RE/MAX Excalibur Realty
(480) 355-3552
k. JAY HAUGEN

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Jay Haugen REO SELLING EXPERT SINCE 1986
30 Day sale program available
100% Sale results for several consecutive years INTRODUCTION LETTER

THE WALL STREET JOURNAL reported on February 26, 2008 that according to FDIC spokesman Andrew Gray The Federal Deposit Insurance Corp. may bring back retirees from its resolutions and receiverships division to prepare for a potential increase in failed financial institutions. A number of retirees from the 1980's and early 1990's who dealt with the savings and loan crisis of the time will bring invaluable experience to the ranks of the FDIC in resolving institutional insolvency as foreclosures continue to rise. Jay Haugen worked with the FDIC during the last real estate adjustment and can assist your institution with his expertise in loss mitigation. Financial institutions who employed Mr. Haugen's service in the 80's and early 90's were able to reduce additional market decline exposure using his market direction analysis. With government regulators reviewing their oversight and receivership obligations institutions may find it helpful to work with an agent who has previous and broad REO experience in their scope of service capabilities.

Citigroup reported a $5.1 billion loss on hefty write-downs the first quarter of 2008. The new CEO Vikram Pandit said in a statement "We are taking the necessary steps to make Citi more efficient while fostering a culture of accountability and teamwork" With this Citigroup statement in mind close attention will be forthcomming for those in charge of managing losses in the realm of REO sales for the nations financial institutions. Selecting your team will be critical.

ATTENTION REO MANAGERS.....Your REO losses will grow substantially the longer it takes you to indentify the market value of your portfolio. Since both Fannie Mae and Freddie Mac have acknowledged declining market rules the following case study is important to read to gain a better understanding of the value of a Directional Price Evaluation and the high cost of Chasing The Market..

CASE STUDY (bank owned property)
We did not represent the financial institution in the marketing of this property but pulled the information from the MLS records. This case study details the high cost of not hiring an experienced REO agent to assist the manager in correctly identifying the market price needed to create an offer. You could say the growing commission cost in this case may exceed 40%. Since the press is intensely covering the foreclosure market the senior management of financial institutions, shareholders, depositors and certainly federal regulators are closely monitoring the performance of those involved in REO disposition. BPO's and appraisals provide incorrect pricing information if they do not take a "Directional Market Evaluation" approach to pricing. Strategic pricing decisions that increase market exposure limit the property exposure to additional losses from declining values.

The actions of the manager as detailed by the time line below support that market advice was not available or if available not employed in a timely manner to stop the growing loss and sell the property.
.
Date…………….Price……………Action
5-24-07………$152,859....Foreclosure date & amount posted (At 6.0% = $916.47 monthly P & I opportunity cost)
6-19-07............$170,000....Listed ($130,000 - $145,000 Estimated market value range when listed)
8-28-07............$167,000....Price Reduction
10-5-07............$163,000....Price Reduction
11-2-07............$159,900....Price Reduction
11-15-07..........$157,000....Price Reduction
12-17-07..........$149,900....Price Reduction
1-25-08............$144,900....Price Reduction
2-1-08..............$139,900....Price Reduction
2-26-08............$134,900....Price Reduction
3-23-08............$129,900....Price Reduction property still not sold due to pricing mistakes
4-9-08........$95,000-$110,000 Estimated market value range after 10 months of chasing the market down

Market value
Taking the lower end of the range of value for market value is the conservative approach to valuation because it includes the potential cost of condition issues and their impact to the sale price. With so many institutions selling property in “AS IS” condition the “unknown cost” of condition certainly impacts a buyer’s offer decision.

Action.................................................................Price.........Dollar Loss.......Percentage loss of Mortgage
Posted county record foreclosure amount............$152,859
Lower end of market value after 10 months.........$ 95,000
Potential market value loss after 10 months...........................$ 57,859.........................37.85%

Posted county record foreclosure amount...........$152,859
Lower end of market value at the time of listing...$130,000
Potential principle loss with 60 day sale................................$ 22,859.........................14.95%

COST OF CHASING THE MARKET..............................$ 35,000..........................22.90%

Cost of chasing the market with a vacant property: Some institutions may be obligated to recognize or continue paying interest charges on non performing loans. Considering these additional costs raises the loss as follows:

Opportunity cost (Interest income loss)
$152,859 @ 6.0% = .......................................$916.47 per month...............$916.47 per month
Market time...................................................... x 10 months........................x 2 months
Lost income......................................................$9,167.70............................$1,832.94
Dollar loss including interest expense................$67,626.70..........................$24,691.94
Percentage loss including interest expense..............44.24%...............................16.15%

