Homebuyer Presentation

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Understanding the process of buying a home

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Homebuyer Presentation

  1. 1. And Dorothy said to Toto, “There’s NO Place Like Home, There’s NO Place Like Home!”
  2. 2. Your Home Is…… <ul><li>… your own private space, where you can do what you want, dress as you want, say what you want </li></ul><ul><li>… where you plan, grow and anchor your family </li></ul><ul><li>… where you celebrate milestones and create important memories </li></ul><ul><li>… where you put your roots down </li></ul><ul><li>… where you center yourself and escape from the cruel, hard world </li></ul><ul><li>… Your Castle! </li></ul>
  3. 3. PART 1 <ul><li>What is Real Estate? </li></ul>
  4. 4. Real Estate is a Commodity <ul><li>DEFINITION: A Commodity is a good or a service that is exchanged for money; it is any item that can be bought, sold, bartered or traded. </li></ul><ul><li>In Real Estate </li></ul><ul><ul><ul><li>The land is the commodity </li></ul></ul></ul><ul><ul><ul><li>It is a limited commodity like gold or silver </li></ul></ul></ul><ul><ul><ul><li>It is not renewable like corn, wheat or the house that sits on the land </li></ul></ul></ul><ul><ul><ul><li>Like all commodities that are traded or sold, it is cyclical </li></ul></ul></ul>
  5. 5. What Factors Affect The Market? <ul><li>Supply and Demand </li></ul><ul><li>Availability of Money – (i.e. Interest Rates) </li></ul><ul><li>Economic Conditions </li></ul><ul><li>Employment Availability </li></ul><ul><li>Transportation Availability </li></ul>
  6. 6. The Cyclical Real Estate Calendar Lethargic Inventory Builds Up Investors and Bargain Hunters Thanksgiving to March 1 Winter           Busy Inventory is Relieved and Restocked Be settled for the Holidays Labor Day to Thanksgiving Fall           Slow Inventory Builds Up New Jobs and Relocations July 4 th to Labor Day Summer           Busy Inventory is Relieved and Restocked Be settled for the start of the next school year March 1 to July 4th Spring           Activity Factor Inventory Characteristics Primary Motivation Typical Time Frame Seasonal Cycle
  7. 7. Recent Markets <ul><li>2000 to 2005 – Seller’s Market </li></ul><ul><ul><ul><li>More sales than inventory </li></ul></ul></ul><ul><li>2005 to 2007 – Buyer’s Market </li></ul><ul><ul><ul><li>More inventory than sales </li></ul></ul></ul><ul><li>2008 – Start of Balanced Market </li></ul><ul><ul><ul><li>Sales and Inventory about equal </li></ul></ul></ul>
  8. 8. What Made The Bubble Burst? <ul><li>From 2000 to 2005 </li></ul><ul><li>Unprecedented Market Acceleration </li></ul><ul><li>Price inflation forced many out of the market who wanted a home </li></ul><ul><li>New financing initiatives were introduced by non-traditional mortgage sources to accommodate those who were being forced out </li></ul><ul><li>These new initiatives incorrectly anticipated continued price inflation at higher than historic rates </li></ul>
  9. 9. Enter Creative Financing <ul><li>The culprits causing the meltdown in financial markets: </li></ul><ul><li>Sub-Prime Mortgages – lending to people who would not ordinarily qualify </li></ul><ul><li>Interest Only Mortgages – these depended on appreciation to cushion the future </li></ul><ul><li>Option ARM – ARM with option to pay 1 ½% interest instead of the normal 6%. </li></ul><ul><li>These loans were made by investment bankers (not </li></ul><ul><li>mortgage bankers) who make their money by financial risk, </li></ul><ul><li>not financial prudence </li></ul>
  10. 10. Now Is A Good Time To Buy! <ul><li>Good supply of homes at much lower prices </li></ul><ul><li>You must buy wisely!!!! </li></ul><ul><li>Real Estate is the only form of investment that you control 100% with just a small down payment – That’s BIG! </li></ul><ul><li>Real Estate is a stable investment that will appreciate historically 4% to 6% annually </li></ul><ul><li>You can borrow against your equity </li></ul><ul><li>Real Estate is a tax preference item – you can deduct mortgage interest and property taxes to lower your taxable income </li></ul><ul><li>Mortgage rates of 4.75% are at historical lows right now </li></ul><ul><li>Government incentives - up to $8,000 tax credit for first time buyers </li></ul>
  11. 11. PART 2 <ul><li>How Do You </li></ul><ul><li>Buy Real Estate? </li></ul>
