Short Sale Irvine September 14,2011

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Short Sale Irvine September 14,2011

  1. 1. Short-Sale ClassBy Redfin Agents Katrina Jauregui & Paul Reid September 14th, 2011
  2. 2. What Redfin Is All AboutOur MissionTo use technology and a customer service focus to change thereal estate game in the consumers’ favor.The Redfin Difference: service, not sales Agents 100% focused on clients, not prospecting Every client surveyed, every response published Every agent paid on client satisfactionWhat That Means for You: a good sale, not any sale Deepest local expertise: what’s selling, who’s buying Accountable for results Focused on your goals, not mine
  3. 3. Overview Agenda What is a distressed home? Finding distressed homes Market and pricing statistics Short sales Bank owned homes / Auctions Financing Home inspections Home warranties Title and closing
  4. 4. Types of Distressed HomesShort Sales  Pre-foreclosure  Approved short sale  Notice of default  Subject to lender approvalBank Owned Homes  AKA: REO, foreclosed, lender owned  Homepath homesAuctions  Foreclosure auction
  5. 5. Reasons to buy or not to buy?Why would you buy:  A short sale home?  A bank owned / REO home?Why wouldn’t you buy:  A short sale home?  A bank owned / REO home?
  6. 6. Searching for Distressed HomesRedfin  Foreclosure homes  Bank Owned & Short sale homesGovernment sites  Homepath.com & Homesteps.com  Hudhomestore.comThird-party sites  Realtytrac.com  ForeclosureRadar.com
  7. 7. Searching on Redfin
  8. 8. Irvine Foreclosures
  9. 9. Orange County Statistics
  10. 10. Orange County – Active ListingsAs of 9/8/2011 2,999 28% Short Sales REOs Standard Sales 6,869 65% 690 7%
  11. 11. Orange County – Sold ListingsAugust 2011 540 23% Short Sales REOs Standard Sales 1440 369 61% 16%
  12. 12. Irvine Statistics
  13. 13. Irvine – Active ListingsAs of 9/8/2011 173 22% Short Sales 39 REOs 5% 582 Standard Sales 73%
  14. 14. Irvine – Sold ListingsAugust 2011 38 20% Short Sales REOs 19 10% Standard Sales 130 70%
  15. 15. Percentage of Total Sales 0 100 10 20 30 40 50 60 80 90 70 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Irvine Sales May-08Short Sales Jul-08 Sep-08 Nov-08REOs Jan-09 % of Total Sales by Listing Type Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10Standard Sales Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11
  16. 16. Average $ / Square Foot 280 290 300 310 320 340 350 360 370 380 390 400 330 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Irvine Sales Jul-10Short Sales Aug-10 Sep-10REOs Oct-10 Nov-10 Dec-10 Average $/Square Foot by listing type Jan-11 Feb-11 Mar-11Standard Sales Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11
  17. 17. Average Days on Market 0 100 120 140 160 180 200 220 20 40 60 80 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Irvine Sales Jan-09Short Sales Mar-09 May-09 Jul-09REOs Sep-09 Nov-09 Jan-10 Average Days on Market – Sold Listings Mar-10 May-10 Jul-10Standard Sales Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11
  18. 18. Short Sales How does a short sale work? Parties involved (chart) Qualifying the short sale Short sale approval process Timelines Approval notice Does cash make a difference?
  19. 19. Short Sale Parties Short Sale Bank #1 Seller Buyer Short Sale Customer Loss AgentDepartment Care Mitigation Home Buyer’s Agent Inspectors Lender BPO Mortgage Attorney Appraiser Insurer General Underwriter Inspector Mortgage Negotiator Termite Investor #1 Appraiser Inspector Mortgage Investor #2 Bank #2 Closing Short Sale Customer Loss Department Department Care Mitigation Title BPO Mortgage Appraiser Insurer Escrow Mortgage Officer Negotiator Investor #1 Escrow Mortgage Assistant Investor #2 Closing Department
  20. 20. Short Sale Approval Process
  21. 21. Short Sale Obstacles No guaranteed approval Property Liens (check title!) Uncooperative tenants Seller doesn’t have funds to close Seller seeks protection (bankruptcy) Deferred and/or poor maintenance Second lender won’t approve Shady operations…
  22. 22. Seller’s Short Sale MotivationsWhy do a short sale? Financial hardship Unexpected move House maintenance Underwater Emotions
  23. 23. Why Buy a Short Sale? It’s the perfect home You can wait 3 – 8 months If you don’t get it, you’ll be fine The home appears to be a good value
  24. 24. Negotiating a Short Sale Pull the comps New listing Old listing Ask lots of questions:  Approved?  How many loans?  Different lenders? Be realistic
  25. 25. Sales Price to List Price % 100 110 120 130 140 70 80 90 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09Short Sales Mar-09 May-09 Jul-09REOs Sep-09 Nov-09 Jan-10 Mar-10 Sales price to original list price % - Irvine May-10 Negotiating a Short Sale Jul-10Standard Sales Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11
  26. 26. Bank Owned Homes Contracts Addendums Timelines Home condition Listing agents Tenants
  27. 27. Why Buy a Bank Owned Home? Best Price Not afraid of a remodel Comfortable with contracts Comfortable acting quickly
  28. 28. Buying at Auction Who buys homes at auction? What types of homes are at auction? (charts) What are the prices like? What is involved with buying at an auction?
  29. 29. Buying at AuctionEstimated market value of Irvine foreclosure propertiesData Source: RealtyTrac
  30. 30. Buying at AuctionBedroom count for Irvine foreclosure propertiesData Source: RealtyTrac
  31. 31. Financing Pre-qualification vs pre-approval Credit inquires and FICO (myfico.com) When to lock your interest rate  Bank Owned  Short Sales Pre-approval by the bank’s lender Partner lenders New lender pay regulations
  32. 32. Financing Options Conventional loans  Down payment amounts FHA  FHA health and safety requirements  Flipping guidelines Rehab loans (FHA 203K) Homepath loans (Homepath.com)
  33. 33. Interest Rate / Points 0 2 4 6 8 10 12 14 16 18 Jan-71 20 Sep-72 May-74 Jan-76 Sep-77 May-79 Jan-81Data Source: Freddie Mac – 30 Yr Fixed Sep-82 May-84 Jan-86 Sep-87 May-89 Interest Rate Jan-91 Sep-92 May-94 Points Jan-96 Sep-97 May-99 Jan-01 Sep-02 Interest Rates 1971 - Today May-04 Jan-06 Sep-07 May-09 Jan-11
  34. 34. Comparing Interest Rates Conventional loans FHA FHA 203k (rehab) 30 yr fixed (4.12, .7) 15 yr fixed (3.33, .6) 5/1 ARMs (2.96, .6)Rate Source: Freddie Mac, September 8, 2011
  35. 35. Home Inspections What to look for yourself  Missing components  Big ticket items (A/C, cabinets, appliances)  Deliberate damage & safety hazards (electrical)  Severe neglect What an inspector won’t find  Hidden defects  Untested system defects
  36. 36. Home Inspections Most common concerns  Plumbing  A/C  Deferred maintenance  Termites  Dry rot
  37. 37. Home Warranties What is a home warranty? What is covered? What is excluded from coverage? Benefits of a home warranty
  38. 38. Home Warranties
  39. 39. Title and Closing Getting a clean title  Last minute liens  Title insurance Closing costs  Who pays what? Recording process Keys!
  40. 40. Thank you for joining us! Questions?

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