Learn About Mortgage Paperwork

If you’re just starting to look for a home, you may be a little confused by the paperwork involved with getting a mortgage. Wouldn’t it be great if someone could give you a line-by-line explanation of the forms you’ll be dealing with during the home-buying process?

We thought so too. That’s why we’ve created annotated versions of some common mortgage documents. Specifically, we’ve marked up the Good Faith Estimate and HUD-1, as well as a standard loan application.

We’ve collected these documents here. Just pick the document you want to review and click the yellow info-points to bring up more information about every item.

These interactive loan documents are just a small part of our online Home Buying Guide. We’re adding several new sections to the guide in the next couple of weeks; we’ll let you know when it all goes live.

Redfin Service Changes in Marin County

We’re making a couple of changes to our Marin County service area to give you access to homes more quickly, and to offer a better selection of local agents who know your market. Starting Friday, May 6th, Redfin will be offering service in Marin County exclusively through our partner agent program.

Redfin partner agents work for other brokerages, but have been carefully chosen to uphold our standards of outstanding customer service, transparency, and better value. If you buy or sell a home with a Redfin partner, at closing he or she will provide you with a credit equal to 15% of the gross buyer’s-agent commission, usually worth $1,000 – $2,000.

We put our partner agent applicants through a rigorous approval process, and hold them to a high standard to ensure that you always get great service:

• Interviewed in-person by a Redfin market manager
• Completed at least 15 transactions in your area and 5 in the last 12 months
• Gave us email addresses to survey the clients they represented in the last 18 months
• Agreed to survey every new client and publish every review
• Paid based on customer satisfaction; removed from the program for bad reviews

If you’ve already started working with a Redfin agent to buy or sell a home, nothing will change — you’ll continue working with the same Redfin agent.

Meet our Marin County partner agents.

Agents: Interested in working as a Redfin partner? Learn more.

Redfin Releases Clustering in the Bay Area!

We just made a big upgrade to the Redfin search experience by clustering your map search results based on the number of homes for sale.

Get all the details on our main blog and let us know what you think!

California first-time home-buyer credit running low; New construction buyers have time

The CA Franchise Tax Board, who is responsible for administering the tax credits for first-time home-buyers and new construction buyers, estimates they have received approximately 17,860 applications as of yesterday, 6/22/2010. Those 17,860 applications account for 91% of the available credit for first-time home-buyers. The tax board is currently receiving around 2,500 applications per week for the first-time home-buyer credit and if that trend holds the credit is estimated to be completely allocated around the end of the month.

However, don’t lose hope and don’t panic! The tax board also admits that the estimated number is over-stated:

“The numbers are overstated as there will be duplicate, revised, and invalid applications included as we have not verified any of the applications. In addition, some purchases may be included twice if we have received both a reservation request and an application for the purchase.”

In reality, the credit will likely still be available for first-time home-buyers who close and apply in the first week or two of July, and maybe a little bit longer. The tax board is going to accept 28,000 applications for the credit, and at the current submission rate the tax board will stop accepting applications around the end of July. However there is no guarantee all applicants will receive the credit. The tax board will review the applications and allocate the credit to qualified applicants on a first-come, first-served basis. So if you’re still looking for the right place you may not have enough time to find a home, close your transaction, and still benefit from the California state first-time home-buyer tax credit (unless you end up buying new construction – see below). It’s definitely down to the wire, but you should still apply because you never know (the application form is only 2 pages).

If you’re already in escrow on a property, don’t panic. Proceed to your closing date in an orderly, single-file line. Here are a few tips:

• Fill out the application ahead of time, and fax it in to the number on the page linked above as soon as you close your escrow, but not before. Submissions prior to closing will not be processed.
• Make sure you are using the 2010 form. You can find the application on the Tax Board’s website under “Forms and Publications.”
• The tax board will use the time stamp from the faxed application to determine priority order and it literally may come down to missing it by minutes, so be prompt once you’ve closed. At 2,500 applications / week, the tax board is receiving an application every minute if you assume most everything comes in during business hours.

One other thing to note, if you’re trying to get the federal tax credit as well, the closing deadline is still June 30th, so make sure you, your lender, and your agent are in constant communication to carry the ball over the goal line.

