Purchasing your 1 st Home…

Purchasing your 1st Home…

What are your Expectations?

?

What we are Covering Today...

1. Understanding Today’s Market & Trends2. Should I buy or wait?3. Is There a Loan For Me?4. Salesperson vs. Consultant5. The Process of Purchasing a Home6. Conclusion

Understanding Today’s

Market & Trends

How is the Market?

Santa Clara County Current Inventory as of 2/11/2011

2,404 - Single Family Homes1,125 - Townhome/Condo’s

Bank Owned (REO) 192 - Single Family Homes (8%)

184 - Townhome/Condo Units (16%)

Short-Sales667 - Single Family Homes (28%)


Santa Clara County Current Inventory as of 3/2/2012

1484 - Single Family Homes411 - Townhome/Condo’s

Bank Owned (REO)120 - Single Family Homes (8%)


Short-Sales227 - Single Family Homes (15%)


Santa Clara County

0-3 Months – Sellers Market3-6 Months – Balanced Market6+ Months – Buyers Market

Criteria: 1. All Price Ranges 2. Single Family Homes3. Undefined Square Footage

June ‘08 Avg. Sale Price: $921,000

Current Avg. Sale Price: $648,000


June ‘08 Avg. Sale Price: $1,727,000

Current Avg. Sale Price: $1,211,000

Los Gatos



April ‘08 Avg. Sale Price: $604,000


Blossom Valley


Stockton: A Tale of Two CitiesForeclosure Mapping - Example

New Construction Existing Older Homes

Stockton: A Tale of Two CitiesForeclosure Mapping - Example


April ‘08 Avg. Sale Price: $678,000


Cambrian


Santa Clara CountyInventory – 9 Year Overview

Statewide Sales by Price Range

Should I buy or wait?

Return onInvestment

Dow S&P NASDAQBay Area

Real Estate

Interest Rate ComparisonYou live in the payment, not the

price

RentalsRising in Price

Statewide Median Price of Detached Homes

P: May-07$594,530

T: Feb-09$245,230

-59% frompeak

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2012 Forecast

Chris ThornbergFormer UCLA Economist & Founding

Principal of Beacon Economics

2007 – “What’s the point of buying today when you can buy it for 10% less in a year? For the life of me, I can’t figure out that logic.”

2012 – “Even if you’ve been thinking about buying a condo in Vegas or buying a condo in Miami, buy now. Now is a great time to buy a home”

John R. Talbott2003 2006

Warren Buffett

“It will be the best

opportunity in your

lifetime”

California Sales of Existing Homes and Median Price

SOURCE: California Association of REALTORS® Median Price in 2011 = 2002 Values

UNITS/MEDIAN PRICE $

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Sales of Existing Detached Homes Median Price

-61% -25%

-44%

UNITS/MEDIAN PRICE $

Forbes Magazine

• 30% of all homes are free and clear of any loan

• 96.7% of homes with a mortgage are not in foreclosure

• Housing affordability is the best it has been in 20 years…

Facts: What you won’t read in the

newspaper

Interest Rates Historic Data

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Consumer Confidence Index

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Share of First Time Homebuyers Remains High

California %

43%

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Multiple Offers in California

Equity Sales

REO Sales

Short Sales

Share of Total Sales 58.7% 19.7% 20.2%

Median Home Price $431,000 $240,000 $287,000

Square Footage 1,783 1,500 1,600

Price / SF $250 $112 $175

Sales-to-List Price Ratio 95.9% 98.0% 95.9%

% of Sales With Multiple Offers

35.2% 58.3% 57.5%

Avg. Number of Offers 3.0 3.0 3.6% of All Cash Sales 25.5% 34.0% 23.3%Days on MLS 67 50 141

Days in Escrow 35 35 45

1. Credit2. Ability to re-pay3. Debt-ratio4. Loan-to-value

(LTV/CLTV)5. Assets/Reserves

Five Points of Loan Qualification

Credit 2-Year History 4-6 Trade Lines (At least 24 months) Rental History (12-24 months) No Unresolved Derogatory Credit Mid-FICO Score of 640 or Better

(Ideal is 700-760) Consider Credit Repair/Build Services

Ability to re-pay 2-year history in the same type of

work Self-employed is acceptable with

further documentation such as business license and business tax returns

Gross Income is what your qualification is based on

Debt-ratio % of your income used to pay debt;

including: Proposed house payment

Taxes, Insurance Homeowner Association Dues (If

applicable) Mortgage Insurance (If applicable)

Monthly installment payments (Auto, student loans, etc.)

Monthly revolving payments (Credit cards) Does not include utilities, phone, food, living

expenses

Debt-ratioMonthly Debt

Payments ÷ Monthly GrossIncome = Debt Ratio

$3,500÷ $9,800= 36%

Lender’s Ideal Debt Ratio33% - 45%

or less

What’s YOUR Ideal Debt Ratio?

