A Modern Day

1

• A Modern Day
• Chicken Little Tale
• Impact of the Softening Real Estate Market
• on Corporate Relocation Programs

2
Chicken Little Gets the Call

• Once upon a time there was a dear little
  Relocation Counselor named Chicken Little
• One morning as she was working in her cubicle,
  she received a call from a transferee who claimed
  that his home was not selling
• As Chicken Little talked to other relocation
  professionals, she realized that throughout the
  kingdom there were
• Decreasing traffic
• Decreasing home prices
• Increasing incentives
• Oh dear me! she cried, homes are not selling!
  I must go and tell the Queen, and quickly she
  headed off to share the news

3
Early Indicators

• Transferees Reaching Out for Additional
  Assistance in Selling Their Homes
• Significant Increases in Exception Requests for
  More Temporary Living, Duplicate Housing and
  Additional Household Goods Storage Days
• Days on Market (DOM) Was Rising
• In 2005 Our DOM Average Was 23 Days
• Through 3Q 2006 the Average Increased to 47 DOM
• And by 4Q 2006, the Average Hit 82 DOM

4
Increasing Days on Market

• By the Fall Of 2006, Over 66 BVO Active
  Homesales Were in Excess of 90 DOM
• 33 on the Market for over Half a Year
• Same Associates had Borrowed Millions in Equity
  Advances from The Bank
• Associates Threatening to Default on Equity
  Advances
• Loss On Sale Benefit Being Requested by
  Associates to Cover Loss On Equity

5
Is it a Loss or a Gain?

• May 2003 Joe Transferee Paid 500,000 for Las
  Vegas Home
• Home Mortgaged for 400,000
• May 2005 Joe Refinances
• Re-fi Appraisal 820,000
• Home Re-financed _at_ 90 LTV 738,000
• December 2006 Joe Asked to Relocate
• February 2007 Joe Gets Offer for 700,000
• Did Joe Gain 200,000 On The Sale Of His Home
  or --
• Did Joe Lose 38,000 On The Sale Of His Home?

6
Redesigned Relo Policy

• April 1 Converted from BVO to Delayed Appraisal
• Appraisals Ordered Up Front to Establish the
  Equity Advance Provide Basis for Marketing
  Guidelines
• Old Program, 105 List Cap Based on BMAs
• New Program, List Cap Based on Established Value
• Established Value (EV) 95 of Appraisal Average
• New List Cap at Day 60 and Every 30 Days
  Following
• At Day 120, Initial Appraisals Updated
• At Day 135, Buyout _at_ 95 of Updated Appraisals
  Avg. Presented
• Mandatory Marketing Period of 30 Days Prior to
  Acceptance Date
• Day 180 Buyout Offer Expires, Converts to
  Direct Reimbursement (No Gross-up)

7
Redesigned Relo Policy
8
Our Success to Date

• As Of April 1 50 over 120 DOM
• As Of September 1 Only 28 over 120 DOM
• Can We Attribute the Positive Changes to Our New
  Program Or Has There Been an Improvement in the
  Market?

9
Time for Change

• Coca-Cola Bottling Co. Consolidated
• 6,000 Employees
• 65 Locations in Portions of 11 States
• 50 to 75 moves annually
• Policy Prior to 2/1/07
• Internal Delayed Appraisal/Guaranteed Buyout
  after 60 Days
• External BVO with Appraisals
• Concerns
• Financial Family Hardship
• Frustrated Employees Managers
• Cost of Inventory Homes (Acquiring Approximately
  39 Annually)
• Change Driven by 2006 Expenses Budget Cuts for
  2007

10
Process and Policy

• Ensure that Candidates are Relocate-able
• Employee Relocation Self- Assessment Form
• Questionnaire Addresses the Following
  Considerations
• Housing
• Financial
• Personal/Family
• Posted on Our CAPS System (Consolidateds
  Application Posting System)
• Internal Employees Must Complete and Sign
  Acknowledgement Prior to Posting for a Position

11

Redesigned Relo Policy

• Reduced Temp Living (30 Day Lump Sum)
• BVO with Discounted Buyout (Share the Loss)
• Two BMAs (Employee Able to Select Agent)
• Appraisals After 60 Days
• Avg. Established Value (EV)
• Offers Within 97 of EV, Company Absorbs Loss
  (15,000)
• Sales Incentive 2 Incentive Before Appraisals
• 1 Incentive After Appraisals
• 120 Days Inspections
• 150 Days Buyout at 90 of EV

12
New Construction Competition

• Competing with New Construction?
• Match Builder Incentives
• Pay One Year HOA Dues
• Closing Cost Assistance
• Lender 2/1 Buy Down
• Example Match Builder Buy Down on 525,000 Home
• Cost of 9,318
• Enhance Commissions/Bonus
• Additional Assistance Available Only on an
  Exception Basis

13
Six Months Later.

• Market Changes Increased Days on Market (50
  120 Days) Combined with a Reduced Level of
  Assistance
• Increase in Exception Requests/Increased Cost to
  Company
• Higher Level of Frustration Employee, Family,
  Managers
• Greater Financial Hardship

14
New Considerations

• Listing Broker Selection
• Requested Agents Must Be Approved by Relocation
  Director
• Appraisals
• Ordered Up Front
• Increase Sales Incentive Bonus to 3
• Max. of 15,000 No Bonus if Company Incurring
  Loss
• Discounted Buyout
• Available After 90 Up to 120 Days
• 94 of Appraisal Average.
• If Employee Elects Not to Take Buyout Reverts
  to Direct Reimbursement of Closing Costs Subject
  to Applicable Taxes.

