ($7,050/yr) o $6,500 x 45% = $2,925 oHomeowners Insurance o $2,700 – 300 (other = $100 ($1,200/yr) debt) oTotal: $1852+588+100 = Qualified $2,540/Month!= Allowed $2,625/Month!Slide 31 of 61
  32. 32. Choose a Lender Pre-Approval Letter is Critical ●Part of the offer ●Sellers want accountability, Local lenders preferred Using Referrals to find your lender ●From Redfin’s partner lenders ●From friends who recently financed a home ●From Realtor Research Your Lender ●Check Yelp, Berkeley Parents Network, Google ●Schedule a meeting by phone or in personSlide 32 of 61
  33. 33. Understand Your CostsGet a Good Faith Estimate o Itemized List of Fees: o Lender: Appraisal, Credit, Processing, Underwriting, Points o Escrow: Title Insurance, Documents, Notary Public o Government: Recording fee, Transfer Tax o Prepaid Items: Mortgage Interest, Homeowner’s insurance, impounds Good news! Loan payments are made in arrears, so your first loan payment will not be for almost two months!Slide 33 of 61
  34. 34. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 34 of 61
  35. 35. Current Average Rates Type of Loan January 3, 2013 December 27, 2012 30-Year Fixed 3.34% 3.35% 15-Year Fixed 2.64% 2.65% 5/1 ARM 2.71% 2.70% 1-Year ARM 2.57% 2.56%Slide 35 of 61
  36. 36. Where Are Rates Headed?Slide 36 of 61
  37. 37. Break!Slide 37 of 61
  38. 38. Putting it all together to findYOUR homeSlide 38 of 61
  39. 39. Redfin.com - Benefits of a MLS (Multiple Listing Service) Powered ● 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 39 of 61
  40. 40. 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 40 of 61
  41. 41. Redfin Open Book ● Redfin Certified Providers ► Proven track record, vetted by Redfin ● We review every client & post the good, bad, & ugly ● Read real reviews & find a great local team ► Inspectors ► Lenders ► Title Companies ► AttorneysSlide 41 of 61
  42. 42. Redfin Open BookSlide 42 of 61
  43. 43. Agent NotesSlide 43 of 61
  44. 44. CMA ToolSlide 44 of 61
  45. 45. Home Buying GuideSlide 45 of 61
  46. 46. Home Inspection Guide http://www.redfin.com/home-buying-guide/interactive-home-inspectionSlide 46 of 61
  47. 47. Choosing the Right AgentSlide 47 of 61
  48. 48. Traditional vs. RedfinSlide 48 of 61
  49. 49. 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
  50. 50. 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
  51. 51. 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 51 of 61
  52. 52. Home Inspection and Other Contingencies NameSlide 52 of 61
  53. 53. 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 53 of 61
  54. 54. Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● OtherSlide 54 of 61
  55. 55. Closing – what you need to knowSlide 55 of 61
  56. 56. 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 56 of 61
  57. 57. 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 57 of 61
  58. 58. 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 58 of 61
  59. 59. 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 59 of 61
  60. 60. 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 60 of 61
  61. 61. 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 61 of 61
  62. 62. AppendixSlide 62 of 61
  63. 63. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 63 of 61
  64. 64. 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
  65. 65. HUD Settlement Statement
  66. 66. 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
  67. 67. 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
  68. 68. 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
  69. 69. 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
  70. 70. 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
  71. 71. 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

×