Loan-to-Value (LTV)

% of the home value being loaned against Down payment 20% down (80% LTV) or more is ideal Less than 20% requires

Private Mortgage Insurance (PMI) Must have a mid-FICO credit score of at

least 740 Appraisal determines value and condition

of property

Assets/Reserves Down Payment and Closing costs Reserve savings (equal to at least 3-6 mos.

of proposed house payments; P.I.T.I.) It must have at least 2-months of

“seasoning” 401-k/retirement accounts can be used for

reserve You must have the down payment and

closing costs in a liquid account Gift funds can be up to 3% of purchase

price; which requires the giver to write a “gift letter” stating it is a gift; not a loan

Salesperson vs.

Consultant

Salesperson Consultant

Deals/Recognition Relationships/Growth

Obsession24/7/365

Commitment to Boundaries

Personal and Professional

Sales-Focused Service-Focused

Salesperson“super star”

ConsultantSuper Servant

PersonaCompetition-Driven

Likeability

CharacterValue-CenteredTrustworthiness

Salesperson Consultant

Deals/Recognition RESULTS Relationships/Growth

Obsession24/7/365 ACTIONS

Commitment to Boundaries

Personal and Professional

Sales-Focused SKILLS Service-Focused

Salesperson“super star” IDENTITY

ConsultantSuper Servant

PersonaCompetition-Driven

Likeability

VALUES& BELIEFS

CharacterValue-CenteredTrustworthiness

A Consultant Does Three Things:1. Consult and Advise:

Asks profound, insightful questions, because the typical agent or lender might not ever take the risk of asking you those types of questions. A consultant will probe and inquire and discover what is really important to you!

Will appropriately define the problems and differentiate the essential objectives from less relevant concerns.

Anticipates likely obstacles to achieving your objectives and identify sensible means to circumvent them

A Consultant Does Three Things:2. Negotiate: A consultant:

Treats your money like it’s their own, because when it is time to save or make you money, they need to be like a "pit bull". Money is an emotional issue, representing yourself while purchasing a home can be compared to performing surgery on yourself – it’s not a great idea…

When dealing with your money, will critically examine the accuracy of the underlying assumptions. While negotiating for you, the consultant will skillfully articulate the strengths and weaknesses of each situation that may arise.

Recognizes the likely underlying agendas and motivations of individuals that are involved in the situations. Consultants also anticipate the likely emotional reactions of individuals and understand how to communicate and troubleshoot issues.

Will appropriately articulate the essential flaws in the arguments of others and reiterate the strengths of your position.

Recognizes when it's appropriate to resist the objection of others and remain committed to a sound course of action

A Consultant Does Three Things:3. Overseer:

Every transaction has 100 to 150 phone calls alone. Each one of them loaded with critical details. Every "i" must be dotted and every "t" must be crossed. There are 41 different people from 14 different industries that are involved during the each stage of your transaction.

Buying a home can be compared to flying an airplane across the country. The consultant is the pilot of your plane and you are the passenger – you can expect turbulence along the way. As your pilot, the consultant’s role is to oversee all of the small (but important) details. A good consultant will be able to see things from multiple perspectives and identify any likely unintended consequences of your decisions.

The Process ofPurchasing a Home

Banker & Realtor Selection Pre-Approval with a lender

a. Establish a pre-approval price range based on your payment comfort level

Setup a meeting with your Realtor to establish your home purchase requirements

Start viewing homes Upon selecting a home, you will make an offer Upon acceptance of a purchase contract, the

escrow period will begin and you will make a deposit to secure the home. The contract will have a timeline defined to conduct the necessary inspections, appraisal and finalize your loan and interest rate.


Upon the completion of your inspections, appraisal, full bank approval and your review of each report, you will decide if you are comfortable with the current contract terms. If something new was discovered, you can re-negotiate the contract until you feel completely comfortable with the agreement.

Once you are ready to proceed forward (with or without another negotiation), you will fully commit to the seller for the purchase of the property or elect to exit from the agreement.

Once you fully commit to the purchase, if you withdraw from the sale (for any reason) your deposit will be at risk and subject to negotiation between you and the seller based on your reason for contract termination.


Next, you will sign the loan documents at the title company and provide your down-payment.

Next, your sale will complete after a total time period of approximately 30-60 days depending on the loan type.

You receive the keys to your new home!


1. You will gather your required loan documentation2. Setup a meeting with a mortgage consultant to review

the various loan options3. The mortgage consultant will run your credit report4. A loan application is then completed and some

disclosures are signed5. Analysis will be run based on your financial profile6. A Good Faith Estimate and Truth-in-lending statement

will be provided to you outlining the estimated projected costs

7. We will conduct an appraisal to verify your purchase price against market conditions/comparable properties

8. Your loan is then submitted for final processing/review9. The lender approval will arrive with their conditions to

issue the loan; then your contingencies are removed10.Final documents are signed at the title company11.Your loan is wired/funded to the title/escrow office12.This process takes approximately 30-60 days

The MortgageProcess:

Dance steps for Fred Astaire by Hermes Pan, ChoreographerT he art is making it effortless...

Purchasing your 1 st Home…

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