Pasadena Home Buying Class May 9, 2012

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Pasadena Home Buying Class May 9, 2012

  1. 1. Redfin’s Home Buying Class May 9, 2012 San Gabriel Valley Follow: @RedfinLosAngeles Like: http://www.facebook.com/RedfinLosAngelesSlide 1 of 48
  2. 2. Agenda ● To buy or not to buy ● Redfin as a tool ● Choosing an agent ● Touring ● Market conditions ● Break! ● Mortgages ● Short sales & foreclosures ● The offer processSlide 2 of 48
  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 48
  4. 4. Redfin as a Tool in Your SearchSlide 4 of 48
  5. 5. 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 5 of 48
  6. 6. Highlights of Redfin’s Site ● Search by zip code or neighborhood ● Saved searches/instant alerts ● Agent notes ● Download results ● Price your home ● Agent scouting report ● Forums ● Home buying guide ● Home inspection guideSlide 6 of 48
  7. 7. After your offer is accepted Important milestone tracker Your to do list Your team of agentsSlide 7 of 48
  8. 8. What Happens After You Find a Home?Slide 8 of 48
  9. 9. 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 9 of 48
  10. 10. Traditional vs. RedfinSlide 10 of 48
  11. 11. Make Sure She’s a Good Fit Click here when you decide See all deals & reviewsSlide 11 of 48
  12. 12. Partners in the Process AGENT TOUR Responsible for your success COORDINATOR Writes your offer Schedules tours Handles negotiations Prepares paperwork TRANSACTION FIELD AGENT COORDINATOR Takes you to see homes Prepares paperwork Sees 50+ homes a week Works with escrowSlide 12 of 48
  13. 13. 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 13 of 48
  14. 14. Open Book ● Redfin Certified Providers ● Every professional is reviewed and all reviews are shown ● Search for local: ► Inspectors ► Lenders ► Title CompaniesSlide 14 of 48
  15. 15. We List Homes, Too! ● More people see your home ► Premium placement on Redfin.com ► Mobile apps target on-the-go buyers ► Professional flyers ● You’ll know it all at every step ► Email all buyers who see your home ► See how many people have viewed your home ► Advise you at every step in the processSlide 15 of 48
  16. 16. TouringSlide 16 of 48
  17. 17. 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 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 & 8. Check for hardwood floors tape measure 9. Peek into the attic 2. See how much sunlight the 10. Bring a marble or two place gets 11. When sharing a wall, make 3. Check the bathrooms for rot & sure it’s thick mold 12. Ignore the appliances and 4. Look for wavy or discolored carpets wood siding on exterior 13. Check the closets 5. Make sure water spouts drain 14. Get the disclosure packet away from house 15. Compare the property’s tax 6. Take stock of storage space records to the listing details 7. Turn off any music playing in houseSlide 18 of 48
  19. 19. Market ConditionsSlide 19 of 48
  20. 20. Pasadena March Stats for HousesSlide 20 of 48
  21. 21. Pasadena March Stats for CondosSlide 21 of 48
  22. 22. National Market Trends ● Multiple Offers ► 74% of offers in OC faced competition in March, 51% in DC ► Offers increased 50% nationwide but closings only increased by 17% ► Competition is up for getting offers accepted ● Tale of 2 markets ► Prices are mostly soft for condos and townhomes ► Entry level and mid range houses are selling like hotcakes ● Nationally, prices are down 3.8% ● Number of homes for sale is down 27% from March last yearSlide 22 of 48
  23. 23. Where is the Local Market Headed? ● Supply of homes is at a five-year update!!! increase the Presenter to low and won’t 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 buyersSlide 23 of 48
  24. 24. 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 24 of 48
  25. 25. Break!Slide 25 of 48
  26. 26. MortgagesSlide 26 of 48
  27. 27. 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 27 of 48
  28. 28. 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 ● 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 statementsSlide 28 of 48
  29. 29. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfins partner lenders ● Referrals from friends, family & co-workers ● Your real estate agent ● Online review sites, such as Yelp ● Local chains and offices *Know your lenderSlide 29 of 48
  30. 30. Local Recommended Lenders *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!Slide 30 of 48
  31. 31. 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 ProgramSlide 31 of 48
  32. 32. 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 32 of 48
  33. 33. Where Are Rates Headed?Slide 33 of 48
  34. 34. 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 34 of 48
  35. 35. Short-Sales & Bank OwnedSlide 35 of 48
  36. 36. 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 36 of 48
  37. 37. 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 37 of 48
  38. 38. Understanding the Offer ProcessSlide 38 of 48
  39. 39. Sequence of a Purchase ● Your agent: ► Researches seller & listing agent ► Prepares a comparative market analysis and discusses ► Writes up your offer ► Submits offer ► Negotiates on your behalf ● Mutual Acceptance ► Earnest money (within 3 days) ► Inspection contingency (10-17 days) ► Title review (17 Days) ► Financing contingency (17 days) ► Appraisal ► Waiting for loan approval ► ClosingSlide 39 of 48
  40. 40. Closing: The Title Company ● The Title Company: ► 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 40 of 48
  41. 41. 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 41 of 48
  42. 42. Closing: What you need to know ● What to bring: ► Government issued photo ID ► Certified check ● Closing typically takes 1 hour ● Shop for title fees ● Get keys and take possession! ● Receive Redfin refund ● Complete Redfin SurveySlide 42 of 48
  43. 43. Closing: HUD–1 Settlement HUD-1 Settlement Statement – Lists all fees/charges/credits ● 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 43 of 48
  44. 44. Sample HUD ● A form that your lender is required to provide to you one day before closing. It lists the final closing costs and fees for your loan. ● By law, the final costs listed on your HUD-1 must be within 10% of the estimates provided on your Good Faith Estimate (GFE).Slide 44 of 48
  45. 45. 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 45 of 48
  46. 46. Check out our local pages!Slide 46 of 48
  47. 47. Our next class! Going Green – Green Real Estate June 16, 2012 10:00am – 12:00pm Jackalope North Hollywoodhttp://www.redfin.com/buy-a-home/classes-and-eventsSlide 47 of 48
  48. 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/buy-a-home/classes-and-eventsSlide 48 of 48
  49. 49. AppendixSlide 49 of 48
  50. 50. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 50 of 48
  51. 51. HUD Settlement Statement
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. 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
  56. 56. 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
  57. 57. 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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