Our Boston Agents. Sean Valiton Metro North Team Lead. Adam Welling Metro West Team Lead. Hannah Driscoll Metro South Team Lead

Transcription

1 Our Boston Agents Adam Welling Metro West Team Lead Sean Valiton Metro North Team Lead Hannah Driscoll Metro South Team Lead

2 Redfin s Home-Buying Class Somerville, MA June 30, 2010

3 Agenda Intro to Redfin 6:00 7:00 Market Conditions When to Buy & Why The Market: what s going on? Searching for a home Mortgages Break: 7:00 7:30 Home Buying Process 7:30 8:15 Touring & Finding an Agent Making an Offer Closing the Deal Short-sales & Foreclosures 8:15 8:30 General Q & A 8:30 9:00

4 What Redfin Is All About Redfin is a real estate brokerage that focuses on customer-service and technology to make buying and selling homes better for consumers. The Most Trusted Service Customer focus: client-satisfaction bonuses, not commissions Transparency: public reviews No obligation: sign up online, it s easy to tour The Best Results Service: 97% would recommend us to a friend Lower fees: $7,500

5 To Buy or Not to Buy?

6 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

7 Why You Shouldn t Buy a Home You don t have a good reason 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. New York Times

8 Market Conditions

9 Case-Shiller: Boston Area +3.8% year-over-year Maximum: September % from maximum April 2003 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 Boston Area 20-City Composite

10 Prices Here Have Dropped Less Than Most 0.0% -10.0% -20.0% Case-Shiller: % Decline from Max as of March 2010 Dallas Denver Charlotte Cleveland Boston New York Portland, OR Atlanta Seattle Chicago Washington, DC Minneapolis San Diego San Francisco Los Angeles Tampa Detroit Miami Phoenix Las Vegas -30.0% -40.0% -50.0% -60.0%

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13 Luxury for less The economy is suffering, Coon said. Because there is more to choose from and less competition, it does allow you to get more for your money. Jenifer B. McKim April 11, 2010

14 Get all the data on Redfin.com

15 Suffolk-SFH 1,225 MLSPIN: # of Homes Sold 1,025 NWMLS: Median Price Region Y-o-Y Prior Mo. No. Suffolk-SFH +62% +30% 139 Suffolk-Condos +34% +12% 436 Middlesex-SFH +49% +18%

16 6,000 5,000 MLSPIN: # of Listings NWMLS: Median Price 4,000 3,000 2,000 1,000 # of Listings Y-o-Y Prior Mo. No. Suffolk-SFH -4% -2% 574 Suffolk-Condos +2% -2% 2,538 Middlesex-SFH +1% -2% 4,283 - Suffolk-SFH Suffolk-Condos Middlesex

17 MLSPIN: Months of Supply NWMLS: Median Price Suffolk-SFH Suffolk-Condos Middlesex Region Y-o-Y Prior Mo. Months Suffolk-SFH -40% -25% 4.1 Suffolk-Condos -24% -12% 5.8 Middlesex-SFH -32% -18% 4.8

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19 Boston-Area Foreclosures Area Foreclosures Average Price % of Homes Boston 1,637 $206, % Suffolk Co. 2,744 $206, % Middlesex Co. 3,449 $168, % Nationally 2,096,279 $178, % Data source: Data based on the number of homes at any point in the foreclosure process in the past month.

20 Sale v. List Data: Middlesex County (SFH) Average SP/LP: 97%, SP/OP: 95% SP/ SP/ Area DOM #Sold Sale List LP Original OLP Andover $562,150 $571,574 98% $589,432 95% Chelmsford $369,884 $374,821 99% $385,518 97% Dedham $369,906 $374,850 99% $390,463 94% Framingham $336,564 $342,056 98% $346,629 97% Lexington $914,445 $934,573 99% $958,396 98% Malden $320,921 $336,514 95% $339,079 95% Medford $382,547 $390,989 98% $393,526 97% Newton $900,097 $928,332 98% $950,733 96% Reading $466,112 $475,890 98% $478,840 97% Wayland $771,689 $835,283 94% $901,728 91% Source: 30-days prior to June 29, 2010 (978 units sold) Average DOM=81

