Our Northern East Bay Team

Transcription

1 Our Northern East Bay Team Catherine Jardine Bay Area Market Manager Charmaine Frank Northern East Bay Team Lead Amber Zahn Northern East Bay Field Agent

2 Redfin s Home-Buying Class San Ramon, CA June 16, 2010

3 Agenda Evaluating the Market 6:30 7:15 When to Buy & Why The Market: what s going on? Costs of Ownership: alternatives Online Resources Break: 7:15 7:35 Working with Redfin 7:35 8:00 Touring Working With an Agent Making an Offer Short-sales & foreclosures 8:00 8:15 Mortgages 8:15 8:30 General Q & A 8:30 9:00

4 When to Buy A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. Warren Buffett, October 2008 I was seldom able to see an opportunity until it had ceased to be one. Mark Twain, 19 th Century

5 Why Buy a Home? You ve got a family, and need room to grow You want deep roots You want creative control You want a type of property that is difficult to rent You re handy, and ready to invest your time You ve saved up a down payment You want the tax savings You ve got an anaconda, a dog, a boat, a camper

6 Why You Shouldn t Buy a Home You don t have a good reason Family Schools You can t afford a 10% - 20% down payment You can rent for much less You plan on moving soon Three years minimum Seven years is ideal You re worried about job security Renting allows you to move where jobs are Renting allows you to down-size more easily The most common real estate mistake is viewing a house first as a financial investment and only second as a home. June 2008, New York Times

7 Case-Shiller: San Francisco Area +9.0% year-over-year Maximum: May % from maximum Nov. 08, May 02 price levels Case-Shiller Seattle v. 20-City Case-Shiller: 20-City Composite -0.5% year-over-year Maximum: July % from maximum July 2003 price levels San Francisco Area 20-City Composite San Francisco Area

8 Alameda County Single Family: Median Sold Price in May: $469, % year-over-year +13% month-over-month Source:

9 Alameda County Condos: Median Sold Price in May: $273, % year-over-year +20% month-over-month

10 Alameda County Single Family Homes Sold in May: % year-over-year +18% month-over-month Source:

11 # Alameda County Condos Sold in May: % year-over-year +16% month-over-month

12 Contra Costa County Single Family Homes Median Sold Price in May: $308, % year-over-year +2.6% month-over-month Source:

13 Contra Costa County Condos Median Sold Price in May : $161,000 3% year-over-year 11% month-over-month Source:

14 # Contra Costa County Single Family Homes Sold in May: 965-9% month-over-month -20% year-over-year Source:

15 # Contra Costa County Condos Sold in May: % year-over-year -6% month-over-month Source:

16 Sale v. List Price Single Family Homes: May 2010 Median Median Avg. Area # Sold List Price Sale Price SP/LP Berkeley 54 $699,000 $710, % Castro Valley 59 $475,000 $407, % Oakland 302 $280,000 $315, % Pleasanton 72 $850,000 $695, % Livermore 154 $170,000 $170, % Richmond 250 $170,000 $162,000 97% San Ramon 92 $760,000 $680, % Walnut Creek 76 $749,000 $683, % Based on data for May 2010

17 Sale v. List Price Condominiums: May 2010 Median Median Avg. Area # Sold List Price Sale Price SP/LP Oakland 71 $280,000 $299, % Richmond 34 $126,000 $157, % Livermore 9 $95,000 $73, % San Ramon 23 $240,000 $295, % San Leandro 7 $167,000 $165,000 - % Walnut Creek 67 $249,000 $220, % Based on data for May 2010

18 East Bay Foreclosures as of June 14, 2010 Community Foreclosures Average Price % of Homes Berkeley 385 N/A 0.12% Oakland 4,910 $266, % San Ramon 661 N/A 0.63% Contra Costa Co. 15,651 $279, % Alameda Co. 14,561 $319, % National 2,087,260 $178, % Data source: Based on number of homes currently in the foreclosure process.

