Redfin’s Home Buyers  Class     January 24, 2013 Glendale, CA     Follow: @RedfinLosAngeles     Like: http://www.facebook....
Agenda     ●   Overview of purchase process     ●   Understanding the Market     ●   Touring     ●   Mortgages     ●   Bre...
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...
Redfin = More Information  ● 20% more agent listed homes for sale than Zillow and Trulia  ● Redfin gets new listings 7-9 d...
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...
Tour homes                  Find dream home                  Consult with agent, write offer                  Submit offer...
Understanding the      MarketSlide 8 of 50
Case-Shiller: Los Angeles Area v. 20-City   300.00                Los Angeles                20-City Composite   250.00   ...
Case-Shiller – By the Numbers  Los Angeles Area    Up 4% year-over-year    Peak was September 2006    Down 36% from peak  ...
Burbank Dec. Stats for HousesSlide 11 of 50
Burbank Dec. Stats for HousesSlide 12 of 50
Burbank Area OverviewSlide 13 of 50
National Market Trends  Multiple Offers - More than a Quarter of Listings Still Selling Fast  ● In Dec. 27.5% of new listi...
National Market Trends  ● The key metrics across 19 major metropolitan markets are:       ► Prices 11.3% higher YoY (9th m...
TouringSlide 16 of 50
How Touring with Redfin Works       ● Up to six homes per tour in         two hour blocks       ● Go on as many tours     ...
Making the Most of Your Tour 1.     Bring a camera, notebook & tape measure   9.    Peek into the attic 2.     See how muc...
Short Sales and Bank OwnedSlide 19 of 50
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 negotia...
Break!Slide 22 of 50
10-Minute Break    10 mins             5 mins        End                 Let’s Get Started!Slide 23 of 50
MortgagesSlide 24 of 50
Start Shopping for Lenders Compile a list of 3 lenders & brokers Good sources include: ● Redfin Open Book    ► Redfin Cert...
Writing a Winning Offer Use a Redfin Preferred Lender                             *In no way does Redfin                  ...
Your Lender is part of our Team!     Ask your loan officer how they can help you in a competitive     situation (shorter c...
Where Are Rates Headed?  Type of Loan    January 10, 2013   January 3, 2013  30-Year Fixed       3.40%              3.34% ...
Where Are Rates Headed?Slide 29 of 50
Getting Pre-Approved A pre-approval letter is a letter from a bank or a lender estimating how much theyll lend you ● Estab...
Types of Loans  ● Conventional:     ► A Higher Down payment (20%+) makes your offer stronger     ► Fewer restrictions on h...
Review Your Financial Situation  To Buy or Not to Buy  ● Pull credit report, look for errors  ● Establish comfort level fo...
Choosing the Right AgentSlide 33 of 50
Traditional vs. RedfinSlide 34 of 50
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...
Write a Winning OfferSlide 37 of 50
Let’s Do our Homework!       Your agent will call the listing agent, to find out what the sellers       situation is & why...
Offer Price Price & Terms are the King & Queen of Winning, especially in    Multiple Offer Situations      Study Comparabl...
Highest & Best  In a multiple offer situation you may have only one shot at     offering and no opportunity to further neg...
Get Ready!  Documentation  Having your finances and other required documents in order  prior to making an offer can accele...
Earnest Money Deposit  3% is typical in the area      A higher EMD shows you are serious buyers and could make      the se...
Add a Personal Touch Including a short letter to the seller and a picture may help the seller connect and consider your of...
Home Inspection and  Other ContingenciesSlide 44 of 50
Other Contingencies TERMS - Understand & offer the terms that seller desires      Contingencies protect the buyer and give...
Inspections  ● We recommend that you have at least a Home Inspection and    Pest Inspection  ● Cost runs $350 to $1200 dep...
Inspections: To Waive or Not To?     • Pre-Inspection           • Out $300 - $1000 and may not get the house           • T...
CLOSING & POSSESSION  Closing - Chat with your lender and see how quick they can    close. Flexibility with closing can ma...
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!...
Upcoming SlideShare
Loading in …5
×

January 24 Glendale Home Buying Class

462 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
462
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

