REO INDUSTRY TRENDS AND CONCERNS
Categories: Competing REO listings in the Southern California Region
There is a current trend of reducing prices to "Beat Out" the competing REO Listings in the Southwest Riverside area of southern California. I can only assume that this is happening because it is the path of least resistance for both REO management and their listing agents.
For those of us who have the gauge of experience to use, we recall the REO market of the early to late 1990's. It was not uncommon (in fact prevalent in this Broker's circle) to do minor rehabs before placing the properties on the market.
Paint, flooring, appliances, fixtures and landscaping have always provided the best return on investment.
We all are aware of the sliding prices and THAT, of course is of major concern. The question is: "Can we rehab the property and get it on the market...BEFORE...the prices pass us by?"
The Consensus from the buying public, relating to REO's specifically, is that "bank repos" should be sold considerably cheaper than the retail listings. This is a valid belief, considering what we are seeing on the REO market today.
Dead lawns and "sold as is" posted all over the offerings...in the buyer's eye means additional "after close" expenses to them.
The question to all of my fellow REO Brokers and Managers is this: "What would happen if we completed a rehab in less than 30 days from assignment and placed the property on the market?" I remember having 15 day deadlines.
First impressions are the key to any good marketing campaign. Dead lawns and trash along with cobwebs, dirty sinks and toilets...are all dollar signs in the eyes of the prospective buyer.
Proposal: Let each REO broker use his/her own "field services" crew and get the property in "show ready" condition, BEFORE beginning the marketing. From what I have experienced, other than a very few exceptions, the 3rd party field services companies are so backlogged, that it is taking up to (I have one property as an example) 30 days to get a trash out! The norm is more like 2 weeks...but what if we could use our own crews, get the trash out and bids in for review within 1 week, get approval within a week and have rehabs completed and properties on the market in top shape in 30 days or less!
Having the freedom to use our own crews will generate this urgency on the part of the rehab teams...they know that meeting deadlines means more business! Is this the current thought of the 3rd party field services companies?
wow! As you said alan, we seem to be going down the path of least resistance. Trying to be TOO systemized with all of the workflow systems is great in concept, but in practical everyday functionality, it just isn't working. i think that some of the Field Services companies are growing so fast that they just can't keep up. I agree let us agents and brokers fullfill our responsibilities as "property managers" and just get the job done!
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Alan, you are right on the mark. Let's get back to the basics of marketing...the package... and the limited time "sale"!
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I could not agree more with this analysis. One thing that was not mentioned was the difference in the quality of work that is seen when dealing with national field service companies versus local preservation companies. There is a certain accountability present when the broker hand picks the preservation company and develops a personal relationship. My husband and I have owned and operated a preservation company for over ten years now in Southwest Florida and we have recently lost repair bids to companies that have performed such shoddy repairs through the national companies, that we were later hired directly by the broker to come in and "clean up" the mess that was made.
So, in addition to time being lost as the result of red tape created by the national service "middle man" quality is suffereing, which is giving solid, quality conscious businesses a bad name as well as making sales much more difficult for brokers. As in any transition from local to national (ie, Mom and Pop shops to Walmart) prices may decrease, such as the flat fee services offered by national service companies, but quality and personal relationships inherently suffer.
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I do as much as possible to make the REO look as good as it can. Trash out/clean outs, paint whatever I can afford out of my pocket. I can get on the market asap and at a good price!
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