Redfin's San Francisco Home Buying Class 101 12.11.13

188 views

Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Redfin's San Francisco Home Buying Class 101 12.11.13

  1. 1. Redfin’s Home Buying Event Host: Mark Colwell & Jess Williams Follow: @Redfin Like: http://www.facebook.com/Redfin Slide 1 of 30
  2. 2. Agenda ● ● ● ● ● ● ● To buy or not to buy Overview of purchase process Understanding the Market Mortgages Multiple offers What to know about closing Thank you! Slide 2 of 30
  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 Slide 3 of 30
  4. 4. Understanding the Buying Process Slide 4 of 30
  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? Slide 5 of 30
  6. 6. Overview of a Purchase Research Search Offer Closing Neighborhoods Define Preferences Comparables Earnest Money Real Estate Agents Saved Search Draft Offer Docs Inspection Mortgage Options Home Tours Negotiate Loan application Preapproval Open Houses Mutual Acceptance Title Review Consider your needs Appraisal Financing Approval Closing Slide 6 of 30
  7. 7. Market Conditions Slide 7 of 30
  8. 8. Story of 2013: Low Inventory Slide 8 of 30
  9. 9. Story of 2013: Rising Prices Slide 9 of 30
  10. 10. San Francisco Area Overview Slide 10 of 30
  11. 11. Where Are Rates Headed? Type of Loan December 5, 2013 November 27, 2013 30-Year Fixed 4.46% 4.29% 15-Year Fixed 3.47% 3.30% 5/1 ARM 2.99% 2.94% 1-Year ARM 2.59% 2.60% Slide 11 of 30
  12. 12. Where Is the Market Headed? ● Supply of homes is at a five-year low and won’t increase much more this year ● Foreclosures have been driving price declines, and years of inventory remain. Investment groups might have impact ● Rents have been rising, making buying more attractive ● Market stabilized – price increases in many areas ● Rate increases - biggest potential issue for buyers Slide 12 of 30
  13. 13. National Market Trends ● The key metrics across Redfin’s markets: ● Home prices in May increased 17% year over year, and rose 4% since April. ● The number of homes for sale (inventory) is down 22% compared to May 2012, but increased 4.3% month-overmonth. This is the second month-over-month increase in a row. ● Home sales rose 14% from 2012, and gained 16% from April. Slide 13 of 30
  14. 14. Mortgages Slide 14 of 30
  15. 15. Review Your Financial Situation ● 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 Slide 15 of 30
  16. 16. Get Pre-Approved Early 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 ● Redfin asks that you get pre-approved before your third tour ● Good for 90 days, depending on lender Info needed: ● W-2, two pay-stubs, tax returns, bank statements Slide 16 of 30
  17. 17. Pulling Credit: Is It Harmful? ● Your credit report must be reviewed by a lender before you can obtain a pre-approval ● If you know your score, a lender should be able to give you ballpark pricing for their loan products ● Better to know sooner rather than later about credit problems ● Maintaining a pre-approval has a negligible impact on your credit score Slide 17 of 30
  18. 18. Pre-approval Scenario oEarns $6,500/month oHas car payment $300 oWants to buy a home for $500,000 oHas 20% down payment o $6,500 x 45% = $2,925 o $2,925 – 300 (other debt) $400,000 Loan o30/Yr Fixed, 3.75% = Allowed $2,625/Month! = Qualified $2,540/Month! Slide 18 of 30 = $1,852 oProperty Taxes o1.41% on purchase price = $588 ($7,050/yr) oHomeowners Insurance = $100 ($1,200/yr) oTotal: $1852+588+100
  19. 19. Start Shopping for Lenders Compile a list of 3-4 local lenders 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 Slide 19 of 30
  20. 20. Local Recommended Lenders In no way does Redfin benefit financially from recommending lenders – we just think they’re great lenders! Slide 20 of 30
  21. 21. Multiple Offers Slide 21 of 30
  22. 22. Experience With Multiple Offers 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 limits Slide 22 of 30
  23. 23. Closing – what you need to know Slide 23 of 30
  24. 24. Closing: HUD–1 Settlement Slide 24 of 30
  25. 25. Signing and Closing A few days before closing you will sign your closing documents and have a walk through. On closing day, you’ll probably get your keys at about 5pm. Slide 25 of 30
  26. 26. All Done! Slide 26 of 30
  27. 27. 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 Slide 27 of 30
  28. 28. Thanks for Coming! Questions? Get in touch: Presenter1 mark.colwell@redfin.com Presenter2 jess.williams@redfin.com Check out our upcoming classes: http://www.redfin.com/buy-a-home/classes-and-events Slide 28 of 30

×