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Home Buying Class - Wantagh - July 28, 2011

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Home Buying Class - Wantagh - July 28, 2011

  1. 1. Redfin’s Home Buying Class July 28, 2011 Wantagh, NY
  2. 2. Agenda Considering… • To Buy or Not to Buy • Market Conditions • How to Search for a Home Looking… • Working with Redfin • Finding a Redfin Agent • Pre-approval Break! Buying… • Mortgages • Short Sales and Bank Owned • The Offer and the DealConsidering… Looking… Buying…
  3. 3. To Buy or Not to Buy
  4. 4. Why You Should Buy a Home • You’ve got a family, and need room to grow • You want deep roots • You’re handy, and ready to invest your time in your home • You’ve saved up a down paymentConsidering… Looking… Buying…
  5. 5. Why You Shouldn’t Buy a Home • You don’t have a good reason like family or schools • You can’t afford a down payment, lawyer and bank fees • You have a low credit score or are paying off high loans • You can rent for much less • You plan on moving soon • You’re worried about job securityConsidering… Looking… Buying…
  6. 6. Market Conditions
  7. 7. Wantagh June Stats for Homes:Considering… Looking… Buying…
  8. 8. Wantagh June Stats for Condos:Considering… Looking… Buying…
  9. 9. How to Search for a Home
  10. 10. Why Redfin’s Search is Better • 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 homesConsidering… Looking… Buying…
  11. 11. Searching on Redfin Find Redfin’s open Forums houses Exclude Search short recent sales sales Download to ExcelConsidering… Looking… Buying…
  12. 12. Home Details Page History of the property Different map views Local school info Add to Favorites Neighborhood area pricing Mortgage Calculator
  13. 13. Add Homes to Your Favorites List Order by price, listing date, etc See your notesConsidering… Looking… Buying…
  14. 14. Working with RedfinWorking with Redfin
  15. 15. Working With Redfin is Different Service • Advocates: client-satisfaction bonuses, not commissions • Transparency: informed decisions • Best Agents: The right home for the right price No obligation • Switch Redfin agents • Pause and re-start your search any time Refund • You may get up to 50% the commission The Best Results • Service: 97% would recommend us to a friendConsidering… Looking… Buying…
  16. 16. How Commissions Work Example: You buy a home for $600,000 Traditional Agents Commission Seller’s Agent (2%) $12,000 Buyer’s Agent (2%) $12,000 Redfin Agents Commission Seller’s Agent (2%) $12,000 Redfin (1%) $6,000 Redfin Buyer (11%) $6,000 • Redfin refunds 50% of the buyer’s agent commission • Remainder paid as a check within 10 days of closing • Refund is tax-free • Minimum Redfin fee: $6,000Considering… Looking… Buying…
  17. 17. How Our Team Works Agent •Responsible for your Field Agents success •Writes your offer •Takes you on •Handles inspection home tours •Handles negotiations •Attends inspections You Coordinator •Schedules tours •Prepares paperworkConsidering… Looking… Buying…
  18. 18. Find a Home to TourConsidering… Looking… Buying…
  19. 19. Schedule a Tour or Add More HomesConsidering… Looking… Buying…
  20. 20. Fill Out Time and NotesConsidering… Looking… Buying…
  21. 21. Verify Your Identity & Coordinator Will Call to ScheduleConsidering… Looking… Buying…
  22. 22. Now You are Ready to Tour • Up to six homes per tour in two hour blocks • Go on as many tours as you would like • Led by agent or field agent • No commitmentConsidering… Looking… Buying…
  23. 23. Finding a Redfin Agent
  24. 24. How to Find Our AgentsConsidering… Looking… Buying…
  25. 25. Pick Your Area to Find Local Redfin AgentsConsidering… Looking… Buying…
  26. 26. Select an AgentConsidering… Looking… Buying…
  27. 27. Make Sure He’s a Good Fit Click here when you decide Team members See all & roles deals & reviewsConsidering… Looking… Buying…
  28. 28. 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?Considering… Looking… Buying…
  29. 29. Get Pre-Approved • A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend a borrower • Help you establish how much you can afford and makes offer process go faster • Information needed: • W-2, two pay-stubs, tax returns (get them ready), bank statements • The process only takes a few days while banks get everything verified • The approval is good for 90 days, depending on lender • Ask for a few different amounts • Redfin asks that you get pre-approved before your third tourConsidering… Looking… Buying…
  30. 30. Break!
  31. 31. Mortgages
  32. 32. Organize Your Assets • Get ready for the down payment • Cash accounts (liquid funds) • 401(k), stocks, other investments • Gift funds? (Max. allowed varies) • Move funds around before you start shoppingConsidering… Looking… Buying…
