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Redfin Arlington Home Buying Class


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Redfin Arlington Home Buying Class

  1. 1. Redfin’s Home Buying Class Redfin’s North Arlington Team June 26, 2014 - Arlington, VA Host: Patricia Ammann @Redfin
  2. 2. Meet Redfin’s North Arlington Team
  3. 3. Agenda ● Overview of the process ● Are you ready to buy? ● Understanding the market ● Never miss a home ● Choosing an agent ● Touring ● Break! ● Mortgages ● Short sales & foreclosures ● Making an offer ● Acceptance to closing
  4. 4. A Little Bit About Redfin Redfin is a real estate brokerage on a mission to make buying and selling a home better for you. ● Accountability: we’re on your side, giving you honest advice ● Technology: sellers get more traffic; buyers tour homes first ● Value: a full-service brokerage that saves you thousands  No obligation
  5. 5. Save $7,000 on Average
  6. 6. Understanding the Buying Process
  7. 7. Overview of Buying a Home Research Your needs The market Neighborhoods Agents Mortgages Preapproval Search Define Preferences Instant Alerts Open houses Home tours Offer Comparables Draft offer Negotiate Mutual acceptance Closing Earnest money Inspection Loan application Title review Appraisal Financing approval Closing
  8. 8. Are You Ready to Buy?
  9. 9. Are You Ready to Buy? ● Do you have a family and need room to grow? ● Do you expect to stay put for 5 or more years? ● Have you saved up for a down payment? 3.0% to 20+% ● Have you saved up for closing costs? Typically 0-2.5% ● Can you rent for less?
  10. 10. Understanding the Market
  11. 11. Story of 2014: Low Inventory
  12. 12. Story of 2014: Rising Prices
  13. 13. Arlington Area Overview
  14. 14. Where Is the Market Headed? ● Supply of homes is at a five-year low and won’t increase much more this year ● Rents have been rising, making buying more attractive ● Market stabilized – price increases in many areas ● Rate increases - biggest potential issue for buyers
  15. 15. Never Miss A Home
  16. 16. Real Estate Sites: What to Look For ● Has all the homes for sale ● Updated every 15 minutes ● Real-time sales data ● Insights from agents ● Lots of data ● Mobile apps
  17. 17. Never Miss a Home
  18. 18. Choosing the Right Agent
  19. 19. What to Ask Any Agent ● Is this your full-time job? ● 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 compliant? ● How are you paid? ● Can I see some reviews of your work?
  20. 20. Redfin Agent Reviews
  21. 21. Redfin’s Partner Program Partner agents are employed by other brokerages, and have teamed up with us to provide Redfin-certified service We’ll refer you to a Partner Agent when: ►A home is below Redfin’s minimum price ►A home is outside of our service area ►If it’s in your financial advantage to work with a partner ►We’re experiencing 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
  22. 22. Seeing Homes in Person
  23. 23. 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
  24. 24. Slide 24 of 55 How Touring with Redfin Works ● Led by agent or associate agent ● Up to six homes per tour in two hour blocks ● Go on as many tours as you need ● No obligation, no pressure
  25. 25. Mortgages
  26. 26. Local Recommended Lenders
  27. 27. Steve Fox Vice President 6.26.2014
  28. 28. 1. Our Online Application is FREE! 2. Applying Online takes as little as ten minutes.
  29. 29. 3. By applying, you can be provided with a FREE credit report. Hey Steve, “Just touching base with an update on my to do list. 1. I paid the DC parking ticket - thanks for the insight on that one 2. The Trans Union folks just notified me that they have fixed my Discover card balance on their report to zero 3. The education loan which was in default is now paid in full as of yesterday - and I have paperwork to prove it. I'm now working to fix my associated credit nightmare Thanks for taking time to go through this with me earlier...I wouldn't have known of these items otherwise. Before I press ahead with a loan I'd like to see where my credit repair efforts take me...I feel like I have a decent shot, just need to let it play out for a few weeks and see where it ends up.” Talk to you soon. — J.B.
  30. 30. 4. Your application does not bind you to a lender, loan program or rate.
  31. 31. 5. By applying, you can receive a complete list of documents needed to obtain final loan commitment.
  32. 32. 5. By applying, you can receive a complete list of documents needed to obtain final loan commitment.
  33. 33. 6. Early application will determine any action items which a purchaser needs to accomplish to be positioned to buy.
  34. 34. New Regulations “QM” = Qualified Mortgage Lenders need to focus on the Borrowers “ATR” – Ability to Repay For Non-Conforming Loans (Basically Loans over $625,500) Maximum Debt Ratio = 43% (NOT Fannie Mae / Freddie Mac / FHA or VA yet!) Document As Much Income As You Can! Overtime / Bonus / Awards / Dividends / Part Time Jobs Do NOT BUY anything extravagant during the buying process Cars / Furniture / Big Ticket Items / Cash Advances on Credit Cards New credit Reports must be generated (not credit scores) prior to closing To ensure your “new” debt to income ratio remains in compliance
  35. 35. 7. Applying allows a discussion of various financing options before you sign a contract.
