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Our Agents Here Tonight

Lori DrewCoordinatorCoordinator

East King, Kirkland Redmond, Bothell

Kurt PepinAgent

B ll N tl

Cheryl McLaineTeam Lead

Kathryn RionAgent

Bellevue, Newcastle, Issaquah, Sammamish

Kirkland, Redmond, Bothell

Kirkland, Redmond, Bothell

Redfin’s Home Buying ClassRedfin s Home-Buying Class

Kirkland, WAJuly 8, 2010y ,

AgendaIntro to Redfin 6:00 – 7:00Market Conditions• When to Buy & Why• The Market: what’s going on?

Searching for a home• Searching for a home• MortgagesBreak: 7:00 – 7:30Home Buying Process 7:30 – 8:15• Touring & Finding an Agent

M ki g Off• Making an Offer• Closing the DealShort-sales & Foreclosures 8:15 – 8:30General Q & A 8:30 – 9:00

What Redfin Is All AboutRedfin is a real estate brokerage that focuses on customer-service and technology to make buying and selling homes better for consumersselling 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 ResultsThe Best Results• Service: 97% would recommend us to a friend• Lower fees: $7,500

To Buy or Not to Buy?To Buy or Not to Buy?

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 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

• FamilyS h l• 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

d l d hand only second as a home.New York Times

Market ConditionsMarket Conditions

Case-Shiller: Seattle v. 20-City 250.00

Case-Shiller: Seattle Area-2.8% year-over-year Maximum: July 2007

200.00

Maximum: July 2007-24.5% from maximumMarch 2005 price levels

150.00

100.00

Seattle Area

20 City Composite

Case-Shiller: 20-City Composite+4% year-over-year

50.0020-City Compositey y

Maximum: July 2006-30% from maximumAugust 2003 price levels

0.00

g p

June King Co. Median Sold Price: $350,241

$400,000

$450,000

$300,000

$350,000

$200 000

$250,000

$ ,

$100 000

$150,000

$200,000

-5% Y-o-Y change+1% M–o-M change

$50,000

$100,000

$0

June King Co. # of Homes Sold: 2,7133,000

2,000

2,500

1,500

1,000

+11% Y-o-Y change

0

500g

+8% M-o-M change

June King Co. # of Listings: 15,593

16 000

18,000

20,000

12 000

14,000

16,000

8 000

10,000

12,000

4 000

6,000

8,000

-1% Y-o-Y change+3% M-o-M change

2,000

4,000

-

June King Co. Months of Supply:5.7 5 75.714.00

16.00

11% Y Y h

10 00

12.00-11% Y-o-Y change-7% M-o-M change

8.00

10.00

4.00

6.00

06-2010: it would take 5.7 months to sell all the inventory if there were no new listings

0 00

2.00

the inventory if there were no new listings.06-2009: 6.4 months of supply

0.00

Seattle-Area ForeclosuresArea Foreclosures Average Price % of Homes

Seattle 3,011 $330,056 0.13%

Bellevue 519 $420 786 0 15%Bellevue 519 $420,786 0.15%

Kirkland 469 N/A 0.20%

Redmond 215 N/A 0.08%

King County 9,115 $319,290 0.18%

Snohomish County 4,726 $237,133 0.27%

Nationally 2,110,860 $173,230 0.25%Nationally 2,110,860 $173,230 0.25%

Data source: www.realtytrac.com numbers represent the number of foreclosed homes currently on the market.

