San Gabriel Valley Foreclosure Class - July 26, 2012

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San Gabriel Valley Foreclosure Class - July 26, 2012

  1. 1. ForeclosuresJuly 26, 2012 Hacienda HeightsFollow: @RedfinLosAngelesLike: http://www.facebook.com/RedfinLosAngelesSlide 1 of 39
  2. 2. Geographical Comparison – Los AngelesSlide 2 of 39
  3. 3. Types of Distressed Homes ● Short Sales ► AKA: Pre-foreclosure ► Potential vs. Approved Short Sale ● Foreclosures ► AKA: Bank-owned, REO, lender owned ► Fannie, Freddie, Ginnie & HUD ● Auctions ● Estate SalesSlide 3 of 39
  4. 4. Agenda ● How does a REO sale work? ● Parties involved (see chart) ● Qualifying the REO ● REO approval process (see chart) ● Timelines (Contingencies and Closing) ● False contracts ● Approval noticeSlide 4 of 39
  5. 5. Bank Owned HomesSlide 5 of 39
  6. 6. 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 ► Contract often requires early release of earnest moneySlide 6 of 39
  7. 7. Foreclosure TimelineSlide 7 of 39
  8. 8. Why Buy a Bank Owned? ● Best price ● Not afraid of a remodel ● Comfortable with contracts ● Financially strong with liquid capitalSlide 8 of 39
  9. 9. Foreclosure Activity and 30-Year Interest Rate – Los Angeles Slide 9 of 39
  10. 10. Foreclosure Activity by Month – Los AngelesSlide 10 of 39
  11. 11. Buying at Auction● County Auctions (steps)● Organized Auctions● Who buys homes at auction?● What types of homes are at auction?● What are the prices like?● What is involved with buying at auction?● What is an absolute auction?● Due Diligence prior to auction● Tip - Write down your Max-bidSlide 11 of 39
  12. 12. Finding Distressed Homes● Redfin ► Shadow Inventory ► Foreclosures (bank owned) ► Short Sales● Government Sites ► Homepath.com and Homesteps.com ► Hudhomestore.com ► IRS● Look down the streetSlide 12 of 39
  13. 13. The Offer & The DealSlide 13 of 39
  14. 14. Negotiation Strategies - REO● Round 1 ► New listing ► 30 days old ► Price Reductions ► Keep it clean● Round 2 ► Repairs Health and safety Stolen goods Lender Required RepairsSlide 14 of 39
  15. 15. Title and Closing● Title Search ► Chain of title ► Last minute liens ► Title insurance Lender’s Policy Owner’s Policy● Closing Paperwork● Possession and keysSlide 15 of 39
  16. 16. FinancingSlide 16 of 39
  17. 17. Financing Options● Conventional loans ► 30 year, 15 year, 5/1 ARM, etc● FHA ► FHA health and safety requirements ► Flipping guidelines● Rehab loans (203k)● Homepath loansSlide 17 of 39
  18. 18. Financing Steps● Preapproval● Select property ► What is condition of property? ► Flipping guidelines● When to lock in the rate ► Short sale ► Bank owned● Mortgage processSlide 18 of 39
  19. 19. Current Average Rates Type of Loan July 12, 2012 July 19, 2012 30-Year Fixed 3.56% 3.53% 15-Year Fixed 2.86% 2.83% 5/1 ARM 2.74% 2.69% 1-Year ARM 2.69% 2.69%Slide 19 of 39
  20. 20. Where Are Rates Headed?Slide 20 of 39
  21. 21. Home InspectionsSlide 21 of 39
  22. 22. Home Inspections● What to look for yourself● Missing components ► Big ticket items (AC, cabinets, appliances) ► Deliberate damage & safety (electrical)● Severe neglect● What an inspector won’t find and won’t test ► Hidden defects ► Untested system defectsSlide 22 of 39
  23. 23. Home Inspections● Most common concerns ► Roof ► Structural ► Plumbing ► Electrical ► HVAC ► Deferred Maintenance ► Termites ► Mold ► CosmeticSlide 23 of 39
  24. 24. Home Warranties● What is a home warranty?● What is covered?● What is excluded from coverage?● Benefits of a home warranty● Managing the risk of unexpected repairs● As-is, what can be covered?● Pre-existing conditions ► Known ► Unknown● Home inspections and warranty coverageSlide 24 of 39
  25. 25. Title and Closing● Getting a clean title ► Last minute liens ► Title insurance● Mortgage Electronic Registration System● Recording Process● Keys!Slide 25 of 39
  26. 26. Check out our local pages!Slide 26 of 39
  27. 27. Thanks for Coming!Please fill out the survey that was handed out at the beginning ofclass. We appreciate the feedback!Check out our upcoming classes and events at http://www.redfin.com/buy-a-home/classes-and-eventsSlide 27 of 39

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