19 Fixed-Rate Mortgage Trend Fixed-Rate Mortgage Trend 8.00% 7.00% 6.00% 5.00% 30-Yr Fixed 4.00% 3.00% 2.00% 1.00% National Average 30-Year Fixed-Rate Mortgage: +0.6% Y-o-Y change -0.4% M-o-M change Average May rate: 4.89% 0.00% May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10

20 Home-Buyer Tax Incentives Stimulus tax credit 10% of purchase price Tax credit $8,000 max for first-time buyers (haven t owned in 3 years) $6,500 max for current owners (lived in same home for 5 consecutive years in the past 8 years) No repayment required Must own the home for three years post credit Income limits: single $125,000, couples $225,000 Be in contract by April 30 th & close by June 30 th For more information visit:

21 New California Tax Credit Up to 5% of the purchase price or $10K Payment spread over three years All first timers eligible Current homeowners only eligible if buying new construction Must close between May 1 & December 31 Combine with the Federal Tax Credit by getting in contract by April 30 th and close by June 30 th

22 What s Most Likely to Happen? Why homes prices could decline another 20% More local layoffs New wave of foreclosures Listings pulled in winter re-listed in summer First-time home-buyers rent instead Why homes prices won t decline 20% Rental market has stayed healthy It s cheaper to buy than rent (mortgage rates) Multiple offers on bank owned properties Sale-to-list is creeping upward

23 Online Resources

24 Doing the Research Yourself Get alerts See neighborhood/ city trends & school info Download to Excel

25 Finding Sweet Digs & Forums

26 Sweet Digs Neighborhood pricing Sale-to-list data Real estate trends Case-Shiller indices Forums: 16,847 posts Can banks withdraw their loan commitment? How do I know when to remove loan contingencies? How much to offer?

27 20 Minute Break Eat, drink & talk real estate. Up Next... Working with Redfin 7:35 8:00 Touring Working With an Agent Making an Offer Short-sales & foreclosures 8:00 8:15 Mortgages 8:15 8:30 General Q & A 8:30 9:00

28 How to Work with Redfin

29 Home-Buying: The Redfin Way Find out what you can afford Tour homes with our field agents Choose a Redfin agent Find a home you like Determine what to offer Make an offer Work with an agent to negotiate Get through closing with our coordinators

30 Before We Get Started: Get Pre-Approved Information needed W-2, two pay-stubs, tax returns (get them ready) Bank statements Time required: 30 minutes Duration: days, depending on lender Uses Tour homes: verify you can afford home Make offers: substantiate your offer Ask for a few different amounts

31 How Touring Works Unlimited tours Up to 6 homes per tour Weekends book early Led by a field agent Get advice from an agent first Or just tour without talking to anyone first No commitment See a home through Redfin Buy through another agent if you choose Pre-approval required Redfin can connect you with a lender (no kickbacks) Start shopping for loans

32 Touring With Redfin: Demo Walk through a live demo that includes: Searching for a home on the map Clicking the Go See This Home button Filling out the tour wizard Selecting another home to tour Submitting the final tour request

33 Working With a Redfin Agent

34 How to Find Our Agents

35 Pick Your Area to Find Local Redfin Agents

36 Select an Agent

37 Make Sure She s a Good Fit Talk With an Agent: If you d like guidance on what to offer Need insight into the market To confirm who you d like to work with

38 What to Ask an 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?

39 Your Agent Negotiates Deal Researches seller Reviews agent-only comments Contacts listing agent Studies listing agent negotiating patterns Discusses with you Do you want a comparative market analysis? Where do you want to start? Where do you want to end up? Crafts purchase & sale agreement Inspection contingency Financing contingency Submits offer Negotiates terms

40 How is Redfin Different? Agents not paid on commissions Base salary, benefits Customer satisfaction bonus You can evaluate our agents Online: transaction history, reviews Meet face-to-face or talk via telephone No commitment Switch Redfin agents Use another brokerage entirely

41 Submit an Offer Online

42 Input Draft Offer Terms

43 After Submitting Your Offer An Agent will review it We ll follow up with you over the phone We ll guide you on price You re not committed until you sign We ll negotiate with the seller on your behalf Guide you through closing

44 How Commissions Work Example: You buy a home for $500,000 Traditional Agents Commission Seller s Agent (2.5%) $12,500 Buyer s Agent (2.5%) $12,500 Redfin Agents Commission Seller s Agent (2.5%) $12,500 Redfin (1.25%) $6,250 Redfin Buyer (1.25%) $6,250 Redfin refunds 50% of the buyer s agent commission Applied to closing costs Remainder paid as a check within 10 days of closing Refund is tax-free Minimum Redfin fee: $5,500

45 Short-Sales, Bank Owned Properties & Tenant-In- Common (TICs)

46 What are Tenants-In-Common? (TICs) Not owned like a Condo, fractional interest Two-ways to finance: Single combined mortgage (all tenants) Fractional or individual separate financing More vulnerable to legislation changes Condo conversion is not absolute Redfin maps TICs but does not support them.