  12. 12. Your Home Ownership Team You Attorney Realtor Brian Wittlin Lender Title Company Appraiser Service Providers Home Inspectors Warranty Provider Contractors and Handymen Mover Municipal Services Remediation Services
  13. 13. How The Team Works <ul><li>The role of your REALTOR ® </li></ul><ul><li>The role of your Attorney </li></ul><ul><li>The role of your Lender </li></ul>
  14. 14. Key Skills Of Your REALTOR ® <ul><li>Knowledge and experience of the home buying process </li></ul><ul><li>Skilled at negotiating the details of your purchase transaction </li></ul><ul><li>Seasoned advisor who will guide you to alternative financing arrangements to make your purchase possible and affordable </li></ul><ul><li>Know-How to navigate the buying and selling process and to avoid the “landmines” that can “kill a deal”. </li></ul>
  15. 15. What Your REALTOR ® Does <ul><li>Identifies your needs and wants; </li></ul><ul><li>Arranges with Lender for loan approval & processing; </li></ul><ul><li>Screens listings, gathers details, schedules & conducts showings, helps you to sort them out and make decisions; </li></ul><ul><li>Prepares offers and represents you when it is presented; </li></ul><ul><li>Negotiates the selling price and the conditions of sale; </li></ul><ul><li>Coordinates all details with your Attorney & Lender; </li></ul><ul><li>Initiates all inspections and manages repair resolutions; </li></ul><ul><li>Initiates referrals to service providers to resolve problems; </li></ul><ul><li>Serves as your personal representative with a fiduciary responsibility to protect your interests and confidential information throughout the entire transaction. </li></ul>
  16. 16. Key Skills of an Attorney <ul><li>Knowledge and experience to represent your legal interests </li></ul><ul><li>Skilled at negotiating changes to your Contract of Sale that afford you improved protection </li></ul><ul><li>Seasoned advisor who can guide you to appropriate actions during your transaction </li></ul><ul><li>Know-How to navigate the legal, title and mortgage process and safeguard your legal interests </li></ul>
  17. 17. What Your Attorney Does <ul><li>Reviews your Contract of Sale and initiates changes to protect your legal rights and interests </li></ul><ul><li>Resolves legal issues that may arise </li></ul><ul><li>Holds your deposit money in escrow </li></ul><ul><li>Counsels you as to your rights and obligations under the Contract of Sale </li></ul><ul><li>Initiates and coordinates the Title process </li></ul><ul><li>Reviews all lender documents </li></ul><ul><li>Manages the closing </li></ul>
  18. 18. Key Skills of a Lender <ul><li>Knowledge and experience with the mortgage process </li></ul><ul><li>Skilled at managing the details of your mortgage application and approval process </li></ul><ul><li>Seasoned advisor who can guide you to appropriate alternative mortgage arrangements that best fit your financial circumstances </li></ul><ul><li>Know-How to navigate the mortgage and appraisal processes to obtain the best results </li></ul>
  19. 19. What Your Lender Does <ul><li>Reviews your financial and credit circumstances and qualifies you for a loan </li></ul><ul><li>Manages your loan application process </li></ul><ul><li>Initiates the property appraisal </li></ul><ul><li>Counsels you on all aspects of the loan application and granting process </li></ul><ul><li>Forwards and coordinates your file with the Loan Processor to secure your mortgage commitment </li></ul>
  20. 20. So You Want To Buy A House? It Just Takes 35 Steps! Let’s Examine Each Of Them
  21. 21. The Home Buying Process <ul><li>Select your REALTOR ® </li></ul><ul><li>Sign a Consumer Information Statement – A document that spells out your relationship with your REALTOR ® </li></ul><ul><li>Sign a Buyer Representation Agreement </li></ul><ul><li>Do an in-depth Needs Analysis with your REALTOR ® </li></ul><ul><li>Secure a Mortgage Pre-Approval </li></ul><ul><li>Preview Properties with your REALTOR ® </li></ul><ul><li>REALTOR ® helps you Select The Property that best meets your needs and wants </li></ul>
