how to buy bank owned homes

WHERE REAL ESTATE IS MOVING WHERE REAL ESTATE IS MOVING™!

HOW TO BUY BANK OWNED HOMES FEBRUARY 26, 2015

© 2014 Auc*on.com, LLC CONFIDENTIAL & PROPRIETARY – DO NOT FORWARD OR PUBLISH

© Auction.com | Confidential & Proprietary

What We’ll Cover Today

2 © 2014 Auc*on.com, LLC CONFIDENTIAL & PROPRIETARY – DO NOT FORWARD OR PUBLISH

•  Overview of Auction.com

•  Bank Owned Homes Overview

•  Online REO Auctions

•  How to Find the Right Property for You

•  Keys to Successful Bidding

•  Post Auction Process

•  Questions & Answers


Why Auction.com?

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Auction.com is the nation’s leading ballroom and online real estate marketplace

Powerful combination of real estate domain expertise, auction experience and marketplace technology

Privately held company with over 900 employees throughout the U.S. Headquartered in Irvine, CA and Silicon Valley with offices in New York, Washington D.C., Austin, Dallas, Miami, Atlanta, Denver

Over $29 billion of real estate sold since 2007.


REO Properties

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•  REO properties can be found through your local real estate agent or online via sites such as Auction.com, Zillow and Trulia

•  Online resources allow you to see a wide selection of REO homes in your chosen geographic location

•  A bank-owned or real estate owned (REO) property is one that has reverted to the mortgage lender after the home fails to sell in a foreclosure auction

•  Properties are sold “As-Is” with no warranties of any sort

What is an REO Property?

Where to Find REO Properties?


How to Buy a Property on Auction.com

Auction.com enables you to find, bid and buy properties online

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Bid Win Find

Search for properties that interest you. Save them as your favorites or sign up for alerts.

Once you find your favorite property, register for its auction, and get ready to bid.

If you are the winning bidder, you will be notified by the Contracting Department to submit your deposit and documents to begin the process.

If you have any questions, please use our community site community.auction.com/community/help-center


REO Online Auctions

What you should know:

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If you have any questions, please use our community site: community.auction.com/community/help-center

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Auctions are conducted weekdays online at Auction.com

Registration is required to bid. A deposit of $2,500 via a credit card hold will occur at time of registration

A 5% Buyer’s Premium (or $2,500, whichever is greater) may be added to the winning bid amount to establish the Total Purchase Price.

Some properties may be occupied and have no interior inspection. These are noted on Auction.com

Some properties are financeable. Buyers seeking financing are responsible for determining eligibility prior to bidding

Read and understand all due diligence documents and transaction details prior to the auction. Auction.com strongly encourages each bidder do their own due diligence


Auction Regions – Auctions End on Weekdays

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MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY

Southeast

Southwest

CA / NV

Northeast

Midwest

Pacific Northwest/Hawaii

Special Events*

Southeast

Southwest

CA / NV

Northeast

Midwest

Pacific Northwest/Hawaii


Occupied Vacant

Types of REO Properties

•  Institutional sellers motivated to move properties

•  Most of these properties are unavailable to buy anywhere else

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1 2 Newly Foreclosed 3

•  No longer occupied

•  Open house dates on Auction.com

•  Financeable, in many cases

•  Broker co-op may be available

•  In differing stages of eviction

•  No interior inspection

•  Not financeable, in most cases


•  Posted just days after foreclosure

•  Likely occupied

•  May require eviction

•  Interior Inspection Reports available on select properties

•  Not financeable, in most cases


•  On selected properties no buyers premium is charged


Search for properties right from the homepage

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Search Results Page – Initial View

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Search Results Page - Filters

11 © 2014 Auc*on.com, LLC CONFIDENTIAL & PROPRIETARY – DO NOT FORWARD OR PUBLISH


Property Details Page

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•  Financing is available on select REO properties, please see the Property Details Page for details. Look for the “Financing Available” banner

•  Buyers who plan on financing should get pre-qualified for a loan before the auction is scheduled.

•  Note: hard money loans or lines of credit may be acceptable on cash-only properties

•  If you are the winning bidder on a property, you will be required to submit your pre-qualification letter along with the other required documentation

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Financing on REO properties?


Create a Free Account

Auction.com has provided a variety of free tools for you to use to help you find your ideal property

•  Create a FREE account: Ability to save properties and set up alerts to be notified when similar properties become available; and updates on auctions in your areas of interest.

