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First Time Home Buyer Class, Pleasanton, CA - April 11, 2012


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First Time Home Buyer Class, Pleasanton, CA - April 11, 2012

  1. 1. Redfin’s First Time Home Buyer Class April 11, 2012 San FranciscoSlide 1 of 55
  2. 2. Agenda Considering… ● To buy or not to buy ● Market conditions ● Searching for a home Looking… ● Finding a real estate agent ● Working with Redfin Break! Buying… ● Mortgages ● The offer and the deal ● Short sales and bank ownedSlide 2 of 55
  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 up to 50% of our commissionSlide 3 of 55
  4. 4. To Buy or Not to BuySlide 4 of 55
  5. 5. 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 commissionSlide 5 of 55
  6. 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 want a home that is difficult to rent ● You’re handy & and ready to invest ● You’ve saved up a down paymentSlide 6 of 55
  7. 7. Why You Shouldn’t Buy a Home ● You don’t have a good reason like family or schools ● 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 55
  8. 8. Market ConditionsSlide 8 of 55
  9. 9. 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 9 of 55
  10. 10. Case-Shiller – By the Numbers San Francisco Area Down 5.4% year-over-year Peak was May 2006 Down 41.1% from peak Currently at May 2006 prices 20-City Composite Down 3.8% year-over-year Peak was July 2006 Down 30.1% from peak Currently at January 2003 pricesSlide 10 of 55
  11. 11. San Ramon March Stats for HousesSlide 11 of 55
  12. 12. San Ramon March Stats for HousesSlide 12 of 55
  13. 13. Pleasanton March Stats for HousesSlide 13 of 55
  14. 14. Pleasanton March Stats for HousesSlide 14 of 55
  15. 15. Dublin March Stats for HousesConsidering…Slide 15 of 55
  16. 16. Dublin March Stats for HousesSlide 16 of 55
  17. 17. Where is the Market Headed? To be updated ● Supply of homes is at a five-year low and won’t increase the rest of the year ● Foreclosures have been driving price declines, likely years of inventory remain by agent with ● Rents have been rising, making buying more attractive) ● Market stabilizing, though likely 2-3 years before significant appreciation local market ● Rate increases - biggest issue for buyers trendsSlide 17 of 55
  18. 18. National Market Trends December: ● New construction inventory low, sales rising and confidence rising too. ● Pending home sales hit a 19-month high. ● Actual closed home sales increased 4%. ● The number of homes on the market declined 18% over the past year. ● Foreclosure sales fell to a four-year low. ● Prices will remain stable in 2012.Slide 18 of 55
  19. 19. Searching for a HomeSlide 19 of 55
  20. 20. Overview •Search homes online & tour •Get pre-approved •Find a dream home Finding •Consult with agent, write offer Your 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 SurveySlide 20 of 55
  21. 21. 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 21 of 55
  22. 22. Live Demo of Redfin’s SiteSlide 22 of 55
  23. 23. Finding an AgentSlide 23 of 55
  24. 24. 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?Slide 24 of 55
  25. 25. Traditional vs. RedfinSlide 25 of 55
  26. 26. Make Sure She’s a Good Fit Click here when you decide See all deals & reviewsSlide 26 of 55
  27. 27. Working with RedfinSlide 27 of 55
  28. 28. How Our Team Works AGENT Responsible for your success Writes your offer Handles negotiations YOU FIELD AGENT COORDINATOR Takes you to see homes Schedules tours See 50+ homes a week Prepares paperwork Works with escrowSlide 28 of 55
  29. 29. 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 29 of 55
  30. 30. We Share Our Commission With You • We refund a portion of our commission to you subject to the approval of your lender and the home seller • Applied to closing costs • Refund is tax-freeSlide 30 of 55
  31. 31. How-To Tour With Redfin DemoSlide 31 of 55
  32. 32. Now You are Ready to Tour ● Up to six homes per tour in two hour blocks ● Go on as many tours as you need ● Led by field agent ● No obligationSlide 32 of 55
  33. 33. Break!Slide 33 of 55
  34. 34. MortgagesSlide 34 of 55
