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Slide 1 of 53 Redfin’s Home Buying Class April 18, 2013 Peoria, AZ Presented By: Kevin Wachel, Redfin’s Phoenix Team Follow: @RedfinPhoenix Like: http://www.facebook.com/RedfinPhoenix

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Page 1: Phoenix hbc 4.18.13

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Redfin’s Home Buying Class

April 18, 2013 Peoria, AZPresented By: Kevin Wachel, Redfin’s Phoenix Team

Follow: @RedfinPhoenixLike: http://www.facebook.com/RedfinPhoenix

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2009 2010 2011 2012 20130%

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REO/HUD/Auc-tionShort Sale

Home Sales By Property Type

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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

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A Little Bit About Who We AreRedfin 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● The right home for the right price

No obligation Get back a portion of our commission

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To Buy or Not to Buy

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Why You Should Buy a Home● You have a family and need room to grow● You expect to stay put for 5 or more years● You’ve saved up a down payment

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Why You Shouldn’t Buy a Home● You don’t have a good reason

● You can’t afford the down payment● You can rent for much less● You plan on moving soon● You’re worried about job security

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Understanding the Buying Process

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Overview of Purchase Process

● Gather information● Tour some houses to get a general idea● Interview Lenders- get pre-approved● Choose an Agent● Tour more seriously and find YOUR home● Mutual Acceptance on your offer● Home Inspection “Contingency”● Financing and Appraisal “Contingencies”● Closing

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Understanding the Market

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Case-Shiller: Phoenix Area v. 20-City

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250.0020 City CompositePhoenix

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Case-Shiller – By the Numbers Case-Shiller: Phoenix Area

Up 23.2% year-over-yearPeak was June 2006Down 44.3% from peakCurrently at January 2004 prices

Case-Shiller: 20-City CompositeUp 8.1% year-over-yearPeak was July 2006Down 29.2% from peakCurrently at September 2003 prices

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Peoria March Stats for Homes

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Peoria March Stats for Homes

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National Market TrendsThe key metrics across 19 major metropolitan markets

are:● Home prices were up 13% from a year ago and 2.4%

month over month.● Closed sales were up 2.3% from February 2012 and

0.7% from January.● More than one-third of new listings are now going

under contract within 14 days of their debut. Last month, 30.3% of homes sold that quickly. Redfin recently published a list of the country’s fastest real estate markets, highlighting “real estate flash sales,” homes that went under contract in 24 hours or less.

● Inventory fell 32% from last year, but picked up slightly (1.1 %) from January.

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National Market Trends

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5 Tips for Winning in a Bidding War

1. Make the competition eat your dust2. Get pre-approved with a local lender & get

underwriter approval3. Start the conversation early4. Write a letter & appeal to the seller5. Know your limits

More About Multiple Offers

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Short Sales and Bank Owned

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Top 5 Buyer Headaches withShort Sales● 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)

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8 Reasons Short Sales Take SO LONG to Get Approved

► 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

money

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Mortgages

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Review Your Financial Situation● Pull credit report, look for errors

● www.annualcreditreport.com● Establish comfort level for monthly payment● Consider different down payment options● Figure out how much monthly income goes towards

debt: 28 – 33% healthy

● Don’t open any new lines of credit● Don’t buy any big ticket items● Current employment status● ASK QUESTIONS!

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Start Shopping for LendersCompile 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

But what about too many inquires into my credit report?

What happens?

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Getting Pre-ApprovedA 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● Good for 90 days, depending on lender● Ask for a few different amounts● Similar, yet different from pre-qualification● Are gift funds involved?● How much do you have for a down payment?● Review the process: HUD SETTLEMENT BOOKLET

Information needed:

●W-2, two pay-stubs, tax returns, bank statements

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Industry Buzz Words

• LQI – Loan Quality Initative • Government Oversight

• Consumer Financial Protection Bureau • Federal Reserve – Loan Officer Pay• FHA• VA• Fannie Mae/Freddie Mac – Seller Servicing

Guide • Dodd/Frank

• OVERLAYS!