If you’re hunting for new construction, whether you’re a first-timer or not, the new construction credit is only 41% allocated and will likely last until the end of September at the current application rate. Watch the tax board website for updates. They will post allocation updates every Friday morning so you can see how things are progressing and will post another update when they are no longer taking applications for the two credits.

Happy hunting.

Bay Area Market Report: Single-Family Home Prices Up 5.5% MoM in April

Redfin today released new data on the San Francisco Bay Area market showing that the median price of a Bay Area single-family home increased 5.5% from March to April. In Marin County, prices for single-family homes jumped 10% in one month, aided by lower interest rates for jumbo loans. Santa Clara County house prices increased 7% month over month and 33% year over year, driven by a shrinking supply of bank-owned properties. House prices in Alameda, San Francisco and San Mateo counties grew by between 1% and 2% month over month.

Sales Volume Declines, in Part Due to State Credit

Sales volume for single-family homes declined from March to April by 3.7% in the Bay Area. Alameda decreased 14%, San Francisco decreased 12%, while San Mateo increased 2%, Santa Clara increased 1% and Marin County increased by 12%.

Based on its own brokerage activity in April, Redfin expects May sales to increase in the Bay Area. June sales volume is still hard to forecast, but early-stage traffic and customer-activity metrics so far suggest that June will not be as strong as May.

According to Redfin agent Gina Pio Roda in San Francisco, this decline in the number of houses sold in April was driven at least in part by California buyers delaying closings to qualify for the state tax credit beginning on May 1.

“Of the eight deals we were working on at the end of April, four pushed to May, just so our clients could save another $10,000,” Ms. Pio Roda said. “The other challenge our buyers face is simply a lack of available inventory; every deal has four or five buyers, and sometimes goes for more than $50,000 over asking. If there were more homes to buy, there are certainly enough buyers to buy them.”

Redfin agents also noticed that tax incentives motivated buyers in the $500,000 – $600,000 range more than those buying homes above $1 million.

Bidding Wars Still Common

In Santa Clara, San Francisco and Alameda counties, the median sale price was higher than the original list price, indicating that bidding wars are still the norm. In Redfin’s own Bay Area business in April, offers on all property types under $500,000 faced competition 88% of the time; the trailing six-month average was 91%. Competition for mid-range and high-priced homes has actually increased. Offers over $500,000 faced competition 81% of the time in April, while the trailing six-month average was 72%. “We are increasingly see all-cash offers, or offers free of any contingencies, as sellers price their homes to sell,” said Redfin San Jose agent Brad Le.

On the Peninsula, competition is driving buyers from highly sought-after markets like Cupertino to more affordable areas like West San Jose. In San Francisco, the same dynamic is driving house-buyers to consider condos, where developers have become more aggressive deal-makers.

This competitive dynamic is partly driven by listing-agent tactics. “Listing agents are getting more aggressive about listing homes lower than their market value to gain a wave of immediate interest among prospective buyers,” said Redfin Fremont & South Bay agent Miawand Bayan. “Their hope is that the final sales price ends up being much higher than the original listing price. This tactic is most common among listing agents for bank-owned properties. Many bank asset managers are only releasing a few properties a month to keep prices as high as possible.”

Some of these tactics are turning away buyers, especially in the battle-scarred East Bay. “Buyers are getting frustrated losing out on foreclosed homes to all-cash investors,” said Redfin East Bay agent Charmaine Frank. “They’re now looking to traditional sales that are in better shape, even if they’re slightly overpriced.”

Spring-Time Inventory Increases Less Than Expected

In most Bay Area counties, the number of houses for sale rose, a seasonal increase aided by rising prices. But comparing April 2010 to April 2009 shows that inventory is in fact declining year over year.

Change in the # of Houses for Sale in Major Bay Area Counties in April 2010

Even as the amount of homes for sale has decreased because of limited bank-owned inventory, the quality of the inventory seems to have improved. “The quality of homes being listed is definitely increasing,” said Redfin agent Brad Le.