January 24 Glendale Home Buying Class

  1. 1. Redfin’s Home Buyers Class January 24, 2013 Glendale, CA Follow: @RedfinLosAngeles Like: http://www.facebook.com/RedfinLosAngelesSlide 1 of 50
  2. 2. Agenda ● Overview of purchase process ● Understanding the Market ● Touring ● Mortgages ● Break! ● Choosing an agent ● Redfin as a tool ● Short sales & foreclosures ● ClosingSlide 2 of 50
  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 commissionSlide 3 of 50
  4. 4. Redfin = More Information ● 20% more agent listed homes for sale than Zillow and Trulia ● Redfin gets new listings 7-9 days faster ● Nearly 2-5 homes that appear on National portals as active listings actually have already soldSlide 4 of 50
  5. 5. 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 5 of 50
  6. 6. 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 6 of 50
  7. 7. Tour homes Find dream home Consult with agent, write offer Submit offer to listing agent Negotiations Success! Mutual Acceptance Earnest money 3% Success! Mutual Acceptance Overview of a Inspection contingency [10-17 days] Purchase Financing contingency [17 days] Final walk thru - details Closing! Get keys and take possession! Receive Redfin refund Complete Redfin surveySlide 7 of 50
  8. 8. Understanding the MarketSlide 8 of 50
  9. 9. Case-Shiller: Los Angeles Area v. 20-City 300.00 Los Angeles 20-City Composite 250.00 200.00 150.00 100.00 50.00 0.00Slide 9 of 55
  10. 10. Case-Shiller – By the Numbers Los Angeles Area Up 4% year-over-year Peak was September 2006 Down 36% from peak Currently at May 2010 prices 20-City Composite Up 3% year-over-year Peak was July 2006 Down 29% from peak Currently at September 2010 pricesSlide 10 of 50
  11. 11. Burbank Dec. Stats for HousesSlide 11 of 50
  12. 12. Burbank Dec. Stats for HousesSlide 12 of 50
  13. 13. Burbank Area OverviewSlide 13 of 50
  14. 14. National Market Trends Multiple Offers - More than a Quarter of Listings Still Selling Fast ● In Dec. 27.5% of new listings were under contract in two weeks or less. ● This measure of how competitive the market is for buyers has been holding steady for the last seven months. ● Multiple offers are not only against 3 or 5 buyers, but more like 10, 20 and sometimes even 30 or moreSlide 14 of 50
  15. 15. National Market Trends ● The key metrics across 19 major metropolitan markets are: ► Prices 11.3% higher YoY (9th month in a row with increasing prices YoY) ► Inventory falls 33% YoY ► At the close of 2012 there were < 160,000 listings nationally ► Inventory been dropping YoY for 22 months in a rowSlide 15 of 50
  16. 16. TouringSlide 16 of 50
  17. 17. 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 17 of 55
  18. 18. 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 6. Take stock of storage space 14. Compare the property’s tax records to the 7. Turn off any music playing in house listing details 8. Check for hardwood floorsSlide 18 of 50
  19. 19. Short Sales and Bank OwnedSlide 19 of 50
  20. 20. 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 20 of 50
  21. 21. 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 ► Limited or no disclosures ► Legal addenda may require an attorney ► Banks demand use of their own contracts ► Banks usually use escrow & title company of their choice – they may give buyers incentive for doing thisSlide 21 of 50
  22. 22. Break!Slide 22 of 50
  23. 23. 10-Minute Break 10 mins 5 mins End Let’s Get Started!Slide 23 of 50
  24. 24. MortgagesSlide 24 of 50
  25. 25. Start Shopping for Lenders Compile a list of 3 lenders & brokers Good sources include: ● Redfin Open Book ► Redfin Certified lenders ► Reviews you can trust ● Your real estate agent ● Friends, family & co-workers ● Banks or credit unions you have accounts with ● Beware of out-of-state lenders!Slide 25 of 50
  26. 26. Writing a Winning Offer Use a Redfin Preferred Lender *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 26 of 50
  27. 27. Your Lender is part of our Team! Ask your loan officer how they can help you in a competitive situation (shorter contingency period, quick closing?) Request that your Loan Officer be available to speak with the listing agent – To confirm the strength of your pre-approval To verify that they can meet the timeline of your offer Get a preapproval letter with your maximum approval amount, you can customize later if necessary Use a lender with local expertise- in a competitive situation it can be the difference between winning and losing Get full underwriter approval --No pre-qualification letters pleaseSlide 27 of 50
  28. 28. Where Are Rates Headed? Type of Loan January 10, 2013 January 3, 2013 30-Year Fixed 3.40% 3.34% 15-Year Fixed 2.66% 2.64% 5/1 ARM 2.67% 2.71% 1-Year ARM 2.60% 2.57%Slide 28 of 50
  29. 29. Where Are Rates Headed?Slide 29 of 50
  30. 30. 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 ● Usually good for 90 days, depends on lender ● 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 30 of 50
  31. 31. Types of Loans ● Conventional: ► A Higher Down payment (20%+) makes your offer stronger ► Fewer restrictions on home’s condition, assures buyer has good credit ► 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, Lower credit ok ► Lender may require repairs, longer closing period ► Not all Sellers will Accept FHA, depending on condition of property ● VA Guaranteed Loan: ► Veterans, active duty personnel, reservists/national guard, surviving spouses ► No down paymentSlide 31 of 50