•  My Dashboard: Manage saved properties and alerts from your own customizable dashboard. You can also download an asset list to Excel

•  Email Notifications: Once you set up alerts, Auction.com will email to you listings that fit your criteria

•  Register for an Event: You can register for an event right from your dashboard

•  Monitor Bid Activity: Monitor your bid activity right from your dashboard

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Log In to your account from the homepage

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Email Notifications

•  Choose cities of interest and types of properties you’d like. Once criteria are set, Auction.com emails you listings that fit your criteria.

•  Visit www.auction.com/email to learn more.

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Benefits

Get newest listings from Auction.com emailed to you every day

Choose only the cities and property types that interest you

Be first to know when and where an auction in your area will take place

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My Dashboard

When you sign up for an account you can track your saved assets, register for an event, and monitor bid activity - all through your dashboard

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Keys to Successful Bidding

Save assets to your dashboard to make it easy to bid during the auction times.

Should you have an agent and a broker co-operation fee is offered on the property, you and your agent must each register for each asset to confirm your relationship.

Be prepared to provide sufficient Proof-of-Funds which demonstrates your liquidity and the ability to close the transaction for each asset of interest.

If you intend on vesting in a legal entity, you will need to register as that entity and provide entity information documents, good standing certificates, and authority resolutions for that entity.

Review all Due Diligence documents, the sample Purchase Agreement and the Auction terms and conditions prior to placing any bid on an asset. Auction.com strongly encourages each bidder do their own due diligence .

A property may be sold “Subject To” seller confirmation, which means the purchase could be rejected by the seller once all of the documentation is submitted.

Properties sold “Subject To” will have an Addendum

to the Purchase Agreement explaining what sold “subject to” seller acceptance means, how it affects the Earnest Money Deposit (“EMD”) in case of rejection, and the time frames for closing if accepted.

The terms of the Purchase Agreement are non-negotiable and this agreement must be executed within two (2) hours of receipt.

EMD must be sent to the escrow company specified on your EMD Wire Instructions. You must submit wire transfer confirmation or a copy of a cashier’s check (with mail receipt) as proof of EMD by the date and time specified by your Contract Specialist.

Closing of the transaction must be within thirty (30) days after the auction ends, or as specifically set forth in the Purchase Agreement.

If you are declared the winning bidder and fail to close the transaction, you may be subject to liquidated damages and/or specific performance requirements.

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Post Auction Process

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After you are declared the winning bidder on a property, you will receive a Winning Bidder confirmation e-mail with a link to execute the purchase agreement

•  Sign Purchase Agreement within 2 hours

•  Send EMD & Proof of Funds as specified in purchase documents

•  Submit Entity Docs (if applicable) within 2 hours

•  Once you sign the Purchase Agreement and provide all required documentation, Auction.com will submit your entire package to the seller

•  Escrow will be opened and closing date established

Submit Documents Seller Approval Escrow


Thank you!

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Submit Documents Seller Approval Escrow

Questions? Comments?

Please join us in the Auction.com Community for a Post webinar conversation. https://community.auction.com/welcome


Types of Deeds

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Quit Claim Deed

Special Warranty Deed

General Warranty Deed

•  Least protective deed for the buyer

•  Only conveys whatever rights or interests the grantor has in the property

•  Provides no warranties or covenants to the buyer

•  Not as protective for the buyer as general warranty deed

•  Conveys title and provides warranties only against defects arising during the period of the grantor’s ownership of the property.

•  Typically, deed includes two warranties:

»  Grantor warrants that they have received title

»  Grantor warrants, unless noted specifically in the deed, that the property was not encumbered during their period of ownership

•  Buyer is best protected by a General Warranty Deed

•  Grantor conveys property with certain covenants or warranties that expressly warrant the entire chain of title.

•  Covenant of Seisin – Seisin means possession and the grantor warrants that they own the property and have legal right to convey it

•  Covenant against encumbrances – Grantor warrants that the property is free of any liens or encumbrances unless they’re specifically stated in the deed

•  Covenant of quiet enjoyment – Buyer is guaranteed that the title will be good against third parties attempting to establish title to the property

•  Covenant of Further Assurance – Grantor promises, in order to make the title good, they will deliver any document or instrument necessary


Glossary of Key Terms

Bidder Deposit A designated amount of money that bidders are required to set aside prior to the auction, usually in the form of a credit card hold.

Buyer’s Premium For winning bidders only, this is a fee added to the Winning Bid Amount. The Buyer’s Premium amount is typically equal to 5% of the Winning Bid Amount (or $2,500 minimum, whichever is greater), and will be added to establish the Total Purchase Price.

Due Diligence A voluntary investigation by the potential buyer for a desired property.

Earnest Money Deposit (EMD)

A deposit on the property placed by the winning bidder to let the seller know that you are earnest (very serious) about buying the property.