  35. 35. Tenancy In Common (Only in SF) • A tenancy-in-common is an arrangement where two or more people, related or not, hold joint ownership of a home. • Each owners name will be on the title and they can decide how they want to divide ownership of the home. • Can be tricky to buy or sell since there are multiple owners on the title with equal interest in the property that must approve of the purchase or sale of the homeSlide 35 of 55
  36. 36. 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 ● Good for 90 days, depending on lender ● Ask for a few different amounts ● Redfin asks that you get pre-approved before your third tour ● Similar, yet different from pre-qualification Information needed: ● W-2, two pay-stubs, tax returns, bank statementsSlide 36 of 55
  37. 37. Organize Your Assets ● Get ready for the down payment ● Cash accounts (liquid funds) ● 401k, stocks, other investments ● Gift funds? (max. allowed varies) ● Move funds around earlySlide 37 of 55
  38. 38. Review Your Debt ● Pull credit report, look for errors ● 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 ● Co-borrower will need to do the sameSlide 38 of 55
  39. 39. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfins partner lenders ● Referrals from friends, family & co-workers ● Banks or credit unions you have accounts at ● A large, national bank with an advertised rate ● Your real estate agent ● Online review sites, such as YelpSlide 39 of 55
  40. 40. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 40 of 55
  41. 41. Current Average Rates Type of Loan March 29, 2012 March 22, 2012 30-Year Fixed 3.99% 4.08% 15-Year Fixed 3.23% 3.30% 5/1 ARM 2.90% 2.96% 1-Year ARM 2.78% 2.84%Slide 41 of 55
  42. 42. Where Are Rates Headed?Slide 42 of 55
  43. 43. 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 43 of 55
  44. 44. 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 44 of 55
  45. 45. Making Your OfferSlide 45 of 55
  46. 46. Getting The House You Want Your agent: ● Researches seller & listing agent ● Prepares a comparative market analysis and discusses ● Writes up your offer ● Submits offer ● Negotiates on your behalfSlide 46 of 55
  47. 47. Overview of a Purchase •Search homes online & tour •Get pre-approved •Find a dream home Finding •Consult with agent, write offer Your Home •Submit offer to listing agent •Negotiations •Success! •Earnest money (within 3 days) •Inspection contingency (5-10 days) Mutual •Title review (5 days) Acceptance •Financing contingency (20-25 days) •Waiting for loan approval •Escrow signing appointment •Get keys and take possession! Closing! •Receive Redfin refund •Complete Redfin SurveySlide 47 of 55
  48. 48. Deal Room Important milestone tracker Your to do list Your team of agentsSlide 48 of 55
  49. 49. Home Inspection Hints Watch out for: Look for and Check: •Galvanized steel pipes •Chimney sweep fireplace •Double-paned windows •Knob and tube wiring inspection •Well ventilated attic •Check all included •Stairs have handrails •Mold, mildew or signs of appliances leaking near walls or floors •Check water pressureSlide 49 of 55
  50. 50. SampleHUDA form that yourlender is required toprovide to you oneday before closing. Itlists the final closingcosts and fees foryour loan.By law, the final costslisted on your HUD-1must be within 10% ofthe estimatesprovided on yourGood Faith Estimate(GFE).Slide 50 of 55
  51. 51. Short-Sales & Bank OwnedSlide 51 of 55
  52. 52. 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)Slide 52 of 55
  53. 53. 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 53 of 55
  54. 54. 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 54 of 55
  55. 55. So… Where’s the Best Deal? ● Sellers who own their home outright ● Sellers who are relocating ● Estate SalesSlide 55 of 55
  56. 56. Key TakeawaysSlide 56 of 55
  57. 57. 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 ● Get pre-approved & look for a lender ● Start seeing homes ● Make an offer & close the dealSlide 57 of 55
  58. 58. AppendixSlide 58 of 55
  59. 59. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 59 of 55
  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 ► CalHFA: California State agency that helps certain buyers● 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 ► 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