Sale v. List Price: Single Family Homes

AreaUnits Sold

Avg.List Price

Avg.Sale Price

Avg.SP/LP

Bellevue 121 $650,000 $605,000 98.5%

Issaquah 61 $549 000 $525 000 97 6%Issaquah 61 $549,000 $525,000 97.6%

Kirkland 40 $585,607 $557,303 95.2%

Mercer Island 15 $962,200 $890,200 92.5%

Redmond 60 $608,855 $583,130 95.9%

Renton 104 $365,471 $359,586 98.3%

Sammamish 49 $638 351 $616 059 96 6%Sammamish 49 $638,351 $616,059 96.6%

Avg. is above Median Avg. is below Median

Based on closed sales 30 days prior to 5/12/2010 - Source: www.nwmls.com

Sale v. List Price: Condominiums

AreaUnits Sold

Avg. List Price

Avg. Sale Price

Avg.SP/LP

Bellevue 26 $273,696 $262,848 96.0%

I h 29 $271 120 $265 923 97 8%Issaquah 29 $271,120 $265,923 97.8%

Kirkland 28 $308,183 $292,822 94.8%

Redmond 15 $293,805 $286,783 97.6%

Renton 20 $191,836 $189,265 99.0%$ , $ ,

Sammamish 2 $297,475 $275,000 92.6%

Based on closed sales 30 days prior to 5/12/2010 - Source: www.nwmls.com

Avg. is above Median Avg. is below Median

What’s Most Likely to Happen?• Why home prices could decline another 10%

U l t b k i t d bl di it• Unemployment breaks into double digits• Foreclosures impact appraisals• Rapid rise in interest rates

• Why home prices won’t decline 10%• Interest rates remain very low• Foreclosures released on market in controlled

manner

How to Search for a How to Search for a HomeHome

Why Redfin’s Search is Better• All the homes for sale: 30% more listings

Y h h 4 h d• 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 E cl deSearch recent sales

Exclude short sales

Doing the Research Yourself

See neighborhood/

Get email alerts

neighborhood/city trends & school info

Download to Excel

Finding Redfin’s Forums

Mortgages: Mortgages: What Can You Afford?What Can You Afford?

You Need a Loan

More importantly, you’ll need to find illi t l d someone willing to lend you money.

Assuming you’ve got good credit (>740), and can come up with a decent down ppayment (10 - 20%), we’ll go over the standard loan processstandard loan process.

Organize Your Assets • Get ready for the down payment

C h (li id f d )• Cash accounts (liquid funds)• 401(k), stocks, other investments• Gift funds? (Max. allowed varies)• Move funds around before you start • Move funds around before you start

shopping

Review Your Debt• Pull credit report, look for errors

Fi h h hl i • Figure out how much monthly income goes towards paying off debt: 28 – 33% h l hhealthy

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

• Don’t open any new lines of creditp y• Don’t buy any big ticket items

Co borrower will need to do the same• Co-borrower will need to do the same

Get Pre-Approved• Establishes your price ranges & shows

you’re seriousyou’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 lendery , p g• Ask for a few different amounts• Redfin asks that you get pre approved • Redfin asks that you get pre-approved

before your third tour

Local Recommended Lenders

Get Paperwork Ready• Gather documentation (you & co-borrower)

• Last two paystubs• Last two paystubs• Last two years’ W-2s (tax returns if self-

employed)employed)• Bank statements (last 60 days)

Copy of driver’s license • Copy of driver’s license • Employer information

R id hi• Residence history• PDF everything so you’re prepared,

id d lavoid delays

Start Shopping for Loans• Banks & credit unions:

• Mainstream loans (20% Conventional FHA)• Mainstream loans (20% Conventional, FHA)• Brokers:

More options rate shopping (“niche” loans)• More options, rate shopping (“niche” loans)• Mortgage bankers:

Lend their o n mone (fle ibilit )• Lend their own money (flexibility)

Comparing GFE Results • Gather Good Faith Estimates (loan

quotes)quotes)• A minimum of three, more is better

C i il l• Compare similar loans• Program (FHA, conventional)• Timeframe (same day)• Timeframe (same day)

• Compare costs side-by-sideDisco nt & origination points• Discount & origination points

• Interest ratesI i (FHA PMI)• Insurance premiums (FHA, PMI)

• APR (interest rates + fees + points + PMI)

Make Your Decision • When possible, get a loan commitment

L k i (30 60 d )• 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 arrears, so your first loan payment won t be for two months. You’ll have one month of no paymentsof no payments.

June 2010 30 Yr-Fixed Rate: 4.74%

7.00%

8.00%

6.00%

4.00%

5.00%

30-Yr Fixed

3.00%

1.00%

2.00%-13% Y-o-Y change-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 June 24, 2010 July 1, 2010

30-Year Fixed 4.69% 4.58%

15-Year Fixed 4 13% 4 04%15 Year Fixed 4.13% 4.04%

5/1 ARM 3.87% 3.79%

1-Year ARM 3.77% 3.80%

Source: Freddie Mac http://www.freddiemac.com/pmms/

20 Minute Break20 Minute BreakEat, drink & talk real estate.

Up Next... Working with Redfin 7:30 – 7:45Making an Offer 7:45 – 8:15gShort Sales & Foreclosures 8:15 – 8:30General Q&A 8:30 – 9:00