A complete April 2010 report for the Bay Area is available in this spreadsheet:
http://blog.redfin.com/sfbay/files/2010/05/Redfin-Bay-Area-Real-Estate-Market-Report-April-2010.xls

The report includes data on the number of homes for sale, for-sale prices, final prices and the number of homes sold; Redfin segments the data for houses and condos, with data on 11 counties and 50 cities.

About Redfin Real Estate Reports

Redfin’s real estate market reports draw data from more sources than any other, including the Multiple Listing Services (MLSs) that brokers use to take properties on and off the market in real time; for-sale-by-owner websites used to market properties unrepresented by brokers; government records that officially record any property sale; and government records on city and county borders. Because Redfin as a broker has access to MLS databases, it is able to identify market changes before sales are publicly recorded. Unlike other reports, Redfin also provides county- and city-level detail, disclosing the number of records available in each county or city.

No report based on tens of thousands of records, all captured by human beings, can eliminate every error, but Redfin has been careful to do so wherever reasonably possible. Reconciling multiple data sources allows Redfin to correct errors in each; sales aren’t double-counted, and records for the same property but with conflicting prices and square footages are flagged for further analysis. The reports analyze houses and condos separately, and exclude townhouses. More detail on Redfin’s reporting methodology is available here: http://www.redfin.com/about/monthly-report-methodology

The New California Home Buyer Tax Credit

We’ve received a lot of comments and questions about our post on the new California Home Buyer Tax Credit. We’ve updated the post to clarify a few points and answer our readers’ questions.

By now, I’m sure most of you have heard about the extension of California’s $10K home buyer tax credit, which Governor Schwarzenegger signed into law on March 25. I’ve had a couple clients ask me about this, so I thought I would pass some info on to our Sweet Digsters.

Here are the highlights:

The program:

• California plans to spend around $200 million dollars to fund this tax credit.
• This is twice as much funding as the state’s previous home buyer tax credit, which was rolled out in March 2009 and exhausted by July 2009.

Who is eligible?

• The home buyer must be a California taxpayer.
• There is no limit on the income of the home buyer.
• The program is available to both existing homeowners and first-time home buyers.
• Current homeowners are eligible only if they buy a newly-built home.
• First-time home buyers are eligible whether they buy a newly-built or existing home.
  • To be a first time home buyer, you cannot have owned a home anywhere in the world during the three years prior to buying your new home. If you’re married, that applies to your spouse as well.

How much is the credit worth?

• The tax credit is worth up to 5% of the purchase price of the home, or $10K, whichever is less.

How does the home buyer receive the tax credit?

• The payment is credited against the home buyer’s annual CA state income tax.
• The total payment will be spread evenly over three years.
• If you qualify for the full $10K, you’d get up to $3,333 per year – but only if you pay at least that much in annual CA state income tax.
  • If your CA state income tax is $4,000 a year, you get a $3,333 credit against that amount, effectively lowering your state income tax to $667.
  • If you owe less than $3,333 per year in CA state income tax, you’ll receive a tax credit only for that amount. The extra will not roll over into the following year’s payment.
  • The credit will begin to be applied to the tax year in which the home was purchased. If you buy your home in 2010, the tax credit will begin to be applied against your 2010 taxes.
  • You cannot apply the tax credit to your 2009 taxes, even if you file your 2009 taxes after you purchase your home.

What’s the deadline for claiming the credit?

• Buyers of existing homes must close escrow between May 1 and December 31, 2010.
  
• Buyers of new homes can either:
  • Close escrow between May 1 and December 31, 2010, or…
  • If they are unable to close escrows during that time, they can reserve a credit by entering into an enforceable contract between May 1 and December 31. They must then file the proper paperwork with the tax board and close escrow by August 1, 2011.

What types of homes are eligible?

• Eligible home types include:
  • Single family homes
  • Condominiums
  • Units in a cooperative project
  • House boats
  • Manufactured homes
  • Mobile homes
• There is no price limit on the home purchase.
• A home constructed by the taxpayer is not eligible, since the home has not been “purchased.”

Can the new CA tax credit be combined with Federal Home Buyer Tax Credit?