47 What is a Short-Sale? A home where 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 bank s approval (usually 2)

48 Redfin Can Help You With A Short Sale Tour short sales with Redfin If you want to buy, we refer you to a short sale specialist partner agent Depending on lender that services mortgage, you may get up to a 15% commission rebate

49 What is a Bank-Owned Property? Auction fails Bank owns, markets property via broker, MLS Standard sale but: Verbal negotiations Long response times Repairs unlikely Legal addenda may require an attorney Limited or no disclosures Also known as Real Estate Owned (REO)

50 REO Quirkiness Long response times Banks put seller-friendly clauses into contracts Utilities will be shut off (you may have to pay to have them turned on for the inspection) Banks, brokers and attorneys not accommodating Property purchased As-Is Closings often don t happen as planned A major hassle!

51 What About Auctions? Cash buyers only Dates are posted in small publications Dress warm, auctions are on the courthouse steps Bidding starts at what the bank owes Be prepared, homes move fast You can t count on getting a good deal You re on your own

52 Cut to the Chase: Where s the Best Deal? REO s & short-sales often aren t 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

53 Mortgages

54 You Need a Loan More importantly, you ll need to find someone willing to lend you money. Assuming you ve got good credit (>720), and can come up with a decent down payment (10-20%), we ll go over the standard loan process.

55 Before You Get Started Get your finances in order Cash accounts (liquid funds) 401(k), stocks, other investments Gift funds? (up to $10,000) Move funds around before you start shopping Review your debt Pull credit report, look for errors Pay down balances to 1/3 rd of credit available Don t open any new lines Don t buy any big ticket items (wait till later) Co-borrower will need to do the same

56 Start Shopping Gather documentation (you & co-borrower) Last two paystubs Last two year s W-2s & tax returns Bank statements (last 30-days) Copy of driver s license Employer information PDF everything so you re prepared, avoid delays Shop for loans from Banks & credit unions: mainstream loans (20%, FHA) Brokers: more options, rate shopping ( niche loans) Mortgage bankers: lend their own money (flexibility)

57 Compare 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 APR (interest rates + fees + points + PMI) Insurance premiums (FHA, PMI) Ask what fees may change

58 Make Your Decision When possible, get a loan commitment Lock your interest rate (30-60 days) Make alternative funds liquid (401(k), stock) Final stop: closing table 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!

59 National Average: Graph Reproduced with the permission of

60 Current Average Rates: Freddie Mac Survey Type of Loan June 3, 2010 June 10, Year Fixed 4.79% 4.72% 15-Year Fixed 4.20% 4.17% 5/1 ARM 3.97% 3.92% 1-Year ARM 3.91% 3.95% Source: Freddie Mac

61 Thanks For Coming! Please fill out the survey we ll send tomorrow along with the slide deck. We d love to get your feedback on how the class could improve. If you d like to get in touch with an agent, just chat with us now or contact us on Redfin.com. Redfin s hiring! Check out our open positions or Sophia Gray at sophia.gray@redfin.com for information about a specific position.

62 Appendix: Step-by-step Touring Guide How to Conduct Your Own: Comparative Market Analysis Mortgage Types & Programs Our Favorite Real Estate Websites

63 How to Tour

64 Search for Properties Online

65 Find a Home to Tour

66 Schedule a Tour or Add More Homes

67 Fill Out Some Basics

68 You re All Set!

69 Tours: Top-Ten Tips 1. Bring a camera and a notebook 2. Bring a (handy) friend 3. Bring a tape measure 4. Keep your thoughts to yourself 5. Visit during the day 6. Check under oddly placed furniture 7. Check the bathrooms for rot and mold 8. Look for wavy or discolored siding 9. When sharing a wall, make sure it's thick 10. Be wary of signing a guest register Print out our checklist for your next home tour:

