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Twitter Home Buying 101 Event

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  • 1. Slide 1 of 29 Redfins Home Buying Event Landon Nash, Jess Williams and Davis Pemstein September 12, 2013 @Redfin
  • 2. Slide 2 of 29 Home Buying 101 Get pre-approved for loan, hire kick-ass agent, find your dream home, make offer, offer accepted, get keys, move in, receive Redfin refund.
  • 3. Slide 3 of 29 Agenda To buy or not to buy Overview of purchase process Understanding the Market Mortgages Multiple offers What to know about closing Thank you!
  • 4. Slide 4 of 29 A Little Bit About Who We Are Redfin 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 Right home for the right price No obligation Commission credit
  • 5. Slide 5 of 29 Understanding the Buying Process
  • 6. Slide 6 of 29 Are You Ready to Buy? Do you have a family and need room to grow? Do you expect to stay put for 5 or more years? Have you saved up a down payment? Can you rent for less?
  • 7. Slide 7 of 29 Overview of a Purchase Research Neighborhoods Real Estate Agents Mortgage Options Preapproval Consider your needs Search Define Preferences Saved Search Home Tours Open Houses Offer Comparables Draft Offer Docs Negotiate Mutual Acceptance Closing Earnest Money Inspection Loan application Title Review Appraisal Financing Approval Closing
  • 8. Slide 8 of 29 Market Conditions
  • 9. Slide 9 of 30 0.00 50.00 100.00 150.00 200.00 250.00 20 City Composite San Francisco Case-Shiller: San Francisco Area v. 20-City
  • 10. Slide 10 of 29 Case-Shiller By the Numbers Case-Shiller: San Francisco Area Up 23.9% year-over-year Peak was May 2006 Down 26.02% from peak Currently at March 2004 prices Case-Shiller: 20-City Composite Up 12.1% year-over-year Peak was May 2006 Down 26.7% from peak Currently at January 2004 prices
  • 11. Slide 11 of 29 Story of 2013: Rising Prices
  • 12. Slide 12 of 29 San Francisco Area Overview
  • 13. Slide 13 of 29 Where Are Rates Headed? Type of Loan September 5, 2013 August 29, 2013 30-Year Fixed 4.57% 4.51% 15-Year Fixed 3.59% 3.54% 5/1 ARM 3.28% 3.24% 1-Year ARM 2.71% 2.64%
  • 14. Slide 14 of 29 San Francisco Multiple Offers Competition has decreased from 89.7% to 80.5% from June to July 78% of offers in July were still over asking price The following % of winning offers in July: Were all cash: 4% Waived Financing: 14% Had Pre-Inspection: 4% Waived Inspection: 20% Had Cover Letter: 80%
  • 15. Slide 15 of 29 San Francisco Market Trends Slide in competition reflects multiple factors beginning to erode sellers market dominance: Buyer fatigue Budgets increase in home price and mortgage rates Growing inventory Summer vacation Prices increased .5% June to July, 27.3% YoY # homes sold increased 8.3% MoM and 12.5% YoY # homes for sale decreased 1.2% MoM and 21.4% YoY 42.8% homes went pending in 2 weeks 1.1 months of supply
  • 16. Slide 16 of 29 Mortgages
  • 17. Slide 17 of 29 Review Your Financial Situation Pull credit report, look for errors Establish comfort level for monthly payment Figure out how much monthly income goes towards debt: 28 33% healthy Pay down credit balances to 1/3rd Dont open any new lines of credit Dont buy any big ticket items Source of money Current employment status
  • 18. Slide 18 of 29 Get Pre-Approved Early A 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 Redfin asks that you get pre-approved before your third tour Good for 90 days, depending on lender Info needed: W-2, two pay-stubs, tax returns, bank statements
  • 19. Slide 19 of 29 Pulling Credit: Is It Harmful? Your credit report must be reviewed by a lender before you can obtain a pre-approval If you know your score, a lender should be able to give you ballpark pricing for their loan products Better to know sooner rather than later about credit problems Maintaining a pre-approval has a negligible impact on your credit score
  • 20. Slide 20 of 29 Pre-approval Scenario oEarns $6,500/month oHas car payment $300 oWants to buy a home for $500,000 oHas 20% down payment o $6,500 x 45% = $2,925 o $2,925 300 (other debt) = Allowed $2,625/Month! $400,000 Loan o30/Yr Fixed, 3.75% = $1,852 oProperty Taxes o1.41% on purchase price = $588 ($7,050/yr) oHomeowners Insurance = $100 ($1,200/yr) oTotal: $1852+588+100 = Qualified $2,540/Month!
  • 21. Slide 21 of 29 Start Shopping for Lenders Compile a list of 3-4 local lenders Good sources include: Redfin's partner lenders Referrals from friends, family & co-workers Online review sites, such as Yelp Local chains and offices *Know your lender
  • 22. Slide 22 of 29 Local Recommended Lenders In no way does Redfin benefit financially from recommending lenders we just think theyre great lenders!
  • 23. Slide 23 of 29 Multiple Offers
  • 24. Slide 24 of 29 This occurs when inventory is down and buyer interest is up 5 Tips for Winning in a Bidding War 1. Get pre-approved with a local lender & get underwriter approval 2. Start the conversation early 3. Write a letter & appeal to the seller 4. Know your limits Experience With Multiple Offers
  • 25. Slide 25 of 29 Closing what you need to know
  • 26. Slide 26 of 29 Signing and Closing A few days before closing you will sign your closing documents and have a walk through. On closing day, youll probably get your keys at about 5pm.
  • 27. Slide 27 of 29 All Done!
  • 28. Slide 28 of 29 So What Now? Make sure its the right time for you Start browsing online Check out our Home Buying Guide Find the right agent Look for a local lender and get pre-approved Start seeing homes in person Make an offer & close the deal
  • 29. Slide 29 of 29 Thanks for Coming! Questions? Get in touch: Landon Nash [email protected] Jess Williams [email protected] Davis Pemstein [email protected] Check out our upcoming classes: http://www.redfin.com/buy-a-home/classes-and-events

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