About the Speaker
» Aaron Lebovic is a third genera3on real estate investor. He graduated from the
University of Denver in March of 2002 with a BS in Business Administra3on and a Major in Finance and Marke3ng.
» Nego3ated, managed, and coordinated over 130 real estate transac3ons in 4 states,
totaling over $23 Million in value.
» Aaron is a licensed Colorado Real Estate Broker, holding his license at Your Castle Real
Estate, and was a Director at the Denver Metro Associa3on of Realtors ‘10-‐’12.
» Aaron is co-‐owner of www.RENAV.com, a source for short sale, foreclosure, and REO
About the Speaker (con3nued)
» Buy & Sell as-‐is
» Buy, Fix, & Sell
» Buy & hold
» Hard money lender
» Mul3ple forms of partnership
Money partner, working partner, half/half
Aaron Lebovic is not an AZorney, Mortgage Broker, or CPA. He is a
broker and investor, and this is all from an investor’s perspec3ve. No legal or financial advice is given or implied.
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Defini3ons
No?ce of Elec?on and Demand (NED):
WriZen no3ce that a lender is elec3ng to foreclose on its deed of trust and a demand that the public trustee sell the subject property at public sale. The lender starts the foreclosure process by filing this document with the public trustee who then records it with the county clerk and recorder.
Bank Bid:
Opening bid amount determined by the Lender as a minimum amount it would accept at sale
Cer?ficate of Purchase:
Recorded with the county clerk and recorder within 5 business days aeer the sale in the name of the winning bidder. It states the 3me and date of the sale, the name of the purchaser, and the purchase price. This is not a deed. It can be assigned.
Defini3ons
Lien Posi?on:
First in 3me (recorded), first in line. Example:
1st = January ‘09 -‐ $200,000 deed of trust
2nd = April ‘09 -‐ $10,000 deed of trust
3rd = May ‘10 -‐ $20,000 mechanics lien
Redemp?on:
A junior lien holder can protect its interest in the property by paying off the auc3on buyer and then owning the property (or paying any senior junior liens who redeemed).
Note – for junior lien holder redemp3on rights, most liens must be valid & recorded prior to the NED (there are some excep3ons).
This class only discusses the Colorado process and Public Trustee Foreclosures and NED’s filed AFTER 12/31/07
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Foreclosure Timeline for NED’s Filed AFTER
12/31/2007
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Pre-NED Lienor Redemption Period 1st Junior Lien 2nd Junior Lien 3rd Juninor Lien Public Trustee Sale NED Pre Foreclosure Default Public Trustee records NED
Notice of Intent to Cure Must be filed at least 15 days before Sale
Cure by noon day before sale
Certificate of Purchase issued w/in
5 days of sale
Lienor Intent to Redeem Must be filed within 8 business days after sale
Non-Agricultural Cure Period 110-125 days
Lender can expedite if abandoned
15-‐19 business days
5 business days
5 business days
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Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
How do I find out what is in foreclosure,
and what is going to auc3on?
»
New NED filings:
»
County Public Trustee Website
»
Data providers like Renav.com and Realtytrac
»
Foreclosure auc?on BIDS:
»
County Public Trustee Website
»
Renav.com
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Preparing to Bid
»
Foreclosure Auc3ons are held weekly
»
Lender submits bid by noon two business days before auc3on
»
Public Trustee posts bids online around 3pm, or service
providers will package informa3on in an easy format within 45
minutes.
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Bidding at the Foreclosure Auc3on
(Denver)
»
Opening bid amount can be what is owed or less.
»
Lender can retract a bid any3me before the auc3on.
»
Bring cashiers check payable to Denver County Public
Trustee for at least $1 more than opening bid.
»
Submit to Public Trustee a Registra3on to Bid by 9:30am
Bidding at the Foreclosure Auc3on
(Con3nued)
»
Trustee iden3fies the property
»
All bidders are confirmed to be present
»
The first bidder called opens the bidding at $1 over the
lenders bid
»
All registered bidders go around the room one by one
bidding each other up, un3l one at a 3me they drop out.
»
The highest increment that can be bid is $2,500 above the
Bidding at the Foreclosure Auc3on
(Con3nued)
»
Winning Bidder hands over check immediately.