70 Comparative Market Analysis

71 CMA Standard Criteria Sold properties (within the last three months) Same type (don t mix townhomes with condos) Look no further than ¼ mile radius from home Square footage within 10-15% Same beds & baths Similar style (craftsman, modern, split-level) Lot Size Year built Consider extenuating circumstances (REO)

72 You Want This Home

73 Identify Major Criteria Type: single family residence Square feet: 1,740 (range 1,450 2,000) Lot size: 4,000 square feet (range 3,500 4,500) Year built: 1927 Style: craftsman Beds: 3 Baths: 1.75 Unique: view

74 Search for Homes Sold (zip code or neighborhood)

75 Download Results

76 Filter Out Stuff You Don t Need Delete sale type, home type, city, state

77 Sort Based on Your Criteria Remember: Square feet: 1,740 3 Beds/1.75 baths Year built: 1927 Craftsman

78 Throw Out Outliers Remember: Square feet range: 1,450 2,000 3 Beds/1.75 baths Year built: 1927

79 Scrutinize the Leftovers Use the links from your download Focus on 2-3 solid comparables Use Google street view when available Consider neighboring homes Street type: arterial Always drive by your final selections

80 Determine a Final Price Range Found two solid comparables Price range: $399,950 - $440,000 Asking price: $497,500 (higher than the range) Identify Unique Attributes Remodeled View Finished basement Quality landscaping

81 Next Step: Active Listings Find out what s on the market (competition) Run a CMA on active listings Select a few comparables: Are they similarly priced? What s the price range? Drive by to confirm details, attend open house Review Pending Sales Ask your agent to pull comparable pending sales, photos Establish a final range for homes sold in the last month Use this as a final gut check for your offer price

82 Ask Your Agent How much depreciation has taken place since the sale of your comps? Finally, Compare Results Establish a final range Consult your agent for specifics Adjust the range for unique attributes Submit an offer

83 Do I make an offer now, or wait? General Rule of Thumb (this ain t gospel) Does it meet the criteria of most of the seven tells? How far below list price are you? 0%-6% : Green Light 7%-12% : Use Discretion 13%-15% : Stop and Evaluate Weigh the Pro s and Con s The price could reduce on it s own (no offers) There s a higher chance of success (days on market) Interest rates could change (up or down) Another party could make an offer (you lose the home) You could jeopardize future negotiations by low balling

84 Quick & Dirty CMA Using Listing Details 1. Find the home you want 2. Click on View Details 3. Scroll down to find: Google street view Property history Median house values Value estimates Similar listings & sales Community information Want to know more about CMAs? Link:

85 Loans & Programs

86 Types of Loans Fixed-rate: years, usually 30-year Simplest The most popular Adjustable Rate Mortgages Low initial rate Rate increase after 1, 3, 5, 7, 10 years Then re-adjusts every 1, 2, 3 years Usually a standard rate + 2% Lingo: 5/1 ARM

87 Loan Programs Federal Housing Authority Conventional Combination (1 st & 2 nd ) Veteran s Affairs Jumbo

88 FHA Loans Insured by U.S. government Insurance 1.75% rolled into the loan Subject to PMI.05% Available for fixed and ARM loans Rate is usually lower Minimum down-payment: 3.5%... FHA appraisal value Purchase price (whichever is lower) No maximum income limits Best choice for Folks with a lower credit score Small down-payment Self-employed

89 Conventional (conforming) Typical term: 30 years Lowest rates 10-20% down payment Credit score >720 Veteran s Affairs Loans (VA Loans) Fixed-rate: year terms Open to veterans of active military service Easy qualification Jumbo (non-conforming) Loans up to $3,000,000 Higher rate

90 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 Terabitz: Custom neighborhood dashboard, pages load slowly and U/I is awkward. Trulia Heat Maps: Median prices across a county

91 Favorite Real Estate Links Listing Search 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, slow to load & the zoom can be funky Brokerage site of listing agents: more photos of the listing RealtyTrac: Foreclosure market detail, subscription required for full reports

92 Favorite Real Estate Links Pricing Data & Tools 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

93 Favorite Real Estate Links Mortgage Calculators & Loan Information 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

94 Favorite Real Estate 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

95 Favorite Real Estate Links 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 (ASHI): Good consumer FAQ & virtual home inspection