Our Local Agents Taylor Connolly Nick Chaconas Karen Krupsaw Fernando Ferrufino Marshall Park Maryland Maryland Balt./Wash. Region DC Northern Virginia Team Lead Team Lead Market Manager Team Lead Team Lead [email protected] [email protected] [email protected] [email protected] [email protected] Redfin’s Home-Buying Class Falls Church, VA July 22, 2010 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 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 To Buy or Not to Buy? When to Buy A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. Warren Buffett I was seldom able to see an opportunity until it had ceased to be one. Mark Twain, 19th Century 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… 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. New York Times 300.00 Case-Shiller: DC Metro Area Case+7.3% year-Shiller-over-year Seattle v. 20-City Maximum: May 2006 250.00 -28.5% from maximum April 2004 price levels 200.00 150.00 100.00 Case-Shiller: 20-City Composite DC Metro Area +4% year-over-year 20-City Composite 50.00 Maximum: July 2006 -30% from maximum August 2003 price levels 0.00 $550,000 NWMLS: MedianMRIS: Median Price Sold Price $500,000 $450,000 $400,000 $350,000 $300,000 Area YoY Prior Mo. $Amount $250,000 Montgomery -0.6% +6.8% $374,750 Fairfax +10.9% +7.7% $435,000 $200,000 Washington, DC -5.5% +2.3% $395,000 $150,000 Montgomery Fairfax Washington DC $100,000 2,200 MRIS: Number of Homes Sold 2,000 Area YoY Prior Mo. No. 1,800 Montgomery +12.1% +14.3% 1,232 Fairfax -0.9% +9.8% 2,149 1,600 Washington, DC +17.0% +8.2% 716 1,400 1,200 1,000 800 600 400 200 Montgomery Fairfax Washington D.C. 12,000 NWMLS: MedianMRIS: Number Price of Listings 10,000 8,000 6,000 4,000 Area YoY Prior Mo. No. 2,000 Montgomery -2.9% +1.2% 5.023 Fairfax +2.1% +0.9% 7,777 Washington, DC -7.8% +1.3% 3,227 - Montgomery Fairfax Washington, DC 16.00 NWMLS: MedianMRIS: Months Price of Supply 14.00 Montgomery Fairfax 12.00 Washington D.C. 10.00 8.00 6.00 4.00 Area YoY Prior Mo. Months Montgomery -13.4% -11.4% 4.1 2.00 Fairfax +3.1% -8.10% 3.6 Washington D.C. -21.2% -6.40% 4.6 - Metro DC: Foreclosures as of July 20th Area Foreclosures Average Price % of Homes Arlington County 441 $488,241 0.07% Fairfax County 6,067 $348,112 0.20% Loudoun County 2,392 $338,162 0.34% Montgomery County 2,549 $291,575 0.16% Washington, DC 1565 NA 0.09% National 2,075,563 $178,871 0.25% Data source: www.realtytrac.com. Data based on homes at any point in the foreclosure process in the last month. What’s Most Likely to Happen? • Why home prices could decline another 20% • More local layoffs: unemployment rate increases • Consumer confidence along with decline in stock prices • New wave of foreclosures • Cash-strapped first-time home-buyers rent instead • Why home prices won’t decline 20% • Inventory declines impact pricing • Government programs stabilize market • Economy stabilizes, improving customer confidence • Government and quasi-government employment props up DC Searching 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 Find open houses Search Exclude recent short sales sales Doing the Research Yourself Get email alerts See neighborhood/ city trends & school info Download to Excel Finding Redfin’s Forums Mortgages: What Can You Afford? You Need a Loan More importantly, you’ll need to find someone willing to lend you money. Assuming you’ve got good credit (>740), and can come up with a decent down payment (5 - 20%), we’ll go over the standard loan process. 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 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 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 Local Recommended Lender •No kickbacks, no obligation •See all Redfin clients’ survey responses Get Paperwork Ready • Gather documentation (you & co-borrower) • Last two paystubs • Last two years’ W-2s (tax returns if self- employed) • Bank statements (last 60 days) • Copy of driver’s license • Employer information • Residence history • PDF everything so you’re prepared, avoid delays 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) 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 (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. June 2010 30 Yr-Fixed Rate: 4.74% 8.00% 7.00% 6.00% 5.00% 30-Yr Fixed 4.00% 3.00% 2.00% -13% Y-o-Y change 1.00% -3% M-o-M change 0.00% Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Current Average Rates Type of Loan July 8, 2010 July 15, 2010 30-Year Fixed 4.57% 4.57% 15-Year Fixed 4.07% 4.06% 5/1 ARM 3.75% 3.85% 1-Year ARM 3.75% 3.74% Source: Freddie Mac http://www.freddiemac.com/pmms/ 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 Working with Redfin 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 How Commissions Work Example: You buy a home for $500,000 Traditional Agents Commission Seller’s Agent (3%) $15,000 Buyer’s Agent (3%) $15,000 Redfin Agents Commission Seller’s Agent (3%) $15,000 Redfin (1.5%) $7,500 Redfin Buyer (1.5%) $7,500 • 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 How Touring Works • See as many homes as you need • Up to six homes per tour in two hour blocks • Led by 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 • Get pre-approved • Redfin can connect you with a lender (no kickbacks) • Start shopping for loans 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 Working With 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 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? Submit an Offer Online Input Draft Offer Terms 5304