Yes, but the window is very small. You will need to have your contracts signed by April 30, and you must close escrow between May 1^st (when the California program begins) and June 30^th (when the Federal program ends). The two programs combined could be worth up to $18K in tax credits.

However, remember to think carefully before diving in on a home purchase, regardless of any available tax credits. Buying a home is a major financial commitment. Don’t be lured into making a rash decision because you’re worried about missing out on “free” money. Instead, make sure that buying a home – with or without tax credits – is in your best long-term interests.

You can read more about the new California home buyer tax credit here.

Here’s the full language of the bill, AB 183.

Here’s California’s official website on the new home buyer tax credit.

–Brad Le, Redfin agent serving Silicon Valley and San Jose

Palo Alto Home Buying Class Canceled Tonight

We need to cancel our Palo Alto home buying class tonight due to a power outage at the Garden Court Hotel.

We’ll try and reschedule the class for a new date and time in the next week or two. We’ll let you know once we do.

Thanks for your understanding. And if you need to get in touch with an agent before the next class just let us know.

Case-Shiller: Prices Still Increasing (at Slowing Rate)

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). Keep in mind that all of the charts in this series of posts are based on the seasonally-adjusted data provided by S&P. For the full source data behind this post, plus non-seasonally adjusted data, hit the S&P/Case-Shiller website (requires free registration). For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for the Bay Area* as of November:

Fourteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between October and November (three more than October). Detroit, Washington, Miami, Tampa, Chicago, and New York all marked seasonally-adjusted drops month-to-month.

Here’s a look at the Bay Area’s latest tiered data, back through 2000:

All three tiers increased in November, with the low tier again getting the biggest boost, up 1.8% in a month, and the middle tier not far behind, increasing 1.3%. The high tier was up 0.7%.

Here’s a look at the seasonally-adjusted month-to-month figures in Redfin’s markets, with annotations of the beginning and the original end of the homebuyer tax credit, so you can see that I’m not just making stuff up when I say that the effects of the stimulus are wearing off.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Here’s the flip side of the peak decline chart—a graph of just this year, indexed to January = 100%:

San Francisco, San Diego, and Los Angeles still appear to be on the rise, but elsewhere in the country, the summer 2009 price boost seems to have run out of steam.

*[Case-Shiller defines the San Francisco Bay Area as the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area, which includes all of the following counties: Alameda, Contra Costa, Marin, San Francisco, and San Mateo.]

Google Perspective Imagery Comes to Oakland

Last month Google launched “perspective imagery” San Jose and San Diego. Last Friday they announced that they added Oakland, Sacramento and Portland. This means for those of you looking for homes for sale in Oakland you can now see angled imagery shot from a low flying plane on Redfin:

Redfin Partner Agents Arrive in Morgan Hill, Gilroy & Hollister

Great news for folks in the Morgan Hill, Gilroy & Hollister areas: Redfin just partnered with three local agents to help you buy or sell homes. In areas beyond the reach of Redfin agents in the Bay Area, Redfin partners with experienced, local agents whom we have carefully chosen to uphold our standards of outstanding customer service, transparency, and better value.

If you buy or sell a home with a Redfin partner, at closing he or she will provide you with a credit equal to 15% of the gross buyer’s-agent commission, usually worth $1,000 – $2,000.

Check out our coverage area below.

Meet Our Morgan Hill, Gilroy & Hollister Agents

We put our partner agent applicants through the ringer to ensure that you’ll get great service:

• Interviewed in-person by a Redfin market manager
• Completed at least 15 transactions in your area and 5 in the last 12 months
• Gave us email addresses to survey the clients they represented in the last 18 months
• Agreed to survey every new client and publish every review
• Paid based on customer satisfaction; removed from the program for bad reviews

	Deborah Adamo Serving Santa Clara and San Benito County Homes Closed: 40+
	Loren Burks Serving Morgan Hill, Gilroy & Hollister Homes Closed: 50+
	Kasey Stewart Serving Morgan Hill, Gilroy & Hollister Homes Closed: 81+

Apply to be a Redfin Partner

Are you a real estate agent with a commitment to customer service and transparency? We’d love to meet you. Become a Redfin partner.