1. Slide 1 of 34 Distressed Properties & Short Sales Tami Ritoch Redfin North Seattle Team October 24, 2013 Seattle, WA @Redfin Facebook.com/Redfin

2. Slide 2 of 34 Working with Redfin

3. Slide 3 of 34 A Little Bit About Who We Are Redfin has refunded more than $100 Million to customers and reaches $8 Billion in home sales; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● Right home for the right price  No obligation  Commission credit

4. Slide 4 of 34 Distressed Properties & Short Sales

5. Slide 5 of 34 Geographical Comparison – King County

6. Slide 6 of 34 Types of Distressed Homes ● Short Sales ► AKA: Pre-foreclosure ► Potential vs. Approved Short Sale ● Foreclosures (Post-County Foreclosure) ► AKA: Bank-owned, REO, lender owned ► Fannie, Freddie, Ginnie & HUD ● Auctions ● Estate Sales

7. Slide 7 of 34 Short Sales ● How does a short sale work? ● Parties involved (see chart) ● Qualifying the short sale ● Short sale approval process (see chart) ● Timelines (Contingencies and Closing) ● False contracts ● Approval notice

8. Slide 8 of 34 The Life of a Short Sale ● Searching for short sales ● Market statistics ● Negotiations and research ● Sit and wait, finally explained ● Getting a loan ● Home inspections and warranties ● Getting a clean title

9. Slide 9 of 34 Foreclosure Activity and 30-Year Interest Rate – King County

10. Slide 10 of 34 Foreclosure Activity by Month – King County

11. Slide 11 of 34 Short Sale Tid Bits ● The rumor mill (old market) ● Types of loans and liens ► Get the Prelim! (and read the fine print) ● 15% Redfin Rebate on Short Sales ● Questions to ask before writing an offer

12. Slide 12 of 34 Picking Your Team ● Qualifying Your Realtor ► Experience, education, designations ► What does it mean to you? ● Qualifying Your Lender ► Rates are just the beginning ► New lender pay compensation ● Partner Lenders ► A hidden value

13. Slide 13 of 34 Moving Forward… ● Writing the Offer ► Tips, tricks, pointers ► Low and Low Method ● You're Under Contract, Now What? ► Sit and wait… and wait… and wait… ► Do an Early Home Inspection ► Revisit the home, occasionally ● Approval Process ► What’s involved? ► Approval Letters and Transferability ● What If… ► House gets trashed ► Critical items are missing to qualify for the loan ► What leverage do you have?

14. Slide 14 of 34 Sit and Wait, Finally Explained! ● The short sale approval process (chart) ● Parties involved (chart) ● Types of liens ● Getting updates ► Frequency and quality ● Approval Notice

15. Slide 15 of 34 Short Sale Parties Short Sale Title Escrow Officer Escrow Assistant Sellers Attorney Buyers Home Inspectors Appraiser Buyer’s Lender Underwriter Investor Guidelines Bank #1 Customer Care Center Short Sale Department BPO Appraiser Negotiator Litigation Mortgage Insurer Mortgage Investor #1 Mortgage Investor #2 Closing Department Bank #2 Customer Care Center Short Sale Department BPO Appraiser Negotiator Litigation Mortgage Insurer Mortgage Investor #1 Mortgage Investor #2 Closing Department

16. Slide 16 of 34 Short Sale Approval Process

17. Slide 17 of 34 Bank-Owned Homes ● Contracts ● Addendums ● Timelines ● Home condition ● Listing agents ● Tenants

18. Slide 18 of 34 Why Buy a Bank-Owned? ● Best price ● Not afraid of a remodel ● Comfortable with contracts ● Financially strong with liquid capital

19. Slide 19 of 34 Buying at Auction ● County Auctions (steps) ● Organized Auctions ● Who buys homes at auction? ● What types of homes are at auction? ● What are the prices like? ● What is involved with buying at auction? ● What is an absolute auction? ● Due Diligence prior to auction ● Tip - Write down your Max-bid

20. Slide 20 of 34 Searching for Distressed Homes

21. Slide 21 of 34 Finding Distressed Homes ● Redfin ► Shadow Inventory ► Foreclosures (bank owned) ► Short Sales ● Government Sites ► Homepath.com and Homesteps.com ► Hudhomestore.com ► IRS IRS ● Look down the street

22. Slide 22 of 34 The Offer & The Deal

23. Slide 23 of 34 Negotiation Strategies - SS ● Recognize pricing strategy ● Ask lots of questions ● New listing ● Old listing ● Pre-approved short sale ● Team up with listing agent ● Meet the sellers ● Be realistic

24. Slide 24 of 34 Negotiation Strategies - REO ● Round 1 ► New listing ► 30 days old ► Price Reductions ► Keep it clean ● Round 2 ► Repairs  Health and safety  Lender Required Repairs

25. Slide 25 of 34 Title and Closing ● Title Search ► Chain of title ► Last minute liens ► Title insurance  Lender’s Policy  Owner’s Policy ● Closing Paperwork ● Possession and keys

26. Slide 26 of 34 Financing

27. Slide 27 of 34 Financing Options ● Conventional loans ► 30 year, 15 year, 5/1 ARM, etc. ● FHA ► FHA health and safety requirements ► Flipping guidelines ● Rehab loans (203k) ● Homepath loans

28. Slide 28 of 34 Financing Steps ● Preapproval ● Select property ► What is condition of property? ► Flipping guidelines ● When to lock in the rate ► Short sale ► Bank owned ● Mortgage process

29. Slide 29 of 34 Where Are Rates Headed?

30. Slide 30 of 34 Home Inspections

31. Slide 31 of 34 Home Inspections ● What to look for yourself ● Missing components ► Big ticket items (AC, cabinets, appliances) ► Deliberate damage & safety (electrical) ● Severe neglect ● What an inspector won’t find and won’t test ► Hidden defects ► Untested system defects

32. Slide 32 of 34 Home Inspections ● Most common concerns ► Roof ► Structural ► Plumbing ► Electrical ► HVAC ► Deferred Maintenance ► Termites ► Mold ► Cosmetic

33. Slide 33 of 34 Home Warranties ● What is a home warranty? ● What is covered? ● What is excluded from coverage? ● Benefits of a home warranty ● Managing the risk of unexpected repairs ● As-is, what can be covered? ● Pre-existing conditions ► Known ► Unknown ● Home inspections and warranty coverage

34. Slide 34 of 34 Thanks for Coming! Questions? Get in touch: Tami Ritochtami.ritoch@redfin.comtami.ritoch@redfin.com Check out our upcoming classes: http://www.redfin.com/events