21 Sale v. List Data: Middlesex County (SFH) Average SP/LP: 98%, SP/OP: 95% SP/ SP/ Area DOM #Sold Sale List LP Original OLP Andover $586,761 $597,561 98% $607,561 96% Chelmsford $366,470 $374,732 98% $381,817 96% Dedham $371,718 $387,667 96% $395,944 94% Framingham $321,805 $328,805 98% $342,674 95% Lexington $892,818 $926,500 98% $968,442 94% Malden $286,067 $293,127 98% $296,793 96% Medford $348,150 $357,661 97% $359,383 97% Newton $803,056 $831,543 97% $854,329 94% Reading $424,780 $434,600 98% $439,207 97% Wayland $559,178 $577,967 97% $580,189 96% Source: 30-days prior to May 24, 2010 (818 units sold) Average DOM=93

22 What s Most Likely to Happen? Why homes prices could decline another 10% More local layoffs: MA unemployment 10+% Financial Institutions continue to contract Local government budget shortfalls New wave of foreclosures Ghost Inventory -6,107 in 10 Petitions jumped 20.8% to 2,431 in April (dropped 9% in May) Short sales fall into foreclosure Middlesex County SF 241 short sales out of 4495= 5% Middlesex County SF REO 94 out of 4495= 2% Large number of new homes listed in coming months 4120 SF on 4/20/09 vs on 4/20/10 = 9% increase Home buyer credit deadline fall-out is real!!!! Middlesex SF UAG 4/1-4/30 = 1145 Middlesex SF UAG 5/1-5/31 = % Drop MoM Middlesex SF UAG 6/1 6/28 = % Drop MoM and 26% drop from 4/20 Greece gets greased Interest rates rise to 6+%

23 What s Most Likely to Happen? Why homes prices won t decline 10% Low interest/gov. rates spur demand, limit foreclosures Lots of refinancing/restructuring (the Obama Mortgage) going on.. Greece continues to slide EU economy Low Rates, low rates, low rates. Better inventory = better buying environment = happy buyers Stock Market/Consumer Confidence stays strong Rental Market rebounding continues Healthcare Reform Small Business Boom It s Summer! Let s buy a house! Educational Reform good schools = strong/increasing value

24 Home sales are up, but will it last? Entry-level demand has been sinking like a rock, he said. July is going to be very soft. Glenn Kelman Alex Coon, market manager for Redfin in Massachusetts, attributed the price fall to increased competition more people put their homes up for sale. Jenifer B. McKim June 23, 2010

25 Unemployment in MA = 9.2% (5/10)

26 How to Search for a Home

27 Why Redfin MLS Search is Better Multiple Listing Services (MLS) are databases that agents use to list homes You see nearly everything an agent sees Refreshes every minutes on Redfin See all the info on homes when they sell Quicker, better, more 30% more listings than other search sites Schools, market data, neighborhood trends

28 Searching on Redfin Find open houses Search recent sales Exclude short sales

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

30 Finding Redfin s Forums

31 Mortgages: What Can You Afford?

32 Getting Started: The Basics April avg rate for 30-year fixed:5.10% Ideal credit score: Greater than 740 Down-payment: ranges from 3 20 % Depends on type of loan program Monthly mortgage payment range: 28 35% of your monthly income

33 Review Your Debt Pull credit report, look for errors Figure out how much monthly income will go towards paying off debt: 28 33% healthy Pay down balances to 1/3 rd 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

34 Get Pre-Approved Establishes your price ranges & shows you re serious Information needed: W-2, two pay-stubs, tax returns (get them ready), bank statements Time required: 30 minutes Duration: 90 days, depending on lender Ask for a few different amounts Redfin asks that you get pre-approved before your third tour

35 Get Paperwork Ready Gather documentation (you & co-borrower Last two paystubs Last two years W-2s (tax returns if selfemployed) Bank statements (last 60 days) Copy of driver s license Employer information Residence history PDF everything so you re prepared, avoid delays

36 Start Shopping for Loans Banks & credit unions: Mainstream loans (20% Conventional, FHA) Brokers: More options, rate shopping ( niche loans) Mortgage bankers: Lend their own money (flexibility)

37 Comparing GFE Results Gather Good Faith Estimates (loan quotes) A minimum of three, more is better Compare similar loans Type of program (FHA, conventional) Same time of day (rates change all day) Compare costs side-by-side Discount & origination points Interest rates Insurance premiums (FHA, PMI) APR (interest rates + fees + points + PMI)

