Redfin's Rockville Home Buying Class 8.20.13


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  • 5 minute break timer.To begin the timer, when in presentation view on the slide, click advance once and you will see the red appear from left to right. When the entire bar is red your break is up!
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  • Redfin's Rockville Home Buying Class 8.20.13

    1. 1. Redfin’s Home Buying Class Presented by: Redfin’s Montgomery Team August 20, 2013 Rockville, MD Host: Karen Parnes & Michael Wells Follow: @RedfinDC Like:
    2. 2. 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 closing
    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 ● Right home for the right price  No obligation  Commission credit
    4. 4. Understanding the Buying Process
    5. 5. 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 a down payment? ● Can you rent for less?
    6. 6. Overview of a Purchase Research Neighborhoods Real Estate Agents Mortgage Options Preapproval Consider your needs Search Define Preferences Saved Search Home Tours Open Houses Offer Comparables Draft Offer Docs Negotiate Mutual Acceptance Closing Earnest Money Inspection Loan application Title Review Appraisal Financing Approval Closing
    7. 7. Understanding the Market
    8. 8. Slide 8 of 55 Case-Shiller: DC Area v. 20-City 0.00 50.00 100.00 150.00 200.00 250.00 300.00
    9. 9. Case-Shiller – By the Numbers Case-Shiller: DC Area Up 6.9% year-over-year Peak was May 2006 Down 25.7% from peak Currently at June 2004 prices Case-Shiller: 20-City Composite Up 5.5% year-over-year Peak was July 2006 Down 29.4% from peak Currently at June 2001 prices
    10. 10. Rockville July Stats for Houses
    11. 11. Rockville July Stats for Condos
    12. 12. Rockville July Inventory
    13. 13. Rockville Area Overview
    14. 14. Bethesda July Inventory
    15. 15. Bethesda Area Overview
    16. 16. National Market Trends The March key metrics across 19 major metropolitan markets: ● Home sales rose 25% from February, but were barely up from 2012, rising just 0.9% year-over-year, the smallest gain in 14 months. ● The number of homes for sale declined 31% from March 2012 to March 2013 (a slight improvement over the 32% drop in February), and were flat month over month. ● Home prices in March increased 15% year over year, and rose 6% just since February. ● The percentage of listings that were under contract within 14 days of their debut inched up yet again from 33.2% in February to 34.8% in March, the highest point on record.
    17. 17. National Market Trends
    18. 18. Local Market Trends Bidding Wars ● % of Baltimore offers faced competition April: 58.1% ● % of Baltimore offers faced competition March: 54.2% ● Most common components of a winning offer: ► A convention loan ► Higher than asking offer price ► Personal cover letter – 52% of winning offers in Baltimore were accompanied by a personal cover letter
    19. 19. Touring
    20. 20. 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
    21. 21. Slide 21 of 55 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 obligation
    22. 22. Mortgages
    23. 23. 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 status
    24. 24. Start Shopping for Lenders Compile a list of 3-4 lenders & brokers Good sources include: ● Redfin's partner lenders ● Referrals from friends, family & co-workers ● Online review sites, such as Yelp ● Local chains and offices *Know your lender
    25. 25. Getting Pre-Approved A pre-approval letter is a letter from a bank or a lender estimating how much they'll lend you ● Establishes what you can afford & makes offer process go faster ● What’s the difference between Pre-Approval and Pre- Qualification ● Good for 90 days, depending on lender ● Ask for a few different amounts ● 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 statements
    26. 26. 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)
    27. 27. 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 Program
    28. 28. Current Average Rates Type of Loan August 15, 2013 August 8, 2013 30-Year Fixed 4.40% 4.40% 15-Year Fixed 3.44% 3.43% 5/1 ARM 3.23% 3.19% 1-Year ARM 2.67% 2.62%
    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 two months.
    30. 30. Break!