Advertising is simply distributing a message, if the message does not generate results the message has to be changed. We have determined, based on our success rate of selling 100% of the properties we listed for several consecutive years, that buyer feedback by itself is an ineffective input to help a seller determine strategic actions to generate an offer. We pay close attention to the number of showings created from our advertising to determine if the pricing is creating buyer interest or resistance. We have found statistics in our data base that, on average, a property can generate an offer within 10 showings. Decision makers in charge of selling assets need the support of good information to reduce the institutions exposure to additional losses from strategic pricing mistakes. We wrote this case study in hopes that our clients could learn from the pricing mistakes of others and not pay the high cost of chasing the market. We are available to help you determine the right strategy for the sale of your property. In addition to the loss of market value by not pricing at market institutions have the additional cost of the money tied up in the property not creating interest income. At the time this property was on the market a 6.0% mortgage rate was available so the opportunity cost of this money sitting in the property is also considered as a cost of holding the property.
Call Jay Haugen at RE/MAX Excalibur Realty 480-355-3552

ARE YOU AN EARLY ADOPTER? In the late 80's and early 90's there were thousands of foreclosures in Arizona and the early adopter institutions made more money selling their REO than late adopters. Call Jay Haugen to discuss this strategy for loss mitigation. There is a small window of opportunity and those who investigate this option for their institutions will be glad they did before this opportunity evaporates. The last REO cycle late adopters lost millions more than early adopters and we are seeing this problem in the current REO disposition strategy applied in 2006, 2007 and now 2008. It is important to learn from the mistakes made during the last large foreclosure cycle and not repeat the procedures that created millions of dollars of additional losses. Our early adopter clients Client List were large, sophisticated entities that, in addition to using our disposition system and technology, provided considerable and candid feedback to help us refine our disposition system to be 100% effective over many years with an average market time of 16 days for those properties sold within 30 days.

HOW TO REDUCE YOUR REO LOSSES--CLICK HERE (methods used by HUD, FNMA, & Freddie Mac)

Please navigate this section by clicking on the links below:
Jay Haugen's Resume Testimonials Client List Zip Code Service Area Contact us AZ Market Update

SELL ALL YOUR REO AT AUCTION.....

One of the ways to resolve your REO inventory problem is to sell it all. Auction sales where pools of non performing loans are sold is used by both the private and government sectors to stop the high cost of holding and potential reserve issues required by F.D.I.C. and other regulatory bodies. If it would be of interest to you to sell off all or part of your REO holdings call Jay Haugen at 480-355-3552. Jay can provide auction resources for REO resolution but keep in mind this method is a commodity value system and may increase losses.

RETAIL REO SALES

Instead of auction or bulk sales you may prefer selling property individually to the retail market. Jay Haugen's disposition system has a proven track record and the key is identifying value. Hedge Funds difficulty in "Marking to Market" their mortgage backed securities is spilling into the REO market. The massive growth in REO inventory is an indicator that the BPO's are in error and relying on the "OLD SCHOOL" methods may put many firms in jeopardy as holding costs grow. A more reliable "directional market evaluation" is needed as was used in the late 80's and early 90's to resolve the thrift crisis of the time. Jay Haugen's Client List confirms the confidence many in the lending industry have in his evaluation, resolution and REO disposition abilities throughout Arizona. National contacts are also in development to manage large scale operations.

JAY HAUGEN SOLD EVERY REO PROPERTY HE LISTED FOR SEVERAL CONSECUTIVE YEARS.
OUTSOURCE YOUR REO TO AN AGENT WITH A PROVEN DISPOSSITION RECORD.

TRADITIONAL REO MARKETING    

You do not have the option of selecting which assets become non-performing, but you do have the option of selecting an agent with a proven system for selling REO’s. Jay Haugen's corporate sale service was established in 1986 with the quick sale of a property other agents had failed to sell. Even in the buyers market of the time some properties he listed sold for thousands more than appraisal. Corporate management was so impressed with the results that he was referred to over 80 other institutions to be part of their REO disposition team. The “6 Step Property Selling System” he developed has been effective selling condos to multi-acre estates and everything in between. Commercial real estate may be next in line as the subprime impact grows and Jay's systems can be effective for these assets as well.

Jay's service area grew as a result of this large client base of some of the largest institutions in America and currently covers Maricopa County, which has the largest population of all Arizona counties. After the Savings & Loan crises of the late 80’s and early 90’s the Arizona economy recovered. Since 1993 Arizona has had a healthy enough economy that REO departments did not need a large contingent of REO sales agents. As the market recovered Jay's sales efforts were focused on the broader market segment of owner occupied property.

