redfin's home buying class - rockville, md - nick chaconas

Redfin’s Home Buying Class

January 11th, 2010 Rockville, MD

AgendaConsidering…• To Buy or Not to Buy• Market Conditions• How to Search for a HomeLooking…• Working with Redfin• Finding a Redfin Agent• Pre-approvalBreak!Buying…• Mortgages• Short Sales and Bank Owned• The Offer and the Deal

Considering… Looking… Buying…

To Buy or Not to Buy

Why You Should Buy a Home• You’ve got a family, and need room to grow

• You want deep roots• You want a type of property that is difficult to rent• You’re handy, and ready to invest your time in your

home• You’ve saved up a down payment


Why You Shouldn’t Buy a Home• You don’t have a good reason like family or

schools• You can’t afford a 10% - 20% down payment• You can rent for much less• You plan on moving soon• You’re worried about job security


Market Conditions

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DC Metro Area

Case-Shiller: DC v. 20-City Case-Shiller: DC AreaUp 3.7% year-over-yearPeak was May 2006Down 25.7% from peakCurrently at May 2004 prices

Case-Shiller: 20-City CompositeUp 2% year-over-yearPeak was July 2006Down 30% from peakCurrently at August 2003 prices


Rockville December Stats for Homes:


Rockville December Stats for Condos:


DC-Area Foreclosures

Area Foreclosures Average Price % of Homes

Rockville 214 $245,838 0.02%

Montgomery County 2,270 $264,115 0.03%

Maryland 17,336 $192,348 0.06%

Nationally 2,179,419 $174,967 0.20%


How to Search for a Home

Why Redfin’s Search is Better• 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


Searching on Redfin

Search recent sales


Find open houses

Exclude short sales

Download to Excel

See more

trends &

details

Get email

updates

Redfin’s Forums

Home info

Agent write up

Go see the home

Home Details Page

Add to Favorites

Mortgage Calculator

Different map views

History of the property

Neighborhood area pricing

Local school info

Add Homes to Your Favorites List


Order by price, listing date, etc

See your notes

Working with Redfin

Working with Redfin

Working With Redfin is DifferentService

• Advocates: client-satisfaction bonuses, not commissions

• Transparency: informed decisions• Best Agents: The right home for the right price

No obligation• Switch Redfin agents• Pause and re-start your search any time

Refund• You get up to 50% the commission

The Best Results• Service: 97% would recommend us to a friend


How Commissions Work

How Our Team WorksAgent

• Responsible for your success

• Writes your offer• Handles inspection• Handles negotiations

Field Agents

• Takes you on home tours

• Attends inspections

Coordinator

• Schedules tours• Works on escrow• Prepares paperwork


You

Find a Home to Tour


Schedule a Tour or Add More Homes


Fill Out Time and Notes


Coordinator Will Call to Schedule


Now You are Ready to Tour

• Up to six homes per tour in two hour blocks• Go on as many tours as you would like• Led by field agent• No commitment


Finding a Redfin Agent

How to Find Our Agents


Pick Your Area to Find Local Redfin Agents


Select an Agent


Make Sure He’s a Good Fit

Team members & roles

See all deals & reviews


Click here when you

decide

What to Ask Any Agent• Is this your full-time job?• Familiar with foreclosures or short-sales?• Where were your last five deals?• Who else will be working with me?• Will you show me all properties for sale?• When am I committed to working with

you?• Has a client ever filed a complaint? • How are you paid?


Get Pre-Approved• A pre-approval letter is a letter from a bank or a lender

estimating how much they'll lend a borrower• Help you establish how much you can afford and makes

offer process go faster• Information needed:

• W-2, two pay-stubs, tax returns (get them ready), bank statements

• The process only takes a few days while banks get everything verified

• The approval is good for 90 days, depending on lender• Ask for a few different amounts• Redfin asks that you get pre-approved before your third

tourConsidering… Looking… Buying…

Break!

Mortgages

Organize Your Assets • Get ready for the down payment• Cash accounts (liquid funds)• 401(k), stocks, other investments• Gift funds? (Max. allowed varies)• Move funds around before you start

shopping

Looking… Buying…Considering…

Review Your Debt• Pull credit report, look for errors• Figure out how much monthly income

goes towards paying off debt: 28 – 33% healthy

• Pay down balances to 1/3rd of credit available

• Don’t open any new lines of credit• Don’t buy any big ticket items• Co-borrower will need to do the same


Start Shopping for LendersCompile a list of 4-6 lenders & brokers

Good sources include:• Redfin's partner lenders • Referrals from friends, family & co-workers• Banks or credit unions you have accounts

with • A large, national bank with an advertised rate• Your real estate agent• Online review sites, such as Yelp


Local Recommended Lenders

*In no way does Redfin benefit financially from recommending lenders – we just think they are great lenders!


Current Average Rates

Type of Loan December 26, 2010

January 6, 2010

30-Year Fixed 4.71% 4.77%15-Year Fixed 4.06% 4.13%

5/1 ARM 3.68% 3.75%

1-Year ARM 3.31% 3.24%


Comparing GFE Results • Gather Good Faith Estimates (loan quotes)

• A minimum of three, more is better• Compare similar loans

• Program (FHA, conventional)• Timeframe (same day)

• Compare costs side-by-side• Discount & origination points• Interest rates• Insurance premiums (FHA, PMI)• APR (interest rates + fees + points + PMI)


Make Your Decision • When possible, get a loan commitment• Lock your interest rate (30 - 60 days)• Make alternative funds liquid (401k,

stock)

Good news! Loan payments are made in arrears, so your first loan payment won’t be for two months. You’ll have one month of no payments.