    31. 31. 10-Minute Break 10 mins 5 mins End Let’s Get Started!
    32. 32. 15-Minute Break 15 mins 7.5 mins End Let’s Get Started!
    33. 33. Putting it all together to find YOUR home
    34. 34. - Benefits of MLS Powered (Multiple Listing Service) ● 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 homes
    35. 35. Highlights of Redfin’s Site ● Search by zip code or neighborhood ● Search by schools ● Saved searches/instant alerts ● Agent notes ● Download results ● Price your home ● Forums ● Home buying guide ● Home inspection guide ● Any questions about the site?
    36. 36. Choosing the Right Agent
    37. 37. Traditional vs. Redfin
    38. 38. 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? ● Can I see some reviews of your work?
    39. 39. Experience With Multiple Offers This occurs when inventory is down and buyer interest is up ● 5 Tips for Winning in a Bidding War ► Make the competition eat your dust ► Get pre-approved with a local lender & get underwriter approval ► Start the conversation early ► Write a letter & appeal to the seller ► Know your limits
    40. 40. Redfin’s Partner Program ● Partner agents are employed by other brokerages, but have teamed up with Redfin to provide Redfin-quality 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 minimum price. ► We're experiencing unusually high customer demand. ● We survey every client, and publish every response. ● We credit 15% of the commission, usually worth $1,000 - $2,000.** ● We fire agents who get bad reviews. ● As a result, you get the same customer focus offered by a Redfin Agent
    41. 41. Short Sales and Bank Owned
    42. 42. 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
    43. 43. 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
    44. 44. Home Inspection and Other Contingencies
    45. 45. Home Inspection ● We recommend that you have a home inspection ● Cost runs $350 to $1200 depending upon the size of the house ● Your agent will accompany you ● Your time to evaluate the property ● What an inspection contingency covers and doesn’t cover ● Types of inspections
    46. 46. Other Contingencies ● Appraisal – Performed in conjunction with financing ● Financing ● Termite ● Other
    47. 47. Closing – what you need to know
    48. 48. 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 ► 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 taxes
    49. 49. 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 buyer
    50. 50. 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,
    51. 51. Closing Day ● You’ll have a final walk-through on closing day or just before ● What to bring: ► Government issued photo ID ► Certified check ● Closing typically takes 1 hour ● Get keys and take possession!
    52. 52. Selling Your Home with Redfin
    53. 53. Better Service, Lower Fees You get top-notch service and still save thousands when you sell with Redfin! Traditional Sale price $500,000 $500,000 Seller fee $12,500 (2.5%) $7,500 (1.5%) Buyer fee $12,500 (2.5%) $12,500 (2.5%) Total fee $25,000 $20,000 With a minimum fee of $5,500 Savings on a $500,000 home: $5,000
    54. 54. We go above and beyond the ordinary brokerage ● Maximum exposure on and the web Top-of-list placement and marketing blitz ● Free, professional photography and floor plans Flawless HDR from Boston Virtual Imaging ● Your team are your boots on the ground Open houses, showings, inspections, contractors ● Data-driven pricing methodology you can track Respond to numbers, not hunches Better Service, Lower Fees
    55. 55. 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 deal
    56. 56. Future Events!
    57. 57. Thanks for Coming! Questions? Get in touch: Presenter1 : Karen Parnes Presenter 2 : Michael Wells Check out our upcoming classes:
    58. 58. Appendix
    59. 59. Appendix ● Important forms/contracts ● Favorite Real Estate Resources
    60. 60. HUD Settlement Statement
    61. 61. 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
    62. 62. 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
    63. 63. 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 ● SmartMoney's Home Buying Worksheet: Similar to the MSN calculator, but requires more info
    64. 64. Favorite Mortgage Links ● Bankrate: Many ads, but is great for comparing local lenders ● Zillow's 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
    65. 65. 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
    66. 66. Favorite Links Cont. ● Remodeling & renovations ► 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