Working with RedfinWorking with Redfin

Working With Redfin is Different• See all our agents deals & reviews

• We survey everyone who tours, signs an offer, We survey everyone who tours, signs an offer, buys or sells a home

• Satisfaction measured by a Net Promoter ScoreScore

• Our agents focus on service, not sales• No obligation• No obligation

• Switch Redfin agents• Use another brokerage entirely• Use another brokerage entirely

• You get up to 50% commission refund

How Commissions Work

Traditional Agents Commission

Example: You buy a home for $500,000

Seller’s Agent (3%) $15,000

Buyer’s Agent (3%) $15,000Buyer s Agent (3%) $15,000

Redfin Agents Commission

Seller’s Agent (3%) $15,000g ( ) $ ,

Redfin (1.5%) $7,500

Redfin Buyer (1.5%) $7,500f y ( ) ,

• 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 blocksp p• Led by field agent

• Get advice from an agent firstO j t t ith t t lki t fi t• Or just tour without talking to anyone first

• No commitment• See a home through RedfinSee 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

Find a Home to Tour

Schedule a Tour or Add More Homes

Fill Out Some Basics…

You’re All Set!

Finding a Redfin AgentFinding 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

See alld l &deals & reviews

Team members & roles

What to Ask any Agent• Is this your full-time job?

F ili i h f l h l ?• 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?• Will you show me all properties for sale?• When am I committed to working with

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

Making an Offer & Making an Offer & Closing the Deal

Tour homes

Find dream home

Consult with agent, write offer

Submit offer to listing agentNegotiationsNegotiations

Success! Mutual AcceptanceEarnest money [Within 3 days]Inspection contingency [5-10 days]

[ d ]

Title review [5 days]Overview of a Purchase Financing contingency [20-25 days]

Waiting for loan approvalEscrow signing appointment

Purchase

Escrow signing appointment

Get keys and take possession!Closing!

Receive Redfin refund

Complete Redfin survey

Tour homes

Find dream home




[ d ]

Title review [5 days]Overview of a Purchase: Financing contingency [20-25 days]


Purchase:Finding a Home





Tour homes

Find dream home




[ d ]



Purchase:Making an Offer





Tour homes

Find dream home




[ d ]



Purchase:Contingencies





Tour homes

Find dream home




[ d ]



Purchase:Closing the Deal





Tour homes

Find dream home




[ d ]



Purchase:Take Ownership





Short Sales &Short-Sales & Bank Owned Propertiesp

What is a Short Sale?• A home where the owner owes more on the

mortgage than the home is worthmortgage than the home is worth• Usually pre-foreclosure, but not always• Listed for less than what’s owed to the bank • Listed for less than what s owed to the bank. • Requires 1 - 2 banks’ approval (usually 2)• May have other liens (taxes utilities HOA) on • May have other liens (taxes, utilities, HOA) on

the home

• Hardship Package –paperwork between seller and their bank, getting pre-approval seller and their bank, getting pre approval for short sale before taking an offer

Redfin Can Help You With A Short Sale

• Tour short sales with RedfinIf b R dfi f• 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 rebate

What is a Bank-Owned Property? • Auction fails

B k k t t i b k • Bank owns, markets property via broker, MLSSt d d l b t• Standard sale but:• Verbal negotiations• Long response times• Repairs unlikelyp y• Legal addenda may require an attorney• Limited or no disclosures• Limited or no disclosures

• Also known as Real Estate Owned (REO)

Bank-Owned Quirkiness • Homes often winterized (can’t test

utilities)utilities)• Banks demand use of their own contracts• Often takes weeks to get signed contract• Bank can back out any time until they’ve y y

signed• Contract often requires early release of • Contract often requires early release of

earnest money

What About Auctions? • Cash buyers only

Dates are posted in small publications• Dates are posted in small publications• Dress warm, auctions are on the courthouse

stepssteps• Bidding starts at what the bank owes

Be prepared homes move fast• Be prepared, homes move fast• You can’t count on getting a good deal

Y ’ • You’re on your own

Cut to the Chase: Where’s the Best Deal?