Short-Sales & Bank Owned

What is a Short Sale?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)


We Can Help With A Short Sale• Tour short sales with Redfin• If you want to buy, Redfin refers you

to a short sale partner agent • Redfin partner agents work for other

brokerages but share Redfin’s commitment to customer service

• Get a 15% commission refund


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

moneyConsidering… Looking… Buying…

So…Where’s the Best Deal? • Bank-owned & short-sales myths –

• Always the best deal?• Banks are stingy• Not a fire sale

• Your best bet for a good deal:• Sellers who own their home outright• Sellers who are relocating• Estate Sales• Short Sales with hardship packages


The Offer & The Deal

Tour homes

Find dream home

Consult with agent, write offer

Submit offer to listing agent

Negotiations

Success! Mutual AcceptanceEarnest money

Inspection contingency [7-14 days]

Financing contingency [20-25 days]

Appraisal [5 days]

Waiting for loan approval

Final Walkthrough

Closing!

Overview of a Purchase

Receive Redfin refund Complete Redfin survey

Get pre-approved

Deal RoomImportant milestone

tracker

Your team of agents

Your to do list

Your Agent Negotiates Deal• Researches seller

• Reviews agent-only comments• Contacts listing agent• Studies listing agent negotiating patterns• Studies sellers situation and motivations

• Discusses with you• Do you want a comparative market analysis?• Where do you want to start?• Where do you want to end up?

• Crafts Offer to Purchase• Inspection contingency• Financing contingency

• Submits offer• Negotiates terms


Home Inspection Hints

• Double-paned windows• Well ventilated attic• Knob and tube wiring

• Mold, mildew or signs of leaking near walls or floors

• Check water pressure

• Galvanized steel pipes • Chimney sweep fireplace inspection

• Stairs have handrails• Check all included appliances

• Cracks in foundation


Watch out for: Look for and Check:

http://www.redfin.com/home-buying-guide/interactive-home-inspection

So What Now? • Make sure it’s the right time for you• Get pre-approved & look for a lender• Search for homes & start touring• Find the right agent• Make an offer & close the deal


After Class…Please fill out the survey we’ll send this week along with this slide deck. We’d love to get your feedback on how the class could improve.

To get even more info on the home buying process, check out our home buying guide:http://redfin.com/home-buying-guide


Appendix: •Important forms/contracts•Favorite Real Estate Resources

NWMLS Purchase & Sale Agreement

HUD Settlement Statement

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

http://www.propertyshark.com/

http://www.walkscore.com/

http://www.trulia.com/home_prices/California/San_Mateo-heat_map/

http://www.trulia.com/home_prices/California/San_Mateo-heat_map/

Favorite Real Estate Links: Listings• Redfin: MLS + FSBO + REO, updated

every 15 minutes, with DOM, price history, Zestimate

• craigslist: Major FSBO source that Redfin can't crawl

• HotPads: Foreclosure heat maps• Brokerage site of listing agents: more

photos of the listing• RealtyTrac: Foreclosure market detail,

subscription required for full reports

http://www.redfin.com/

http://www.craigslist.org/

http://hotpads.com/

http://www.realtytrac.com/

Favorite Real Estate Links: Pricing Data• Case-Schiller Indices: Pricing trends by

metropolitan area• HouseMath: Compares a housing

investment to a stock market investment • 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

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html

http://www.housemath.us/

http://www.altosresearch.com/

http://articles.moneycentral.msn.com/Banking/Loan/HomeAffordabilityCalculator.aspx

http://www.smartmoney.com/home/buying/index.cfm?story=howmuch

http://www.smartmoney.com/home/buying/index.cfm?story=howmuch

Favorite Real Estate Links: Mortgage• 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

http://www.bankrate.com/brm/rate/mtg_home.asp

http://www.zillow.com/mortgage/help/Main.htm

http://www.zillow.com/mortgage/help/Main.htm

http://www.zillow.com/mortgage/calculator/Calculators.htm

http://www.mtgprofessor.com/

http://www.hud.gov/buying/loans.cfm

Favorite Links• Loans for First-Time Home-

Buyers• Federal Housing Administration (FHA)• Fannie Mae and Freddy Mac• CalHFA: California State agency that

helps certain buyers

• Government Sites• Federal Trade Commission: Articles &

alerts for home-buyers.• Dept. of Justice: Role of competition in

real estate

http://portal.hud.gov/portal/page?_pageid=73,1&_dad=portal&_schema=PORTAL

http://www.fanniemae.com/index.jhtml

http://www.freddiemac.com/

http://www.calhfa.ca.gov/

http://www.ftc.gov/bcp/menus/consumer/credit/mortgage.shtm

http://www.usdoj.gov/atr/public/real_estate/

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

• What to Look for in an

Inspection• American Society of Home Inspectors (A

SHI): Good consumer FAQ & virtual home inspection

http://www.doityourself.com/

http://www.nahb.org/page.aspx/category/sectionID=126

http://www.nahb.org/page.aspx/category/sectionID=126

http://www.ashi.org/

http://www.ashi.org/

redfin's home buying class - rockville, md - nick chaconas

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