foreclosure 101: how to research, bid and buy with success
TRANSCRIPT
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
FORECLOSURE 101
HOW TO RESEARCH,BID&BUY WITH SUCCESS
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Presenters
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Mike JanstaAuction.com
Sr. Vice President of Marketing
Sarina KinderAuction.com
Vice President of Foreclosure Operations
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AUCTION.COM - PROFILE
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Auction.com isthenation’sleadingliveandonlinerealestatemarketplace
Powerfulcombinationofrealestateauctionexperienceandmarketplacetechnology
Privatelyheldcompanywithover1000employeesthroughouttheU.S.
Over$34billionofrealestatesoldsince2007
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WHAT IS A FORECLOSURE SALE?
AForeclosureSaleisthefinalstepintheforeclosureprocess.
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Thepropertiesforsaleatthesepubliceventsarecalledforeclosures,astheyarestillgoingthroughtheforeclosureprocessandhavenotyetbeenforeclosedupon.
Ifapropertyhasgonethroughtheforeclosureauctionbutwasnotsoldtoathirdparty,itisthensoldbacktothebankandbecomesabank-owned(alsoknownasRealEstateOwnedorREO)property.
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TYPES OF LIVE FORECLOSURE AUCTIONS BY STATE
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Judicial Non-Judicial
WhoConductstheAuction: Asheriff,judgeorcourtappointedpersonnel
WhereAreTheyHeld: Usuallyinsidethecourthouseoronthecourthousesteps(Insomestates,theauctionisconductedinfrontoftheproperty)
WhoConductstheAuction:Doesnotneedtobecourtappointedpersonnel(i.e.,Auction.com)
WhereAreTheyHeld: Eitheronthecourthousesteps,atthepropertyorinaballroom(publicspace)
For more details on the foreclosure auction laws and procedures by state visit the applicable state/county government websites or http://www.realtytrac.com/real-estate-guides/foreclosure-laws/
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POSTPONEMENTS AND CANCELLATIONS
Becausethesearepre-foreclosureproperties,there isahighrateofpostponementsandcancellations.
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Whydopropertiesgetpostponedorcancelled?
• Homeownerhasreachedouttothelender/banktotryandworkoutawayofkeepingthehome
• Filingerror
• DeclarationofBankruptcy
• SoldbythehomeownerasaShortSale
* Recommend considering at least 2 properties per auction to purchase since there is a high likelihood of postponement/cancellation
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BUYING FORECLOSURE PROPERTIES – HIGH RISK &HIGH REWARD
Benefits:
• Mostpropertiessellatbelowmarketvalue
» Cangetagreatdeal;sometimesupto30%belowmarketvalue!
• Greatinvestmentopportunities
» Startbuildingyourrealestateportfolio
» Greatpropertiesto“flip”
Risks:
• HiddenLiens
» Makesureyoudoyourhomework
• EvictionProcess
• BuyingSiteUnseen
Ifyoudoyourduediligence andresearch,youcanfindagreatpropertyattherightpricewiththepotentialtomaketopdollaronyourreturnoninvestment!
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WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
HOW TO RESEARCH PROPERTIESON AUCTION.COM
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FINDING YOUR PROPERTY ON AUCTION.COM
Auction.comhasover15,000foreclosurepropertiesacrosstheUS.
Greatbuyingopportunities! NoBuyer’sPremium!Andyoucanfindpropertiesthatarelistedatorbelowmarketvalue!
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1 Wheredoyoustart?1. VisitAuction.com
2. Searchforyourideal location:a) County,city,stateand/orzipcode
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SEARCH RESULTS PAGE
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2 Onceonthepropertylistings:1. Filterthelistingsbyassettype
a) Foreclosure/Trustee
2. Expandyourpropertyfiltersa) PropertyTypeb) Pricec) Size(SquareFootage)d) AuctionDatee) Features&more
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PROPERTY DETAIL PAGE
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• Access toplatmaps,foreclosure propertyinformation, titleinsurance,photos andmore
• Reviewimportantsaledocumentation such asT&C’sandSample TrusteeDeeds
• Links formorecountyinformation viavideos andFAQs
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• Informationondate,timeandlocationofthesales
• Badgesthatspecifyimportantdetails oftheproperty such asValueBasedBids,NoBuyer’s Premium,etc.
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FREEHOMEBUYER TOOLS
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• Foreclosure Cleared forSale
• PropertyAlertsand AuctionNotificationscustomizedtomeetyourcriteria
• ForeclosureDataFeed
• AccesstoDueDiligencedocumentsfrompropertydetailpages
• Abilitytosavepropertiesofinterest
• OnlineDashboard tomanageyoursavedassetsandsearches
FREETools
WhenyoucreateanaccountonAuction.com,youcanaccessseveralvaluabletools,absolutelyfree.
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PREFERENCE CENTER
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• MarketingandPromotionalEmailstostayinformedonpropertiesandeventsinyourarea
• SavedSearcheswillemailyouwhentherearenewpropertiesthatfityourcriteria
• ForeclosureDataFeed andClearedforSalenotificationsinyourstateofinterest.
• Andmuchmore!
Thepreferencecenterwillhelpyoumanageyouralertsandotherhomebuyertools.ThiscanbefoundinyourDashboardunderprofile.
WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
RESEARCH BEFORE YOU BUY
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PREPARING FOR THE AUCTION – DO YOUR DUE DILIGENCE!