• Bank-owned & short-sales myth –Always the best deal?• Always the best deal?• Banks are stingy• Not a fire sale• Not a fire sale

• Your best bet for a good deal:Sellers who own their home outright• Sellers who own their home outright

• Sellers who are relocating• Estate Sales• Short Sales with hardship packages

So What Now…• Make sure it’s the right time to buy

R h k i i di i• Research market pricing conditions• Get pre-approved & start shopping for

mortgages• Search for homes & get out on toursg• Find the right agent

Make an offer & close the deal• Make an offer & close the deal

Help Us Improve Our ClassPlease fill out the survey we’ll send

l i h h lid d k W ’dtomorrow along with the slide deck. We’dlove to get your feedback on how the classcould improve.

If you’d like to get in touch with an agent,j h i h just chat with us now or contact us onRedfin.com.

Appendix: pp•Glossary of common real estate terms•Important forms/contractsImportant forms/contracts•Mortgage Types & ProgramsFavorite Real Estate Resources•Favorite Real Estate Resources

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 g yownership. 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 –p y y3% 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!y

NWMLS Purchase & Sale Agreement

HUD Settlement Statement

Loans & ProgramsLoans & Programs

Types of Loans• Fixed-rate: 15 – 50 years, usually 30-year

• Simplest• The most popular

• Adjustable Rate MortgagesLow initial rate• Low initial rate

• Rate increase after 1, 3, 5, 7, 10 years• Then re-adjusts every 1 2 3 years• Then re adjusts every 1, 2, 3 years• Usually a standard rate + 2%• Lingo: 5/1 ARMg

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

FHA Loans• Insured by U.S. government

• Insurance 1.75% rolled into the loan• Subject to PMI 05%• Subject to PMI .05%• Available for fixed and ARM loans• Rate is usually lowerRate is usually lower

• Minimum down-payment: 3.5%...• FHA appraisal value• Purchase price (whichever is lower)

• No maximum income limits• Best choice for• Best choice for…

• Folks with a lower credit score• Small down-paymentp y• Self-employed

Conventional (conforming)T i l t 30 • Typical term: 30 years

• Lowest rates• 10-20% down payment• Credit score >720

Veteran’s Affairs Loans (VA Loans)• Fixed-rate: 10-30 year termsy• Open to veterans of active military service• Easy qualificationy q

Jumbo (non-conforming)• Loans up to $3 000 000• Loans up to $3,000,000• Higher rate

Favorite Real Estate Links

• Property InformationP t Sh k Z i d t titl hi t • PropertyShark: Zoning data, title history, permits, neighborhood data; navigation is clunkyclunky

Neighborhood Information• Neighborhood Information• WalkScore: Proximity to points of interest

b hb h d d hb d• Terabitz: Custom neighborhood dashboard, pages load slowly and U/I is awkward.T li H t M M di i • Trulia Heat Maps: Median prices across a county


• Listing Search• Redfin: MLS + FSBO + REO updated every 15 • Redfin: MLS + FSBO + REO, updated every 15

minutes, with DOM, price history, Zestimate• craigslist: Major FSBO source that Redfin can't 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 listingof the listing• RealtyTrac: Foreclosure market detail,

subscription required for full reportssubscription required for full reports

Favorite Real Estate Links• Pricing Data & Tools

• Case-Schiller Indices: Pricing trends by Case Schiller Indices: Pricing trends by metropolitan area

• HouseMath: Compares a housing investment p gto a stock market investment

• Altos Research: Median price trends and days p yon 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

Favorite Real Estate Links• Mortgage Calculators & Loan

InformationInformation• Bankrate: Many ads, but is great for

comparing local lenderscomparing local lenders• Zillow's Mortgage Marketplace Help Center:

Articles mortgage rates, types of mortgages, g g , yp g g ,credit reports, and a series of mortgage calculators

• The Mortgage Professor: Bare bones information on mortgages, definitions of

i d f common terms, myriad of mortgage calculators HUD FHA M t li bl l ti f

Favorite Real Estate Links• Loans for First-Time Home-Buyers

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

certain buyers

• Government SitesF d l T d C i i A ti l & l t • Federal Trade Commission: Articles & alerts for home-buyers.Dept of Justice: Role of competition in real • Dept. of Justice: Role of competition in real estate


• Remodeling & Renovations• DoItYourself com: A few ads but a useful • DoItYourself.com: A few ads, but a useful

clearinghouse of information on remodeling• National Association of Home Builders 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 inspectioninspection

Our Agents Here Tonightimg.cdn-redfin.com/static-images/images/kirkland-wa-home...Sammamish 49 $638...

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