  32. 32. 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 statusSlide 32 of 50
  33. 33. Choosing the Right AgentSlide 33 of 50
  34. 34. Traditional vs. RedfinSlide 34 of 50
  35. 35. 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? ● 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 35 of 50
  36. 36. 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 36 of 50
  37. 37. Write a Winning OfferSlide 37 of 50
  38. 38. Let’s Do our Homework! Your agent will call the listing agent, to find out what the sellers situation is & why they are selling What are the sellers’ motivations? Will they need to remain at the property after closing? Do they need a quick sale? Request for copies of disclosures and reports Find out how many disclosure packages have been sent out to other buyers, has there been heavy traffic? Is there an offer due date? How should offers be submitted – via email, drop off at listing office or in person? Build rapport with listing agent and check scouting reportSlide 38 of 50
  39. 39. Offer Price Price & Terms are the King & Queen of Winning, especially in Multiple Offer Situations Study Comparables Understand pricing trends in the area Base your offer on the comparables – not the listing price especially if it is strategically low Determine your maximum price & Know when to Walk Away You can’t control what someone else is willing to pay Calculate payment difference at incremental price points $5,000 more equals $?/month Days on Market Fewer DOM – sellers are less flexible More DOM – sellers are usually more motivated/open to negotiating Know the Sellers Current Loan SituationSlide 39 of 50
  40. 40. Highest & Best In a multiple offer situation you may have only one shot at offering and no opportunity to further negotiate Blind betting – you don’t know what the other offers are What is the maximum price you are willing to pay for this property? How much do you really want this property? Determine your walk away price Go in with your Highest Price and Best Terms right from the startSlide 40 of 50
  41. 41. Get Ready! Documentation Having your finances and other required documents in order prior to making an offer can accelerate the process. Here’s what we’ll need at a minimum to include with your offer: Pre-Approval Letter Not a pre-qualification Proof of Funds Bank statement, 401k, brokerage statement Earnest Money Deposit Check Just a copy (picture, scan or fax)Slide 41 of 50
  42. 42. Earnest Money Deposit 3% is typical in the area A higher EMD shows you are serious buyers and could make the sellers consider your offer more To be submitted to escrow within 3 business days of acceptance The check is cashed, held at escrow & applied to your down payment at closing Refunded if you cancel as a result of a contingency Could be in jeopardy if you cancel after you’ve removed all contingenciesSlide 42 of 50
  43. 43. Add a Personal Touch Including a short letter to the seller and a picture may help the seller connect and consider your offer. Include a bit about you, your family, your profession. Comment on the things you liked about the seller’s home. Send your agent a family photo to include. Won’t help with a bank owned properties or investor sellersSlide 43 of 50
  44. 44. Home Inspection and Other ContingenciesSlide 44 of 50
  45. 45. Other Contingencies TERMS - Understand & offer the terms that seller desires Contingencies protect the buyer and gives the option to negotiate further, or cancel the transaction if no agreement is reached. Inspection Contingency – Typically 7 to 12 days Financing Contingency - Typically 14 to 17 days Appraisal Contingency - Typically 14 to 17 days Shorter contingency periods makes your offer stronger & shows how serious you are as buyers Need a Home Warranty? Seller Rent Back?Slide 45 of 50
  46. 46. Inspections ● We recommend that you have at least a Home Inspection and Pest Inspection ● Cost runs $350 to $1200 depending upon the size of the house ● Your time to evaluate & investigate the property ● What an inspection contingency covers ● Types of inspectionsSlide 46 of 50
  47. 47. Inspections: To Waive or Not To? • Pre-Inspection • Out $300 - $1000 and may not get the house • Timing can be difficult • Seller may not allow • Post-Inspection • May scare sellers – They usually want a truly As-Is sale • Deal can quickly fall apart • What’s reasonable to negotiate further? • Waived Inspection • High Risk • Waiting contingencies is not advisableSlide 47 of 50
  48. 48. CLOSING & POSSESSION Closing - Chat with your lender and see how quick they can close. Flexibility with closing can make a huge difference Take Possession At closing or does the seller need a Rent Back? The seller may needs to stay longer but want to close sooner to have access to the funds Seller pays buyers PITI while occupying the home after settlement Deposit & Rent is held at escrow upon closing Usually a max of 30 days – anything more requires lender approvalSlide 48 of 50
  49. 49. 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 49 of 50
  50. 50. 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 50 of 50

×