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Whetheryou’regoingtooccupytheproperty,flipitorrentit,realestateisoneofthemostexpensiveinvestmentsyou’llevermake.Itmakessensetodoyourdiligence.Wewillgothrough5EasyStepstofollowbeforeyoubidontheproperty.Youcanseemoreat: www.auction.com/BeforeYouBuy
TitleReview
ConsidertheSurroundingProperties
ExamineRecentSalesActivityontheProperty
ReviewPriceTrends
LookattheUpsidePotential
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EasySteps
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DUE DILIGENCE:TITLE REVIEW
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1 IMPORTANT!
• Suggestpurchasingapreliminary titlereportonanyforeclosurepropertyyou’reinterestedinbuying.
• Lookforanysecondaryliensortaxliens.
• Makesuretherearen’tanyhiddenliensorencumbrancesonthepropertythatwillsurfacelater.
2 BOTTOMLINE!
• Ensureyouunderstandwhatyouarebuying,notjustthepropertybutanyoutstandingliensaswell.
• Investintitleinsurance– considertheriskofnothavingit!
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DUE DILIGENCE:SURROUNDING PROPERTIES &NEIGHBORHOOD
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• Don’tconfineyourinspectiontothestructureitself.Lookatthelandscaping.
• Doesthepropertybackupagainstabankoflandwithnovegetation?
• Willthedrainageworkintheeventofaheavystorm?
• Checkoutthesurroundingneighborhood.Itsconditioncanaffectpropertyvalue.
• Doyouseeprideofownershipforotherhomesinthearea?
• Doyouseeabandonedpropertiesinthearea?
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DUE DILIGENCE:RECENT SALES ACTIVITY &PRICING TRENDS
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• Whatisthehousingmarket likeinthatarea?
• Whatareotherpropertiesintheareasellingfor?
• Arethereotherpropertiesintheareainforeclosure?
• Howmanydayshavehomesstayedonthemarket?
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DUE DILIGENCE:UPSIDE POTENTIAL
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1 Isthepropertylocatednearthingsthatcouldbeappealingtopotentialbuyersandrenters?
• Agoodschool,atransportationhub?
• Anup&comingneighborhood?
2 Arenewbusinesses poppinguporbeinglaunched inthearea?
• Conversely,hastherebeenaplantshutdownrecently?
Thelocalchamberofcommercecansupplysomeofthisinformation;italsohelpstohavesomelocalconnections.
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DUE DILIGENCE BONUS:DO THE MATH!!!!
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Onceyouhavechosenaproperty,evaluatehowmuchyoucanaffordtospendonit.
Takeintoaccountanyoutstandingloans,liens, labor,rehab,inspections, permits,etc.toensurethatyouunderstandthemaximumamountthatwillgointothepurchasecostandthemaximumamountthatyoucanbidonaproperty.
Keepinmind,yourstrategymayalsoimpactyourprice
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WHERE REAL ESTATE IS MOVINGWHERE REAL ESTATE IS MOVING™
IT’S AUCTION DAY…
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AUCTION DAY CHECKLIST
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• Seeklegaladviceregardingquestionsaboutpropertytitles,bidders'rightsortheoverallforeclosureprocess
• Knowthedate,timeandlocationoftheevent
• ReadthroughtheapplicableTermsandConditions,availableonthePropertyDetailPage
• Bringadriver'slicense,passportorothergovernment-issuedI.D.
• Bringcertifiedfundsorcashinthefullamountyouarewillingtopayfortheproperty*
*Auction.comrecommendsbringingcashier ’schecksastheyallowforfasterprocessingpost-auction
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HOW TO BUY A PROPERTY AT A LIVE AUCTION – WITH AUCTION.COM
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Goingonce,Goingtwice,Sold!
1. Arriveearlytothevenue
2. Checktosee ifthepropertyispostponedorcancelled
3. Register/getabiddercardToregisteryoumayhavetoshowproofoffunds(cashier’schecks)&governmentissuedID
4. Whentheauctionstarts,listenforyourpropertytobecalledbytheauctioneer
5. Whenthebiddingstarts,justraiseyourhand/biddercardtomakeabidontheproperty
6. Ifyouarethehighestbidder,astaffmemberwillcomeovertoyouandyouwillberequiredtosubmitpayment
7. Youwillsigndocumentsconfirmingthesale&willreceiveareceiptofsale
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WHAT HAPPENS AFTER YOU PURCHASE APROPERTY AT THE AUCTION
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Congratulations!Youarethewinningbidder.Nowwhat?
• Presentappropriatefundsatthetimeofsale
• Receivethereceiptforfundspaid
• Thetrustee’sdeedwillbemailedtoyouin2-3weekspostauction*
*Notapplicabletoallstates.Also,inselectstatesthedeedmaynotbereceivedimmediatelyasthereareredemptionperiodsorothervariablefactorsthatmaydelaytheprocess.Pleasecheckwithlocalstatutestodeterminehowtoobtainyourdeed.
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POST AUCTION ACTIVITY – AGAME OF HURRY UP AND WAIT
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Beforeyoucanstartconstruction,moveinorrentouttheproperty;thereareseveralthingsthatneedtobecompleted.
Theanswerandtimeline foreachofthesemayvarybystateorcounty:
• HowdoIpaytheliensontheproperty?• Eviction– thiscouldbealongprocess• WhencanIgetkeystotheproperty?• Bringingthepropertyuptocode?• StartingConstruction– ifyouneedtoevictsomeonethiscould
bedelayed
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Whetheryouareafirsttimebuyeroraseasoned investor,weprovidethetoolstohelpyoumaximizeyourinvestmentopportunities.
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POST WEBINAR Q&A
TheanswerstothequestionssubmittedduringtheForeclosure101webinarwillbepostedonthededicated“FromtheRaiseofthePaddletotheDropoftheGavel”grouppagewithintheCommunity.Visitauction.com/webinarseries1
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ADDITIONAL QUESTIONS?
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