15
Past ExperienceFuture Options

• Reorganization Fall 2005
• 12 Home in Inventory
• 1 in Panama City
• BMA 320,000 listed 10/17/05 for 320,000
• 60 days Appraisals 290,000 289,000
• Purchased 12/30/05 - 289,500
• Repaired/Painted/Reduced/Reduced to 264,500
• Auction 8/1/06
• Sold 9/14/06 - 240,000
• I Wish We Had Contacted Williams Williams
  Earlier

16
Asset Management Challenges

• Organizations Are Changing Their Model of Real
  Estate Disposition to Mitigate Their Losses on
  These Non-earning Assets and Stem the
  Ever-increasing Costs of Vacant Properties
• Current Challenges
• Inability to Accurately Forecast Expenses
• Inability to Accurately Predict Market Value
• Potential Negative Financial and/or Liability
  Exposure
• Inability to Anticipate Changing Market Cycles
• Ever-increasing Market Supply
• Ever-increasing Days on Market

17
Auction Facts

• Extensive Growth for the Auction Industry in 2006
  with a 7.1 Increase over 2005 in Gross Revenue,
  Translating into 257.2 Billion in Total Revenue
  Generated (1)
• EBay's 2006 Gross Revenue 5.97 Billion (2)
• 16 Billion Gross Auction Revenue for Real Estate
  in 2006 (1)
• 12.5 Increase in 2006 Residential Real Estate
  Gross Auction Revenues (1)
• Auction of Real Property Fastest Growing Segment
  in Real Estate and Auction Industry

1.Morpace International Global Market Research
Firm on behalf of National Auctioneers
Association 2006 2. eBay, Inc. 2006 Financial
Results
18
Approach to Market

• Price Certain / Time Uncertain (Traditional Real
  Estate Sales)
• Price Uncertain/ Time Certain (Auction
  Marketing)
• In Theory, 2 Supports Goals of Guaranteed Offer
  Process in Addition to Inventory Disposition

19
What the NAR is saying.

• The real estate auction is a win-win proposition
  for everyone involved.

20
Benefits to the Seller

• Buyers Come Prepared to Buy
• Quick Disposal Reduces Long-term Carrying Costs,
  Including Taxes Maintenance
• Assurance that Property will be Sold at True
  Market Value
• Exposes the Property to a Large Number of
  Pre-qualified Prospects
• Accelerates the Sale
• Creates Competition among Buyers
• Requires Potential Buyers to Pre-qualify for
  Financing
• The Seller Knows Exactly When the Property will
  Sell
• Eliminates Numerous and Unscheduled Showings
• Takes the Seller Out of the Negotiation Process
• Ensures an Aggressive Marketing Program that
  Increases Interest and Visibility

21
Benefits to the Buyer

• Smart Investments Are Made as Properties Are
  Usually Purchased at Fair Market Value Through
  Competitive Bidding
• The Buyer Knows the Seller is Committed to Sell
• In Multi-property Auctions the Buyer Sees Many
  Offerings in the Same Place at the Same Time
• Buyers Determine the Purchase Price
• Auctions Eliminate Long Negotiation Periods
• Auctions Reduce Time to Purchase the Property
• Purchasing and Closing Dates are Known
• Buyers Know They are Competing Fairly and on the
  Same Terms as All Other Buyers
• Buyers Receive Comprehensive Information on
  Property Via Due Diligence Packet

22
Strategic Considerations

• Auction Companies - Local vs. National
• Buyers Premium vs. Seller Commission
• Absolute Sales vs. Seller Reserve
• Marketing Strength
• Types of Properties to Consider
• Unique Assets
• Difficult to Comp
• New Home Sales Problematic
• Understand Net Present Value and
• Market Value is What a Ready, Willing Able
  Buyer is Willing to Pay and What a Motivated
  Seller is Willing to Accept

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Decision Making Methodologies
Decisions Making Traditional Method
Decisions Making NPV Method
Property Enters Inventory
Property Enters Inventory
Property Valuation
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Property Valuation
Property Listed with Agent
Net Present Value
80 of Properties sell 79 of Last List
10 of properties sell within 60 days for 90 of
valuation or more
lt
60
Timeline in Days
Lowered Price

• Fewer DOM
• Volume Execution
• Simple Closing

40 of properties sell within 120 days for 70 of
valuation or more
120
Lowered Price
70 of properties sell within 180 days for 60 of
valuation or more
180
90 of properties sell within 240 days for 50 of
valuation or more
Lowered Price
240
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