Redfin’s Home Buying Class  February 21, 2013 Chandler, AZ  Presented By: Kevin Wachel, Redfin’s Phoenix Team  Follow: @Re...
Home Sales By Property Type 80% 70% 60% 50% 50%                                               REO/HUD/Auction 40%         ...
Agenda     ●   To buy or not to buy     ●   Overview of purchase process     ●   Understanding the Market     ●   Touring ...
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...
To Buy or Not to BuySlide 5 of 53
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’ve ...
Why You Shouldn’t Buy a Home  ●   You don’t have a good reason  ●   You can’t afford the down payment  ●   You can rent fo...
Understanding the    Buying ProcessSlide 8 of 53
Overview of Purchase Process  ●   Gather information  ●   Tour some houses to get a general idea  ●   Interview Lenders- g...
Understanding the     MarketSlide 10 of 53
Case-Shiller: Phoenix Area v. 20-City   250.00            20 City Composite            Phoenix   200.00   150.00   100.00 ...
Case-Shiller – By the Numbers  Case-Shiller: Phoenix Area    Up 22.8% year-over-year    Peak was June 2006    Down 45.4% f...
Glendale January Stats for HomesSlide 13 of 53
Glendale January Stats for HomesSlide 14 of 53
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...
More About Multiple Offers 5 Tips for Winning in a Bidding War       1. Make the competition eat your dust       2. Get pr...
Short Sales and Bank OwnedSlide 18 of 53
Top 5 Buyer Headaches with  Short Sales ● The owner owes more on the mortgage than the home is   worth ● Usually pre-forec...
8 Reasons Short Sales Take  SO LONG to Get Approved       ► Verbal negotiations       ► Long response times       ► Repair...
MortgagesSlide 21 of 53
Review Your Financial Situation  ● Pull credit report, look for errors     ● www.annualcreditreport.com  ● Establish comfo...
Start Shopping for Lenders  Compile a list of 3-4 lenders & brokers  Good sources include:  ● Redfins partner lenders  ● R...
Getting Pre-Approved     A pre-approval letter is a letter from a bank or a lender estimating how     much theyll lend you...
Industry Buzz Words    • LQI – Loan Quality Initative    •Government Oversight       • Consumer Financial Protection Burea...
Loan Estimates & Loan Types     ● Gather loan estimates        ► Good Faith Estimate        ► Cost Estimate        ► Itemi...
Where Are Rates Headed?  Type of Loan    January 31, 2013   February 7, 2013  30-Year Fixed       3.53%              3.53%...
Slide 28 of 53
Make Your Decision     ● When possible, get a loan commitment     ● Make alternative funds liquid (401k, stock)     Good n...
Break!Slide 30 of 53
Putting it all together to findYOUR homeSlide 31 of 53
Redfin.com-Benefits of a MLS Powered  Site     ● All the homes for sale: 30% more listings     ● You see what the agent se...
Highlights of Redfin’s Site  ● Search by zip code    or neighborhood  ● Saved searches/instant alerts  ● Agent notes  ● Do...
Choosing the Right AgentSlide 34 of 53
10 Questions to Ask Any Agent  1. Is this your full-time job?  2. Are you familiar with foreclosures and short-sales?  3. ...
Traditional vs. RedfinSlide 36 of 53
Redfin’s Partner Program   Partner agents are employed by other brokerages, but     have teamed up with us to provide Redf...
Are you a Good Buyer?Slide 38 of 53
What Agents Look For in a Buyer  ● Sense of urgency (need to buy)  ● Realistic about     ► the market     ► what they want...
Need to Know About Agents  ● Traditional agents work for free until a deal closes  ● Only about 10% of home buyers will bu...
Creating a Solid Relationship  ● Start by clearly communicating     ► Your expectations of your Realtor     ► Your work sc...
TouringSlide 42 of 53
How Touring with Redfin Works       ● Up to six homes per tour in         two hour blocks       ● Go on as many tours     ...
8 Things to Look For  1. Does the home fit your needs?  2. Does the home fit some or all of your wants?  3. What cosmetic ...
Home Inspection and  Other ContingenciesSlide 45 of 53
Home Inspection Basics ● We recommend that you have a home inspection ● Cost runs $350 to $600    ► Depends on the size an...
Other Contingencies  ●   Appraisal  ●   Financing  ●   HOA  ●   SPDS  ● Things to consider     ► Buyer favored contract   ...
Closing – what you  need to knowSlide 48 of 53
Closing: HUD–1 Settlement  HUD-1 Settlement Statement – Lists all fees/charges/credits  By law, the final costs listed on ...
Title Companies  ● What does the title company do?    ► Prepares the final documents, including the HUD-1    ► Conducts th...
Closing Day  ●   You’ll have a final walk-through on closing   ●   Closing typically takes 1 hour      day or just before ...