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Loan Estimates & Loan Types● Gather loan estimates

► Good Faith Estimate► Cost Estimate ► Itemized Fee Worksheet

● Compare costs side-by-side

Know the different types of loans● Conventional● Federal Housing Administration Loan (FHA)● VA Guaranteed Loan● Ask your lender if they have special loan programs

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Where Are Rates Headed?

Type of Loan April 11, 2013 April 4, 2013

30-Year Fixed 3.43% 3.54%

15-Year Fixed 2.65% 2.74%

5/1 ARM 2.62% 2.65%

1-Year ARM 2.62% 2.63%

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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 up to two months.

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Break!

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Putting it all together to find YOUR home

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Redfin.com-Benefits of a MLS Powered Site

● 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

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Highlights of Redfin’s Site● Search by zip code

or neighborhood● Saved searches/instant alerts● Agent notes● Download results● Forums● Home buying guide● Home inspection guide

● Any questions about the site?

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Choosing the Right Agent

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10 Questions to Ask Any Agent1. Is this your full-time job?2. Are you familiar with foreclosures and short-sales?3. What can you tell me about the market?4. Where in the valley do you work?5. How do you like to negotiate?6. Who else will be working with me?7. Will you show me all properties for sale?8. When am I committed to working with you?9. Has a client ever filed a complaint? 10.How are you paid?

● Open ended questions, provide the best response► Don’t lead the agent to the answer► Ask for a story or two to get more details

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Traditional vs. Redfin

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Redfin’s Partner ProgramPartner agents are employed by other

brokerages, but have teamed up with us to provide Redfin-Certified 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 price minimum► We’re experiencing an unusually high customer

demand

We survey all partner agent clients► All surveys are published on their Redfin page► 97% of customers would recommend Redfin

partners

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Are you a Good Buyer?

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What Agents Look For in a Buyer

● Sense of urgency (need to buy)● Realistic about

► the market► what they want in a home► the buying process

● Respectful of the agent’s time and schedule● See’s the agent as a trusted advisor● Good communication skills● Fully prequalified

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Need to Know About Agents● Traditional agents work for free until a deal closes● Only about 10% of home buyers will buy a home

► That’s a lot of time worked for no pay● This is a 24/7 job

► But we still need personal time and family time● This is a career/job that is constantly changing

● Agents often become life long friends with their clients

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Creating a Solid Relationship● Start by clearly communicating

► Your expectations of your Realtor► Your work schedule► Preferred communication method► Motivations for

buying a home and timeline (doesn’t have to be immediate)

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Touring

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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

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8 Things to Look For1. Does the home fit your needs?2. Does the home fit some or all of your wants?3. What cosmetic repairs are needed?4. How is the curb appeal?----------------------------------------------------------------------5. How has the home been cared for?

► Deferred Maintenance► Intentional Neglect

6. Are there any unwanted critters?7. What repairs are needed in the next 12 months?8. What repairs are needed in the next 36 months?

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Home Inspection and Other Contingencies

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Home Inspection Basics● We recommend that you have a home inspection● Cost runs $350 to $600

► Depends on the size and age of the home● Your agent will accompany you● Your time to evaluate the property● What an inspection contingency covers and doesn’t

cover● Types of inspections

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Other Contingencies● Appraisal ● Financing● HOA● SPDS

● Things to consider► Buyer favored contract► Cure Notice

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Closing – what you need to know

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Closing: HUD–1 SettlementHUD-1 Settlement Statement – Lists all

fees/charges/creditsBy 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 ● Title charges● Government charges

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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

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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!

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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

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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-events

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Appendix

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Appendix ● Important forms/contracts● Favorite Real Estate Resources

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Some Of Our Favorite Sites● Seattle Bubble: market analysis● Curbed Seattle: cool houses● Urbnlivn: for condo shoppers● WalkScore: see what’s nearby

doug.livas
DO NOT PRESENT THIS SLIDE OR ANYTHING AFTER IT
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HUD Settlement Statement

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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

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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

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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

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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

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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

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Favorite Links Cont. ● Remodeling & renovations

► DoItYourself.com: 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