Recent market shifts once again dictate promoting the “6 Step Property Selling System” to the lending industry. Arizona has experienced a loss of equity for many property owners and a high number of bankruptcies which have contributed to thousands of foreclosures. Access to an experienced REO expert is fast becoming a valuable commodity for REO departments with Arizona inventory. As you will see in review of Jay's resume and credentials he is well qualified to assist with your disposition needs and is available to discuss how you can reduce your losses through his asset improvement and sale services.

JAY HAUGEN'S RESUME

RE/MAX Excalibur Realty
8510 E. Shea Blvd #100 Scottsdale, AZ 85260
Office: 480-355-3500 Website www.haugenhomes.com

Key Strengths
• Proven track record as successful salesperson since 1982
• Client focused and detail oriented
• Superior knowledge of Arizona real estate market
• Effective communicator & strong technical knowledge
Major Accomplishments & Performance Records
• Developed “6 Step Home Selling System” which generated 100% success when employed
• Every home listed SOLD, for several consecutive years
• The system worked effectively in the following cities;
Apache Junction, Buckeye, Carefree, Chandler, Fountain Hills, Gilbert
Glendale, Mesa, Paradise Valley, Peoria, Phoenix, Scottsdale, Sun Lakes
Surprise, Tempe
• Many clients received an offer after an average of 8 showings
• Average market time was 16 days for the dozens of homes that sold within 30 days
• Over 100 clients received more than one offer on their property
• Multiple bids gave the seller an auction like environment from which to select high bidder and dozens of clients received full price or more for their property
• Wrote “Buying Book” to assist home buyers in reducing after purchase surprises
Awards & Work Experience
• Ranked in the top 6.0% of RE/MAX agents in the world.
• Designated as #3 salesperson for RE/MAX Southwest Region.(Region contained 4,632 agents at the time)
• Designated as #1 salesperson for RE/MAX Anasazi Realty in Tempe Arizona
• Hall of Fame
To become a member of the RE/MAX Hall of Fame, Jay Haugen has distinguished himself as one of the elite in the entire real estate industry. In his career with RE/MAX he has produced real estate sales exceeding those of entire sales staffs of other companies. This extraordinary professional achievement along with dedication and loyalty qualifies Jay Haugen for a place of honor in the RE/MAX Hall of Fame.
• RE/MAX Platinum, 100% Club, Executive and President awards for superior sales performance
• RE/MAX Golden Eagle Service Award for client satisfaction for several consecutive years
• Featured speaker & trainer on property valuation at National Association of REO Brokers (NAREOB) corporate sales conference
• Ranked in the top 1.4% of all Century 21 agents in Maricopa County
• Designated as #1 salesperson for Century 21 Plaza
(Century 21 Plaza was the number one office for Century 21 in the region at the time which encompassed 2 ½ states with 2,750 associates)
Affiliations & Education
• RE/MAX Excalibur Realty (2007 to Present)
• RE/MAX Anasazi Realty (1990 to 2007)
• Century 21 Plaza (1986 to 1990) & Century 21 Stalcup (1982 to 1986)
• National Association of Realtors (NAR)
• Arizona Association of Realtors (AAR)
• Arizona Regional Multiple Listing Service (MLS)
• Southeast Valley Regional Association of Realtors (SEVRAR)
• National Association of REO Brokers (NAREOB)
• Coursework for Certified Residential Specialist (CRS) & Graduate Realtors Institute (GRI)
• Real Estate License earned in 1980 while attending Arizona State University
• B.S. in Accounting from W. P. Carey School of Business, Arizona State University

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TESTIMONIALS

Our referral base has grown to almost 100 REO departments because we place client satisfaction on the top of our priority list. Our clients appreciation of our system is best supported in their own words:

“I wanted to let you know I have enjoyed working with you. I feel we've built a good working relationship. I look forward to continuing that relationship and our friendship. Thank you for your insight, knowledge and guidance. It’s always a pleasure to work with an individual who presents and handles himself professionally within our industry.”
Adam Lawrence GMAC/Residential Funding Corp.

“Your (sales) statistics are very impressive and certainly prove your superior knowledge of the Arizona real estate market and that you have what it takes to sell properties in a tough market. You are to be commended on your prompt friendly service and your willingness to help with any problem that may arise. Your market opinions are very thorough and really help to give insight into your local market and how a particular property should be most effectively marketed. Also, highly appreciated, is you concern for the seller at all times and our “pocketbook”. You have never given me any cause to wonder for whom you are really working.”
Paula Higgins Metmor Financial Inc.