  22. 22. The Home Buying Process <ul><li>REALTOR ® obtains and reviews the Seller’s Property Disclosure with you </li></ul><ul><li>REALTOR ® advises you on offer price and conditions of sale and prepares an Offer </li></ul><ul><li>Make a Good Faith Deposit </li></ul><ul><li>REALTOR ® submits Offer to Seller’s Agent </li></ul><ul><li>Seller’s Agent presents your Offer to Sellers </li></ul><ul><li>REALTOR ® negotiates Offer (terms and conditions) with Seller’s Agent </li></ul><ul><li>Seller signs Offer making it an enforceable Contract of Sale </li></ul>
  23. 23. The Home Buying Process <ul><li>Begin 3 day Attorney Review upon delivery of signed Contract to Seller and Buyer </li></ul><ul><li>During Attorney Review, the Attorney’s negotiate any attorney changes to the Contract </li></ul><ul><li>Attorney’s sign off, ending Attorney Review </li></ul><ul><li>Buyer makes Additional Deposit as specified in the Contract </li></ul><ul><li>Buyer makes formal application for mortgage </li></ul><ul><li>Mortgage lender orders property appraisal </li></ul><ul><li>Buyer verifies all representations made to lender during the mortgage pre-approval discussion </li></ul>
  24. 24. The Home Buying Process <ul><li>REALTOR ® orders inspections Authorized by Buyer (Home, Termite, Radon; plus Lead, Well Water, Septic, Fireplace where needed) </li></ul><ul><li>Inspections are performed; Buyer/ REALTOR ® attend </li></ul><ul><li>REALTOR ® submits any inspection repair requests to Buyer’s Attorney who submits to Seller’s Attorney for response </li></ul><ul><li>Seller responds to request for repairs </li></ul><ul><li>REALTOR ® and Attorney counsel Buyer as to acceptance, rejection, or negotiation of Seller’s repair response </li></ul><ul><li>Inspection issues are resolved; Repairs get underway </li></ul><ul><li>Mortgage commitment is secured </li></ul>
  25. 25. The Home Buying Process <ul><li>Attorney/Title Company order search, survey, and title work required for closing </li></ul><ul><li>Buyer obtains Homeowner’s Insurance policy </li></ul><ul><li>Buyer orders utilities – gas, electric, water </li></ul><ul><li>Buyer arranges for other services – movers, oil delivery, security, telephone, cable/satellite, etc.) </li></ul><ul><li>Buyer obtains certified funds to cover closing costs (Title Company or Attorney will advise the amount) </li></ul><ul><li>REALTOR ® manages the walk-thru inspection of the property to verify property condition, verify everything working and verify completion of repairs </li></ul><ul><li>Closing – this is when everything comes together to complete the transaction. </li></ul>
  26. 26. Why Is Now A Great Time To Buy? <ul><li>Q. If I Wait To Buy A Home, Won't Prices Go Down Even Lower? </li></ul><ul><ul><li>Timing the market usually isn’t a great idea. </li></ul></ul><ul><ul><li>You may get a better deal by waiting, but you’ll neglect many more opportunities. </li></ul></ul><ul><ul><li>A good negotiator may allow you to get what you want without waiting. </li></ul></ul><ul><ul><li>There may be alternative ways to structure a deal, so you don’t have to wait. </li></ul></ul><ul><ul><li>All the market fundamentals show that now is a good time to buy - prices are down and interest rates are very affordable. </li></ul></ul><ul><li>Q. Shouldn’t I Wait To Buy A Home Until Interest Rates Go Down Further? </li></ul><ul><ul><li>NO! Here’s why: </li></ul></ul><ul><ul><li>Current interest rates are extremely favorable for buyers. </li></ul></ul><ul><ul><li>Waiting to time the market can be a losing game. Mortgage interest rates can change on a moments notice in response to a major economic change, and you can’t predict when those might occur. </li></ul></ul><ul><li>Q. Is It Better To Wait Until The Economic Picture Is Clearer So My House Will Appreciate? </li></ul><ul><ul><li>NO! The facts are: </li></ul></ul><ul><ul><li>Economic growth is moderating; home prices will level off and normal appreciation will resume (4% to 6% annually). </li></ul></ul><ul><ul><li>It’s not likely nor predicted that we will return to 10% to 15% annual home value appreciation anytime soon, if ever. </li></ul></ul><ul><ul><li>There are currently plenty of homes to choose from, putting more pressure on Sellers to be flexible and responsive. </li></ul></ul>
  27. 27. If you found this presentation to be informative and would like to discuss the home buying or selling process in more detail, now would be a great time to a call! Brian Wittlin, GRI,e-Pro 609-936-9760 or [email_address] Thanks for watching!

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