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Redfin's Free Multiple Offer Webinar - San Diego, CA


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Redfin's Free Multiple Offer Webinar - San Diego, CA

  1. 1. How To Win In Multiple Offer Situations Presented by: Cheree Bray San Diego, CA August 19, 2013 Follow: Like:
  2. 2. Agenda  A little about Redfin  Why All the Multiple Offers?  Building Your Team  Starting an Offer  Writing a Winning Offer
  3. 3. Working with Redfin
  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 ● Right home for the right price  No obligation  Commission credit
  5. 5. The Redfin Refund You buy and pay for your dream home. The 6% sales commission is split. The Listing Agent gets 3% commission. Your Buyers’ Agent gets 3% commission. You save with Redfin. Redfin keeps a portion as our fee.
  6. 6. Why All The Multiple Offers?
  7. 7. Why all the Multiple Offers? ● What’s driving the sudden demand for homes? ● It’s time to buy! Buyers are confident again ● Interest rates still at historical lows ► Foreign investors, all-cash buyers ► Buyers are not shying away from bidding wars ► LOW INVENTORY  San Diego July offers facing competition: 71.7%  29% over asking  26.8% homes go pending in one week, 42.6% in two  1.6 months of supply
  8. 8. What trends are we noticing? ● Bidding wars in San Diego cooled the most in July with above 10 percentage point drop to 71.1% from 81.9% ● Why? ► Buyer fatigue: buyers are growing tired from losing bidding wars and are pulling back for now ► Budget: Rising prices and mortgage rates continues to price buyers out of the market, reducing competition for available inventory. Nationally, the median home price per square foot for single-family homes was up 18.7%. ► Growing inventory: Rising prices and mortgage rates are also driving homeowners to list their homes in greater numbers. ► Summer vacation: distracted some buyers from house hunting in July.
  9. 9. Building Your Team
  10. 10. Build Your Team: How We Can Help ● Redfin agents close more deals than an average agent, we know the market and how to get the job done. ● We are advocates for our clients, not commissions ● Help determine market price - CMA, trends and stats ● Creative use of terms to present the strongest possible offer ● Established relationships with listing agents - we know what questions to ask, what to say, when to say it ● Understand the listing agent’s negotiation style ● Write crisp, clean offers quickly (Docusign) ● Team structure allows agent to focus on writing your offer
  11. 11. Building Your Team: Choosing a Lender Goal: Determine the Best Candidate and Obtain a Pre-Approval Letter First:  Use a lender with local expertise- in a competitive situation it can be the difference between winning and losing  Ask your loan officer how they can help you in a competitive situation (shorter loan approval period, quick closing?) Are they available on nights and weekends? What is their typical response time?  Request that your LO be available to speak with the listing agent Next:  Get a preapproval letter with your maximum approval amount, you can customize later if necessary  Get full underwriter approval --No pre-qualification letters please  Show FICO scores if possible
  12. 12. Consider a Redfin Preferred Lender *In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders!
  13. 13. Starting an Offer
  14. 14. 5 Tips for Winning a Bidding War 1. Make the competition eat your dust – sign up for a redfin listing alert! 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
  15. 15. Get Ready! Start the Conversation:  Buyer’s 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? Any special terms?  Find out how many offers they have in hand  Is there an offer due date? How should offers be submitted / special requests  Build rapport with listing agent and check scouting report  Check for copies of disclosures and reports, if any
  16. 16. Get Ready! Know the Numbers - Knowing what to offer and being confident in your offer price makes the process less stressful.  Run a Comparative Market Analysis (CMA)  Understand pricing for the area  Determine your maximum price  Calculate payment difference at incremental price points  $5,000 more equals $?/month  Know When To Walk Away  You can’t control what someone else is willing to pay
  17. 17. 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)
  18. 18. Writing a Winning Offer
  19. 19. Writing a Winning Offer Offer Price - Price & Terms are the King & Queen of Winning in Multiple Offer Situations  Study Comparables  Base your offer on the comparables and the trends – not the listing price  Understand Pricing and Sales Trends in the Area  List price to sales price ratio  Days on Market  Fewer DOM – sellers are less flexible (14 days or less)  More DOM – sellers are usually more motivated/open to negotiating
  20. 20. Writing a Winning Offer 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 start
  21. 21. Writing a Winning Offer 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?
  22. 22. Financing Terms ● Cash ► Cash offers can close in just a few days as there is no loan approval process. ► Strongest of all financing options ● Conventional ► 5% or more down payment. Few restrictions on condition of home, buyer has good credit. ► Strong second best financing option ● FHA / VA ► Least down payment (as little as 0%-3.5%), lender may require repairs, longest closing period. Lower credit ok. ► Also viable financing options
  23. 23. Earnest Money Deposit ● Deposited with escrow within 3 business days of Acceptance ● A higher EMD shows you are serious buyers and could cause the sellers to consider your offer over others, all else being equal ● 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 contingencies ● In today’s market, a typical EMD is 3% of the purchase price
  24. 24. Closing & Possession ● Shorter COE - You’ve already spoken to your lender to see how quick they can close. Flexibility can make a huge difference! ● Take Possession at Closing (ideal) ● Does the seller need a Rent Back? ● The seller may need to stay longer but want to close sooner to have access to the funds ● Seller pays buyers PITI while occupying the home after recording – this is negotiable! ● Deposit & Rent are held at escrow upon closing ● Usually a max of 30 days – anything more requires lender approval, rental agreement contract ● Seller occupancy after recording establishes a tenant/landlord relationship
  25. 25. Writing a Winning Offer 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 sellers
  26. 26. Thanks for Coming! Questions? Get in touch: Cheree Bray Check out our upcoming classes:
  27. 27. Thank You!