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!...
AppendixSlide 54 of 53
Appendix  ● Important forms/contracts  ● Favorite Real Estate ResourcesSlide 55 of 53
Some Of Our Favorite Sites  ●   Seattle Bubble: market analysis  ●   Curbed Seattle: cool houses  ●   Urbnlivn: for condo ...
HUD Settlement Statement
Favorite Real Estate Links● Property information   ► PropertyShark: Zoning data, title history, permits,     neighborhood ...
Favorite Homes For Sale Links ● Redfin: MLS + FSBO + REO, updated every 15 minutes,   with DOM, price history, Zestimate ●...
Favorite Data Links ● Case-Schiller Indices: Pricing trends by metropolitan area ● Altos Research: Median price trends and...
Favorite Mortgage Links ● Bankrate: Many ads, but is great for comparing local   lenders ● Zillows Mortgage Marketplace He...
Favorite Links● Loans for first-time home buyers   ► Federal Housing Administration (FHA)   ► Fannie Mae and Freddy Mac● G...
Favorite Links Cont.● Remodeling & renovations   ► DoItYourself.com: A few ads, but a useful clearinghouse of     informat...
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Phoenix hbc 2.21.13

  1. 1. Redfin’s Home Buying Class February 21, 2013 Chandler, AZ Presented By: Kevin Wachel, Redfin’s Phoenix Team Follow: @RedfinPhoenix Like: http://www.facebook.com/RedfinPhoenixSlide 1 of 53
  2. 2. Home Sales By Property Type 80% 70% 60% 50% 50% REO/HUD/Auction 40% Short Sale 40% Traditional 30% 30% 20% 20% Distressed Distressed 10% Traditional 10% 0% 0% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013Slide 2 of 53
  3. 3. 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 closingSlide 3 of 53
  4. 4. 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 4 of 53
  5. 5. To Buy or Not to BuySlide 5 of 53
  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’ve saved up a down paymentSlide 6 of 53
  7. 7. 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 securitySlide 7 of 53
  8. 8. Understanding the Buying ProcessSlide 8 of 53
  9. 9. Overview of Purchase Process ● Gather information ● 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” ● ClosingSlide 9 of 53
  10. 10. Understanding the MarketSlide 10 of 53
  11. 11. Case-Shiller: Phoenix Area v. 20-City 250.00 20 City Composite Phoenix 200.00 150.00 100.00 50.00 0.00Slide 11 of 53
  12. 12. Case-Shiller – By the Numbers Case-Shiller: Phoenix Area Up 22.8% year-over-year Peak was June 2006 Down 45.4% from peak Currently at September 2003 prices Case-Shiller: 20-City Composite Up 5.5% year-over-year Peak was July 2006 Down 29.4% from peak Currently at September 2003 pricesSlide 12 of 53
  13. 13. Glendale January Stats for HomesSlide 13 of 53
  14. 14. Glendale January Stats for HomesSlide 14 of 53
  15. 15. 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 15 of 53
  16. 16. 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 16 of 53
  17. 17. More About Multiple Offers 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 17 of 53
  18. 18. Short Sales and Bank OwnedSlide 18 of 53
  19. 19. Top 5 Buyer Headaches with Short Sales ● 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 19 of 53
  20. 20. 8 Reasons Short Sales Take SO LONG to Get Approved ► 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 20 of 53
  21. 21. MortgagesSlide 21 of 53
  22. 22. Review Your Financial Situation ● Pull credit report, look for errors ● www.annualcreditreport.com ● Establish comfort level for monthly payment ● Consider different down payment options ● Figure out how much monthly income goes towards debt: 28 – 33% healthy ● Don’t open any new lines of credit ● Don’t buy any big ticket items ● Current employment status ● ASK QUESTIONS!Slide 22 of 53
  23. 23. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfins partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices But what about too many inquires into my credit report? What happens?Slide 23 of 53
  24. 24. 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 ● Are gift funds involved? ● How much do you have for a down payment? ● Review the process: HUD SETTLEMENT BOOKLET Information needed: ● W-2, two pay-stubs, tax returns, bank statementsSlide 24 of 53
  25. 25. Industry Buzz Words • LQI – Loan Quality Initative •Government Oversight • Consumer Financial Protection Bureau • Federal Reserve – Loan Officer Pay •FHA •VA •Fannie Mae/Freddie Mac – Seller Servicing Guide •Dodd/Frank • OVERLAYS!Slide 25 of 53
  26. 26. Loan Estimates & Loan Types ● Gather loan estimates ► Good Faith Estimate ► Cost Estimate ► Itemized Fee Worksheet ● Compare costs side-by-side Know the different types of loans ● Conventional ● Federal Housing Administration Loan (FHA) ● VA Guaranteed Loan ● Ask your lender if they have special loan programsSlide 26 of 53
  27. 27. Where Are Rates Headed? Type of Loan January 31, 2013 February 7, 2013 30-Year Fixed 3.53% 3.53% 15-Year Fixed 2.81% 2.77% 5/1 ARM 2.70% 2.63% 1-Year ARM 2.59% 2.53%Slide 27 of 53
  28. 28. Slide 28 of 53
  29. 29. 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 up to two months.Slide 29 of 53
  30. 30. Break!Slide 30 of 53
  31. 31. Putting it all together to findYOUR homeSlide 31 of 53
  32. 32. 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 homesSlide 32 of 53
  33. 33. Highlights of Redfin’s Site ● Search by zip code or neighborhood ● Saved searches/instant alerts ● Agent notes ● Download results ● Forums ● Home buying guide ● Home inspection guide ● Any questions about the site?Slide 33 of 53
  34. 34. Choosing the Right AgentSlide 34 of 53
  35. 35. 10 Questions to Ask Any Agent 1. Is this your full-time job? 2. Are you familiar with foreclosures and short-sales? 3. What can you tell me about the market? 4. Where in the valley do you work? 5. How do you like to negotiate? 6. Who else will be working with me? 7. Will you show me all properties for sale? 8. When am I committed to working with you? 9. Has a client ever filed a complaint? 10. How are you paid? ● Open ended questions, provide the best response ► Don’t lead the agent to the answer ► Ask for a story or two to get more detailsSlide 35 of 53
  36. 36. Traditional vs. RedfinSlide 36 of 53
  37. 37. 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 37 of 53
  38. 38. Are you a Good Buyer?Slide 38 of 53
  39. 39. What Agents Look For in a Buyer ● Sense of urgency (need to buy) ● Realistic about ► the market ► what they want in a home ► the buying process ● Respectful of the agent’s time and schedule ● See’s the agent as a trusted advisor ● Good communication skills ● Fully prequalifiedSlide 39 of 53
  40. 40. Need to Know About Agents ● Traditional agents work for free until a deal closes ● Only about 10% of home buyers will buy a home ► That’s a lot of time worked for no pay ● This is a 24/7 job ► But we still need personal time and family time ● This is a career/job that is constantly changing ● Agents often become life long friends with their clientsSlide 40 of 53
  41. 41. Creating a Solid Relationship ● Start by clearly communicating ► Your expectations of your Realtor ► Your work schedule ► Preferred communication method ► Motivations for buying a home and timeline (doesn’t have to be immediate)Slide 41 of 53
  42. 42. TouringSlide 42 of 53
  43. 43. 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 43 of 53
  44. 44. 8 Things to Look For 1. Does the home fit your needs? 2. Does the home fit some or all of your wants? 3. What cosmetic repairs are needed? 4. How is the curb appeal? ---------------------------------------------------------------------- 1. How has the home been cared for? ► Deferred Maintenance ► Intentional Neglect 2. Are there any unwanted critters? 3. What repairs are needed in the next 12 months? 4. What repairs are needed in the next 36 months?Slide 44 of 53
  45. 45. Home Inspection and Other ContingenciesSlide 45 of 53
  46. 46. Home Inspection Basics ● We recommend that you have a home inspection ● Cost runs $350 to $600 ► Depends on the size and age of the home ● Your agent will accompany you ● Your time to evaluate the property ● What an inspection contingency covers and doesn’t cover ● Types of inspectionsSlide 46 of 53
  47. 47. Other Contingencies ● Appraisal ● Financing ● HOA ● SPDS ● Things to consider ► Buyer favored contract ► Cure NoticeSlide 47 of 53
  48. 48. Closing – what you need to knowSlide 48 of 53
  49. 49. 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 ● Title charges ● Government chargesSlide 49 of 53
  50. 50. 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 buyerSlide 50 of 53
  51. 51. Closing Day ● You’ll have a final walk-through on closing ● Closing typically takes 1 hour day or just before ● Get keys and take possession! ● What to bring: ► Government issued photo ID ► Certified checkSlide 51 of 53
  52. 52. 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 52 of 53
  53. 53. 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 53 of 53
  54. 54. AppendixSlide 54 of 53
  55. 55. Appendix ● Important forms/contracts ● Favorite Real Estate ResourcesSlide 55 of 53
  56. 56. Some Of Our Favorite Sites ● Seattle Bubble: market analysis ● Curbed Seattle: cool houses ● Urbnlivn: for condo shoppers ● WalkScore: see what’s nearbySlide 56 of 53
  57. 57. HUD Settlement Statement
  58. 58. 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
  59. 59. 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
  60. 60. 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
  61. 61. 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
  62. 62. 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
  63. 63. 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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