»
If winning bidder doesn’t come in with balance of overbid
funds by 2pm, an e-‐mail will be sent to all other bidders by
around 3pm to bring in 100% funds of their highest bid, and
highest bidder to show up with check at 4:30pm wins the
property.
»
A cer3ficate of purchase is recorded in the winning bidders
Bidding at the Foreclosure Auc3on
(Con3nued)
»
If no other lien holders redeem, the Public Trustee issues as Confirma3on Deed aeer the redemp3on periods have expired.
»
Proceeds from sale are used to pay the foreclosing lender, junior liens and the homeowner.
» If a senior lien holder forecloses all junior lien holders’ interests (assuming
there is no overbid and/or no intent to redeem filed) are wiped off 3tle.
» If a junior lien forecloses, the winning bidder gets 3tle subject to the senior
lien holder’s interests.
Example:
1st Lien: $100,000
2nd Lien: $50,000
Real Estate Brokers
»
Brokers can make a commission by represen3ng
auc3on buyers:
»
Sec3on 7.2 of Buyer Agency Agreement requires
purchaser to pay a “SUCCESS FEE”
»
Brokers can enter into an agreement and invoice
buyers for compensa3on, just like a doctor or
aZorney would, and also CYA.
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Risks of Buying at the Auc3on
»
Sales are final.
»
Title problems
»
Evic3on -‐ Damage by occupants
»
No appraisal or any kind of inspec3ons
»
There might be an unpaid water bill, property taxes, city
viola3ons, most previous 6 months of HOA bills, and other local
(district) taxing authori3es which are statutory and super-‐liens
which the auc3on buyer MUST PAY.
Risks of Buying at the Auc3on
(Con3nued)
» You buy in “as-‐is” condi3on. There may be water damage, mold,
asbestos, meth (or other bio-‐hazard), structural damage, broken sewer line, house may have been guZed down to studs
» You may overpay
» Another lien holder may redeem you out, in which case you will get
paid interest at the note rate, and expenses
» The IRS tax lien recorded at least 30 days before the auc3on has a
special redemp3on period of up to 120 days aeer the auc3on. Other Federal Liens have a One Year redemp3on period.
» If a junior lienholder was not serviced with Foreclosure no3ce, they
are an “omiZed party” and have special redemp3on rights
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Protect Yourself
» Check the water bill, unpaid taxes, HOA balance, city liens
» Get an O&E and a Title Commitment
» Pull comparables from a trusted source
» Always drive by!
» You are bidding on the LEGAL DESCRIPTION IN THE DEED OF TRUST
BEING FORECLOSED, not the commonly known address!
» Watch out for divided duplexes and mul3-‐units
» Pay for your Title Insurance and Property Insurance IMMEDIATELY
aeer purchase at the auc3on
Protect Yourself
Built 1856
3,106sf Single Family Home
Tax value $399,800
Opening Bid: $285,000
Talking Points
1.
Defini3ons
2.
Timeline
3.
Resources
4.
Preparing to bid
5.
Bidding at the auc3on
6.
Risks of buying at the auc3on
7.
Ways to protect yourself
8.
Sta3s3cs
Sta3s3cs (Denver County)
» Scheduled for Denver County auc?on in 2012:
» 3,611 proper3es were scheduled (4,370 in ‘11)
» 638 of the above proper3es sale dates were pushed from ‘12
into ‘13
» 1,494 proper3es actually went to sale (2,171 in ‘11)
» 388 (26%) were sold to 3rd party bidders (74% of sales went
back to the bank in Denver. 82% in all 19 coun3es)
» 3rd Party Bids
» Of the 388 proper3es bought by 3rd par3es in ’12:
» $1-‐100,000 = 129 bids » $100,001 – 200,000 = 190 bids » $200,001 -‐ $300,000 = 46 bids » $300,001 -‐ $400,000 = 14 bids » $400,001 -‐ $500,000 = 5 bids » $500,001+ = 4 bids
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ways to legally get inside of proper3es before auc3on
Junior Lien holder Redemp3on's -‐ what, where, who, and how
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Upcoming Classes
March 24
TH, 2013
DETAILED FORECLOSURE CLASS!
Benefits:
• Learn about upcoming events and deals. • See interesting articles that matter to you!
• Learn about new strategy videos and website enhancements.
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You could win a $100 gie card to
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Thank You for AZending!