  33. 33. Review Your Debt • Pull credit report, look for errors • Figure out how much monthly income goes towards paying off debt: 28 – 33% healthy • Pay down balances to 1/3rd of credit available • Don’t open any new lines of credit • Don’t buy any big ticket items • Co-borrower will need to do the sameConsidering… Looking… Buying…
  34. 34. Start Shopping for Lenders Compile a list of 4-6 lenders & brokers Good sources include: • Redfins partner lenders • Referrals from friends, family & co-workers • Banks or credit unions you have accounts with • A large, national bank with an advertised rate • Your real estate agent • Online review sites, such as YelpConsidering… Looking… Buying…
  35. 35. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they are great lenders!Considering… Looking… Buying…
  36. 36. Current Average Rates Type of Loan July 14, 2011 July 21, 2011 30-Year Fixed 4.51% 4.52% 15-Year Fixed 3.65% 3.66% 5/1 ARM 3.29% 3.27% 1-Year ARM 2.95% 2.97%Considering… Looking… Buying…
  37. 37. Comparing GFE Results • Gather Good Faith Estimates (loan quotes) • A minimum of three, more is better • 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)Considering… Looking… Buying…
  38. 38. Make Your Decision • When possible, get a loan commitment • Lock your interest rate (30 - 60 days) • 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. You’ll have one month of no payments.Considering… Looking… Buying…
  39. 39. Short-Sales & Bank Owned
  40. 40. 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)Considering… Looking… Buying…
  41. 41. 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 moneyConsidering… Looking… Buying…
  42. 42. So…Where’s the Best Deal? • Bank-owned & short-sales myths – • Always the best deal? • Banks are stingy • Not a fire sale • Your best bet for a good deal: • Sellers who own their home outright • Sellers who are relocating • Estate Sales • Short Sales with hardship packagesConsidering… Looking… Buying…
  43. 43. The Offer & The Deal
  44. 44. Start an Offer
  45. 45. Start an Offer
  46. 46. Your Agent Negotiates Deal• Researches seller • Reviews agent-only comments • Contacts listing agent • Studies listing agent negotiating patterns • Studies sellers situation and motivations• Discusses with you • Do you want a comparative market analysis? • Where do you want to start? • Where do you want to end up?• Crafts Offer to Purchase • Inspection contingency • Financing contingency• Submits offer• Negotiates terms
  47. 47. Deal Room Important milestone tracker Your to do list Your team of agents
  48. 48. 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 •Cracks in foundation •Check all included •Stairs have handrails appliances •Mold, mildew or signs of •Check water pressure leaking near walls or floorsConsidering… Looking… Buying…
  49. 49. Tour homes Get pre-approved Find dream home Consult with agent, write offer Submit offer to listing agent Negotiations Success! Mutual Acceptance Inspection contingency [5-10 days]Overview of a Meet with Attorney and Sign Contracts [5 days]Purchase Financing contingency [20-25 days] Waiting for loan approval Final walk through Closing! Get keys and take possession! Receive Redfin refund Complete Redfin survey
  50. 50. So What Now? • Make sure it’s the right time for you • Get pre-approved & look for a lender • Search for homes & start touring • Find the right agent • Make an offer & close the dealConsidering… Looking… Buying…
  51. 51. After Class… Please fill out the survey we’ll send this week along with this slide deck. We’d love to get your feedback on how the class could improve. To get even more info on the home buying process, check out our home buying guide: http://redfin.com/home-buying-guideConsidering… Looking… Buying…
  52. 52. Appendix:•Important forms/contracts•Favorite Real Estate Resources
  53. 53. NWMLS Purchase & Sale Agreement
  54. 54. HUD Settlement Statement
  55. 55. 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
  56. 56. Favorite Real Estate Links: Listings • Redfin: MLS + FSBO + REO, updated every 15 minutes, with DOM, price history, Zestimate • craigslist: Major FSBO source that Redfin cant crawl • HotPads: Foreclosure heat maps • Brokerage site of listing agents: more photos of the listing • RealtyTrac: Foreclosure market detail, subscription required for full reports
  57. 57. Favorite Real Estate Links: Pricing Data • Case-Schiller Indices: Pricing trends by metropolitan area • HouseMath: Compares a housing investment to a stock market investment • 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
  58. 58. Favorite Real Estate Links: Mortgage • 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
  59. 59. 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
  60. 60. 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 • What to Look for in an Inspection • American Society of Home Inspectors (ASHI): Good consumer FAQ & virtual home inspection

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