© 2009 SmartZip Confidential & Proprietary

New Tools for Real Estate Due Diligence

Tom Glassanos President, CEO SmartZip

2 © 2009 SmartZip Confidential & Proprietary

What is a Cynic?

A man who knows the price of everything and the value of nothing.

- Oscar Wilde Lady Windermere’s Fan

3 © 2009 SmartZip Confidential & Proprietary 3

Investing 101

• Diversify to manage risk• Sweat the fundamentals• Seek consistent top

performers within an asset class

Relative performance is what counts!

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A Top Performing Example – FAIRX*

Higher return in good years; Smaller loss in bad years

Consistently outperforms within its asset class

Morningstar Rating - *****

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A Poor Performing Example – Salinas, CA*

• Consistently underperforms the market (good & bad times)

• Total 18% decline over 10 years

CA Residential Real Estate Rank

Performance Since 2000 (5 year % total return)

Top 25%

Bottom 25%

2005 2009

87% - 56%

*Actual property picture not shown

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A Top Example – San Clemente, CA*

• Consistently out performs the market (good & bad times)

• Below average risk; 46% growth over 10 year period

CA Residential Real Estate Rank

Performance Since 2000 (% total return)

Top 25%

Bottom 25%

2005 2009

144% -39%

*Actual property picture not shown

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The Best and Worst over 20 Years*

Bottom QuartileTop Quartile

* Source: SmartZip

Inland lags

Micro Changes

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Financial Value of Real Estate

Conventional WisdomBuying real estate is safe

“There is only so much land”

The New RealityAll real estate purchases are

investments

20082007

So …. how does anyone know if a property is worth buying!!!

Fundamentals Matter!

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New Tool – SmartZip Financial Score™

• Risk adjusted return• Relative scale calculation• Quantitative & statistically relevant

Fundamental Analysis For Today’s Real Estate Market

UnderperformMarket Perform

Outperform

84Score

1000

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How Fundamental Analysis Compares?

Future Value

Net Expected Returns

Risk-Adjustment

Projected Appreciatio

n

Historical Risk/Variance

HistoricalPrice Index

Supply-Demand Modeling

MonthlyCash Flow

ExpensesRepairs, Tax, etc.

AutomatedValuation

Rental Pricing

SmartZipScore

TM

AutomatedValuation

Rental Pricing

Current Value

Fu

nd

amen

tal A

nal

ysis

11 © 2009 SmartZip Confidential & Proprietary 11

Summary

Investment value counts Fundamental analysis matters

New tools are becoming available

Why would anyone buy a house without knowing its investment

rating?