  36. 36.  ARM Loans  Avoiding Mortgage Insurance  Seller plus Closing Costs/Gift Funds  Conventional, VA, FHA, VHDA
  37. 37. Avoiding Mortgage Insurance
  38. 38. 8. Applying will determine the price range of homes they are qualified to purchase, thereby focusing their home search. Dear Steve, “Thank you very much for walking me through various aspects of home loans. As a first time buyer I really appreciate your time to explain things. Thank you also for sending me documents with various options. I have been going through them and they are really helpful. I am currently collecting all the documents that I need to send you for the application form but I have few questions. I thought we agreed to apply for a limit for $450K in case I found a house I like that will cost me more than $400K. I noticed that both the pre-approved letter and the application form that you sent have the amount as $400K. I want to make sure that this will not have an impact if I chose to buy a house that costs more than $400K.” —S.L.
  39. 39. Once you “close” on your new home – you can raise your “withholding allowances” with your HR department. This will allow you to “NET” more income from each pay check. • Common IRS Federal Tax Bracket = 28%** • Common “write off’s” allowed = 8% • Common “marginal” tax savings for owning = 20% So – if you add your total yearly interest expense and yearly property tax payments and multiply by 20% - this will give you a VERY “rough” estimate of your savings by owning I often call this your “it’s like renting” payment; however, you do have maintenance costs when you own – which you would not have when you rent. *I am not an accountant or able to give tax advice. PLEASE consult your accountant for your actual tax savings. A good time to do this would be when you are preparing your tax returns this year. **Depends on your actual income
  40. 40. Great Way to Estimate Monthly Payments The Extra Monthly Financing Cost Per $50,000 of Sales Price =$300/month Rule of Thumb #1
  41. 41. 9. Pre-approval strengthens your offer in the eyes of the seller Steve, “Just wanted to thank you so much for all you've done to help us successfully bid on this townhome. V. received the ratified contract this afternoon at the home inspection. We found out we won the bidding war yesterday because of you really. Another party offered about $5K more and had a West coast lender. The agent advised the sellers to take our offer instead because of YOU, your reputation and history as a local lender. So we're really grateful! —Heather G.
  42. 42. Steve, “Thanks to you and your team for making this transaction go smoothly. I told Justin that the main reason my Sellers accepted the Offer so because you were the Lender!” Best wishes, Tom X Realtors - Licensed in Virginia
  43. 43. 10. Your Pre-approval is valid as long as your finances and the interest rates remain generally constant and can be updated and amended as needed.
  44. 44. Apply Online Steve Fox . Vice President NMLS ID # 208239 Office: 703.883.9581 Cell: 703.407.7424 NMLS ID # 38694 (
  45. 45. Short Sales and Bank Owned
  46. 46. 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
  47. 47. 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 ►Earnest money deposit usually held by listing agent
  48. 48. Making an Offer
  49. 49. Crafting Your Offer ● Evaluate – your agent will provide you with information about market conditions and recent sales in the area ● Consider the situation – the seller’s preferences, days on the market, and other interest will influence the process. ● Decide on price & strategy with your agent ● Common contingencies & terms: ►Earnest Money ►Inspection ►Financing ►Appraisal ►Title Review
  50. 50. Tips for Winning a Bidding War 1. Just win, baby! Simply have the best offer. ► Cash is King ► Escalate your price? ► Tighten your timelines ► Remove some contingencies? 2. Get pre-approved with a local lender 3. What’s important to the seller? 4. Write a letter & appeal to the seller
  51. 51. Acceptance to Closing
  52. 52. Steps After Mutual Acceptance ● Earnest money deposit – usually 1-3%+ ● Inspection – approximately $500 ● Other inspections – radon, lead etc. ● Loan application – 7days or less ● Title review ● Appraisal ● Loan approval ● Walk through ● Closing and Receive your keys!
  53. 53. Home Inspection We recommend that you have a home inspection ● Cost runs $350 to $1200 depending upon the home’s size ● Your agent will accompany you ● Your time to evaluate the property Let’s talk about: ● What an inspection contingency covers and doesn’t cover ● Types of inspections
  54. 54. What are Contingencies? A Seller has accepted an offer from a Buyer, but success may still depend on various events contained within the contract. Types of Contingencies: ● Appraisal ● Financing ● Home Inspection ● Sale of the Buyer’s home ● HOA/Condo Document Review ● Other
  55. 55. What do Title Companies do? ● Typically holds the earnest money deposit ● Prepares the final documents, including the HUD-1 ● Conducts the closing ● Receive and disburse funds for closing ● Arrange for pay off of any liens (sellers’ mortgage, taxes, etc) ● 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
  56. 56. Signing and Closing - Within a couple days prior to settlement, you have the chance to conduct a walk-through to make sure the home is in the same condition and to see if any agreed upon repairs are completed. - On the day of closing, you typically get the keys to your new home and you can start unpacking boxes right away!
  57. 57. Selling Your Home with Redfin
  58. 58. ● We’re on your side ►Agents paid on your satisfaction ►You’re backed by a whole team ● Double your exposure ►Premium placement on Redfin ►Zillow, Trulia, Craigslist and ● 1.5% selling side listing fee ►Professional Photographer to document your home ►Beautiful flyers to ‘wow’ people seeing your home ►Open houses that generate results ►No hidden brokerage administrative fees Better Service, Lower Fees
  59. 59. All Done!
  60. 60. So What Now? ● Make sure it’s the right time for you ● Start browsing online ● Check out our Home Buying Guide ● Find the right agent ● Look for a local lender and get pre-approved ● Start seeing homes in person ● Make an offer & close the deal
  61. 61. Thanks for Coming! Questions? Get in touch: Patricia Ammann Amy McCarthy Anthony Lam Check out our upcoming classes: