Redfin's Free Home Buying Class - Houston

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  • http://blog.redfin.com/blog/2013/03/february-real-time-home-price-tracker.html
  • http://blog.redfin.com/blog/2013/03/february-real-time-home-price-tracker.html
  • http://www.freddiemac.com/pmms/
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspx
  • Doug: Courtney and I update this slide to reflect the agent who is presenting and their team.
  • Redfin's Free Home Buying Class - Houston

    1. 1. Slide 1 of 48 Redfin’s Home Buying Class Tara Waggoner Redfin’s Houston Team July, 17, 2013 Houston, TX @RedfinHouston Facebook.com/RedfinHouston
    2. 2. Slide 2 of 48 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 closing
    3. 3. Slide 3 of 48 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
    4. 4. Slide 4 of 48 To Buy or Not to Buy
    5. 5. Slide 5 of 48 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 payment
    6. 6. Slide 6 of 48 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 security
    7. 7. Slide 7 of 48 Understanding the Buying Process
    8. 8. Slide 8 of 48 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” ● Closing
    9. 9. Slide 9 of 48 Understanding the Market
    10. 10. Slide 10 of 48 Case-Shiller: Dallas Area v. 20-City 0.00 50.00 100.00 150.00 200.00 250.00 20 City Composite San Francisco Dallas
    11. 11. Slide 11 of 48 Case-Shiller – By the Numbers Dallas Area Up 7.4% year-over-year Peak was June 2007 Down 3.5% from peak Currently at July 2006 prices 20-City Composite Up 12.1% year-over-year Peak was July 2006 Down 28.7% from peak Currently at February 2004 prices
    12. 12. Slide 12 of 48 National Market Trends The key metrics across Redfin’s markets: ● Home sales rose 25% from February, but were barely up from 2012, rising just 0.9% year-over-year, the smallest gain in 14 months. ● The number of homes for sale declined 31% from March 2012 to March 2013 (a slight improvement over the 32% drop in February), and were flat month over month. ● Home prices in March increased 15% year over year, and rose 6% just since February. ● The percentage of listings that were under contract within 14 days of their debut inched up yet again from 33.2% in February to 34.8% in March, the highest point on record.
    13. 13. Slide 13 of 48 National Market Trends
    14. 14. Slide 14 of 48 Where is the Local Market Headed? ● Supply of homes is at a five-year low and won’t increase the rest of the year ● Rents have been rising, making buying more attractive) ● Market stabilizing, though likely 2-3 years before significant appreciation ● Rate increases - biggest issue for buyers
    15. 15. Slide 15 of 48 Short Sales and Bank Owned
    16. 16. Slide 16 of 48 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 refund
    17. 17. Slide 17 of 48 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 money
    18. 18. Slide 18 of 48 Touring
    19. 19. Slide 19 of 48 Making the Most of Your Tour 1. Bring a camera, notebook & tape measure 2. See how much sunlight the place gets 3. Check the bathrooms for rot & mold 4. Look for wavy or discolored wood siding 5. Make sure water spouts drain away from house 6. Take stock of storage space 7. Turn off any music playing in house 8. Check for hardwood floors 9. Peek into the attic 10. Bring a marble or two 11. When sharing a wall, make sure it’s thick 12. Ignore the appliances and carpets 13. Check the closets 14. Get the disclosure packet 15. Compare the property’s tax records to the listing details
    20. 20. Slide 20 of 48 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 obligation
    21. 21. Slide 21 of 48 Mortgages
    22. 22. Slide 22 of 48 Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
    23. 23. Slide 23 of 48 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 status
    24. 24. Slide 24 of 48 Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfin's partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices *Know your lender
    25. 25. Slide 25 of 48 Getting Pre-Approved A pre-approval letter is a letter from a bank or a lender estimating how much they'll 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 statements
    26. 26. Slide 26 of 48 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)
    27. 27. Slide 27 of 48 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 Program
    28. 28. Slide 28 of 48 Where Are Rates Headed? Type of Loan July 11, 2013 July 3, 2013 30-Year Fixed 4.51% 4.29% 15-Year Fixed 3.53% 3.39% 5/1 ARM 3.26% 3.10% 1-Year ARM 2.66% 2.66%
    29. 29. Slide 29 of 48 Where Are Rates Headed?
    30. 30. Slide 30 of 48 Break!
    31. 31. Slide 31 of 48 Putting it all together to find YOUR home
    32. 32. Slide 32 of 48 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 homes
    33. 33. Slide 33 of 48 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?
    34. 34. Slide 34 of 48 Choosing the Right Agent
    35. 35. Slide 35 of 48 Traditional vs. Redfin
    36. 36. Slide 36 of 48 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?
    37. 37. Slide 37 of 48 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 limits Experience With Multiple Offers
    38. 38. Slide 38 of 48 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 partners
    39. 39. Slide 39 of 48 Home Inspection and Other Contingencies
    40. 40. Slide 40 of 48 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 inspections
    41. 41. Slide 41 of 48 Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● Other
    42. 42. Slide 42 of 48 Closing – what you need to know
    43. 43. Slide 43 of 48 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 taxes
    44. 44. Slide 44 of 48 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 buyer
    45. 45. Slide 45 of 48 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,
    46. 46. Slide 46 of 48 Closing Day ● You’ll have a final walk-through on closing day or just before ● What to bring: ► Government issued photo ID ► Certified check ● Closing typically takes 1 hour ● Get keys and take possession!
    47. 47. Slide 47 of 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 deal
    48. 48. Slide 48 of 48 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/events
    49. 49. Slide 49 of 48 Appendix
    50. 50. Slide 50 of 48 Appendix ● Important forms/contracts ● Favorite Real Estate Resources
    51. 51. Slide 51 of 48 Some Of Our Favorite Sites ● Seattle Bubble: market analysis ● Curbed Seattle: cool houses ● Urbnlivn: for condo shoppers ● WalkScore: see what’s nearby
    52. 52. HUD Settlement Statement
    53. 53. 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
    54. 54. 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
    55. 55. 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 ● SmartMoney's Home Buying Worksheet: Similar to the MSN calculator, but requires more info
    56. 56. Favorite Mortgage Links ● Bankrate: Many ads, but is great for comparing local lenders ● Zillow's 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
    57. 57. 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
    58. 58. 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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