Proof of Funds (POF) A statement from a financial institution dated within the last 60 days that demonstrates a person has the funds available to purchase.

Reserve Price A reserve price is typically the lowest price at which the seller is willing to sell the property.

Title Insurance A form of indemnity insurance which insures against financial loss from defects in title to real property.

Total Purchase Price The final amount of money due from the winning bidder. This amount is comprised of the winning bid amount plus a Buyer’s Premium (if applicable).

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Disclosure and Confiden0ality This document, including all aLachments, addenda, and exhibits provided in any form (together the “Confiden*al Documents”), is being furnished to the recipient (the “Recipient”) solely for the Recipient’s own limited use in considering whether to bid on or buy REO proper0es via Auc0on.com. They are for informa0onal purposes and are not for the purpose of providing legal advice. Auc0on.com, LLC (the “Company”) The Company has prepared these Confiden*al Documents, which contain brief, selected informa*on pertaining to the business and affairs of the Company. This informa*on does not purport to be all-‐inclusive nor does it purport to contain all the informa*on which the Recipient may desire. Neither the Company nor any of its respec*ve partners, officers, employees or agents make any representa*ons or warran*es, expressed or implied, as to the accuracy or completeness of these Confiden*al Documents or of its contents, and no legal liability is assumed or shall be implied with respect thereto. The Recipient agrees that (a) the Confiden*al Documents are confiden*al informa*on, except for such informa*on contained in these Confiden*al Documents that is a maLer of public record, (b) the Recipient, the Recipient’s employees, agents and consultants (collec*vely, the “Need to Know Par*es”) will hold and treat these Confiden*al Documents in the strictest of confidence, and the Recipient and the Need to Know Par*es will not, directly or indirectly, disclose or permit anyone else to disclose their contents to any other person, firm, or en*ty without the prior wriLen authoriza*on of the Company, and (c) the Recipient and the Need to Know Par*es will not use or permit to be used these Confiden*al Documents or its contents in any fashion or manner detrimental to the interest of the Company or for any purpose other than use in considering whether to conduct business with the Company. The Recipient and the Need to Know Par*es agree to keep these Confiden*al Documents and all confiden*al informa*on contained herein confiden*al indefinitely and further agree to use these Confiden*al Documents solely for the purpose set forth herein. © AUCTION.COM, LLC & AFFILIATES | CONFIDENTIAL AND PROPRIETARY | PHOTOCOPYING, DUPLICATION AND DISTRIBUTION ARE STRICTLY PROHIBITED. AUCTION.COM REAL ESTATE BROKER LICENSE NO.: AL 000094404-0 AK 2207 AR PB00075836 AZ Licensed as REDC CO586378000 CA 01093886 CO EL100028410 CT Scott Reid REB.0790370 DC LL98370409 DE RB-0020179 FL No. CQ1031187 GA H-61904 HI RB-20620 IA F05393000 ID LC38200 IN RC51100011 IL 478.012986 KS CO00001663 KY 75140 LA BROK.0995681059-CORP ME AC90602657 MD 652906 MA 7990 MI 6505355610 MN 40040398 MS 19897 MO 2008027754 MT RRE-BRO-LIC-32620 NE 20140595 NV B.1001472.CORP NH 068879 NJ 1110662 NM 07791 NY 10991207955 NC C20400 ND 2918 OH REC.2012003219 OK 157084 OR 201102068 PA RB067584 RI REC.0005008 SC 15690 SD 15963 TN 262679 TX 0580708 UT 7923219-CN00 VT 083.0078393-MAIN VA 0226020092 WA 9943 WI 936870-091 WV 004930-00 WY 189700. AUCTION FIRM LICENSE NO.: AL C17 GA AUC002976 IN AC 31100002 LA AB-328 MA 03058 MS 1203F NC 8781 ND Online Auction OH Auction Mediation Company PA AY002136 SC 3933 TN Online Auction VA 2908000750 WA 2370 WI Registered Firm 384-53 WV Online Auction PRINCIPAL AUCTIONEER MARK P. BULEZIUK LICENSE NO.: AL 5097 IN AU10900036 KY RP3242 LA 1733 ME AUC1527 MN Hennepin County 2711079 NH 5058 NC 8336 PA AU005557 RI 5163 TX 16063 VT 057.0068633 WI Registered Auctioneer 2585-52. WWW.AUCTION.COM 1 Mauchly, Irvine, CA 92618 (800) 499-6199.

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SOS ResiREO 2/26/15

© 2015 Auc*on.com, LLC CONFIDENTIAL & PROPRIETARY – DO NOT FORWARD OR PUBLISH

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