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

39 National Average: Graph Reproduced with the permission of

40 Our Recommended Lenders See all their reviews:

41 20 Minute Break Eat, drink & talk real estate. Up Next... Working with Redfin 7:30 7:45 Making an Offer 7:45 8:15 Short Sales & Foreclosures 8:15 8:30 General Q&A 8:30 9:00

42 Working with Redfin

43 Working With Redfin is Different See all our agents deals & reviews We survey everyone who tours, signs an offer, buys or sells a home Satisfaction measured by a Net Promoter Score Our agents focus on service, not sales No obligation Switch Redfin agents Use another brokerage entirely You get up to 50% commission refund

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 (1.5%) $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 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

46 Working With a Redfin Agent

47 How to Find Our Agents

48 Pick Your Area to Find Local Redfin Agents

49 Select an Agent

50 Make Sure He s a Good Fit Team members & roles See all deals & reviews

51 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?

52 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

53 Submit an Offer Online

54 Input Draft Offer Terms

55 Overview of a Purchase Tour homes Find dream home Consult with agent, write offer Submit offer to listing agent Negotiations Success! Mutual Acceptance Earnest money [$1000] Success! Mutual Acceptance Inspection contingency [5-10 days] P&S Review [10-14 days] 5% of Purchase Price Financing contingency [20-25] Final walk thru - details Closing! Get keys and take possession! Receive Redfin refund Complete Redfin survey

56 After Submitting Your Offer A Redfin 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 We ll guide you through closing $1000 check with offer Time is of the Essence

57 What Next Under Agreement! Schedule Home Inspection Look for pdf. reports with photos Ask us or use personal references Mention if you want tests perform: Radon- canister or computer? Lead Paint Water Have a check or CC ready Shop around Stay involved Basement?

58 What Next Lawyers! Get a Lawyer They ll have one so should you Ask about pricing up front flat fee What they will be doing? services Are they a RE attorney? Who will I be working with? How long have you been doing this? Contingencies

59 What Next Are we there yet? Purchase And Sales Contract Negotiated by your RE attorney The guts of the deal Inspection Items Yes/No Deposit Money Required (5% typical in MA) Personal check acceptable Goes to Listing Broker escrow account Redfin Rebate!!! - closing costs, reduction 4 signed and initialed copies + check Copy to your lender ASAP

60 Finally. Massive Debt Close contact with your Lender Appraisal order it quickly Private Mortgage Insurance ask early Commitment Letter (15-30 days out) Home Insurance -required Movers book up quickly Final Walk Through Closing - checklist

61 So What Now Make sure it s the right time for you to buy Research market pricing conditions Get pre-approved & start shopping for mortgages Search for homes & get out on tours Find the right agent Make an offer & close the deal

62 Help Us Improve Our Class 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.

63 Appendix: Glossary of Real Estate Terms How to Conduct Your Own: Comparative Market Analysis Our Favorite Real Estate Websites

64 Common Real Estate Jargon Contingency: Conditions included with an offer on a home that must be fulfilled before the deal can close. If a buyer or seller is unable to satisfy a contingency, then the offer on a home may become void. Deed: A legal document filed with the county that documents the transfer of home ownership. This is a document the buyer signs when her deal closes and she'll receive a copy once the original is recorded by the county. Earnest Money: The money buyers pay one to three business days after agreeing with the seller on a price for the home to show that they're serious about the offer. Usually 1 3% of the purchase price (though sometimes it's a fixed amount), the money is deposited into an escrow account via a cashier's check or money order. Escrow: A neutral third party or attorney that handles the exchange of money and documents once mutual acceptance is reached on an offer. Escrow handles the transfer of the buyer's loan documents and property taxes and works with a buyer's lender and real estate agent to make sure that the title of the home is clear of liens before the transfer of ownership. Title: A legal document listing the history of ownership of the home. Buyers get a preliminary title report from an escrow agent or attorney within a week after they reach mutual acceptance on an offer. See even more definitions in Redfin s Real Estate Glossary!

65 Comparative Market Analysis

66 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

67 You Want This Home

68 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

69 Search for Homes Sold (zip code or neighborhood)

70 Download Results

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

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

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

74 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

75 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

76 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

77 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

78 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

79 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:

80 Favorite Real Estate Links Property Information PropertyShark: Zoning data, title history, permits, neighborhood data; navigation is clunky Mass Land Records: Mortgages, liens, permits.. Boston Magazine: Best Places to Live 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 Neighborhood Blogs

81 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

82 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

83 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

84 Favorite Real Estate 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

85 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