“We have been very pleased with the services you have given us. I especially like the detailed information you have given us on our property. Since we are not close enough to the property to personally inspect it ourselves, the information you provide has been helpful to us in deciding on repairs, setting a list price, and making general marketing decisions. I also like the way you take a personal interest in our property. It helps us to feel at ease to know that you are doing everything possible to get our property sold quickly. I have enjoyed working with you , and I am looking forward to working with you in the future.”
Melanie Allen Community Federal

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CLIENT LIST
Jay Haugen has assisted the following companies with their valuation and disposition needs.

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ZIP CODE SERVICE AREA
Jay Haugen's geographical service area where he has closed sales is defined by zip code below.

These Zip Codes are found in the cities of:
Apache Junction, Buckeye, Carefree, Cave Creek, Chandler, Fountain Hills, Gilbert, Glendale, Mesa, Paradise Valley, Peoria, Phoenix, Scottsdale, Surprise, Tempe.

Please note that there are many planned communities in these cities such as Ahwatukee/Foothills, Boulders, DC Ranch, Desert Highlands, Desert Mountain, McDowell Mountain, Terravita, Troon and numerous others.

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CONTACT US, Select the method that works best for you. .

List a property for sale…
…..............Have a question about your transaction...
…..............................................................Just need some advice….

PHONE:

Office/Direct 480-355-3552 then dial 1

MAIL:

JAY HAUGEN
RE/MAX Excalibur Realty
8510 E. Shea Blvd. #100 Scottsdale, AZ 85260
Scottsdale, AZ 85260

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AZ Market Update
From time to time information that may impact your bottom line comes to our attention. We will update this page as we become aware of changes in law or procedure that you should know when selling property. The information provided here may help you reduce losses or limit liability for your company.

REO Disclosure Requirements
Courtesy of Chris Combs (March 2003 AZ Realtor Digest)
Real estate attorney with Combs Law Group in Phoenix, Arizona
Q: A bank is selling "real estate owned" (REO) property. The bank refuses to furnish a "Sellers Property Disclosure Statement" (SPDS). Is the bank required to furnish an SPDS?
A: No. Unlike most states Arizona does not have a staute requiring written disclosure by sellers. Therefore, the bank can require that, if the buyer wants to buy the property, the buyer agree to an amendment to the contract deleting the SPDS. Note: Under common law and the contract, Lines 280-282, the bank is still required to disclose any material and adverse facts related to the property.
JAY HAUGEN: Banks may sell property in "AS IS" condition but "common law" dictates that the sale be "Informed AS IS" since the bank is required to disclose what it knows. It is a good standard of practice to check the property files for any adverse and material information that should be disclosed to the buyer. Disclosure issues discovered within the banks REO files during any litigation after closing may create additional loss. In light of the economic risks of nondisclosure, filling out a Seller Property Disclosure Statement (SPDS) would not be an unreasonable company policy to limit the institutional liability for after sale claims.
CASE STUDY
On April 30, 2003 a local Arizona news channel (channel 3) announced that a family had purchased a HUD home and after closing learned that it was previously a meth lab. The reporter also announced that after the news staff visited with HUD they agreed to clean up the the property or buy it back. You probably do not want your company to be the subject of evening news.

AS IS vs. REPAIRED
The big question when a file lands on your desk is how do you minimize the loss. Consider the three different buyers for an REO property.

Investor/bulk sale: The goal is to make money on a quick turn around so they consider market value, cost of repairs, and desired profit margin for their efforts. Their offer will be thousands below market to meet this goal. Sometimes this is not the perfect buyer, and there are times when this is the perfect buyer for a no win, heavily damaged property.

Owner/Occupant Investor: The goal is to make money when the property is sold in the future. Perhaps they will make the repairs themselves which cuts out the profit margin of the contractors so they can pay you more for the property.

Owner/Occupant: No time to fix it up, they just want a quick clean move and they will pay close to fair market value or more for the opportunity. In our experience many buyers figure the expense of repair at three times the cost. If a buyer will pay $4,500 more for a property with a $1,500 paint job you have effectively lessened the loss for the company by improving the market appeal with a coat of paint.

The AS IS/REPAIR decision also depends on if the market favors sellers or buyers at the time of sale. Jay has sold REO property for $40,000 to $95,000 more than appraisal. Including a directional market study with a BPO’s helps determine market direction which the previous examples show are crucial to reducing REO losses. Jay looks forward to discussing your disposition goals should the need arise here in Arizona.

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