Historically low inventory and high demand has created a tight housing market, where homebuyers are moving quickly on available properties. In April 2017, the National Association of Realtors reported the national median Days on Market had dropped to an all-time low of 29 days. While this is an opportunity for REO managers and servicers to sell their inventory quickly, it also means they must be prepared to rapidly convert assets to be sales-ready.
Below is an essential checklist for servicers and REO managers to efficiently prepare assets for sale. By focusing on these key areas, assets will be well-positioned to compete in today’s hot market.
Inspect the property closely and schedule repairs that require a contractor. Be sure to also inspect any outbuildings, like a shed or detached garage, to ensure they are in good condition and are not a liability. Over time, building a relationship with a reliable contractor will save you time and get your properties on the market more efficiently.
Inspect all systems to ensure they are operating correctly. Check for proper airflow, ensure the hot and cold water are flowing from every tap and drains are clear, and doublecheck that all heating and cooling systems are working correctly. In humid areas, having a working air conditioner, dehumidifier or fan system with strong airflow to help prevent wall sweating and mold is essential. When checking the air systems, it is also a great time to replace air filters. While you are in the basement, be sure that any existing sump pumps are operating properly and that the area remains dry. Homebuyers are often leery of water stains, so be sure to check skylights for condensation and proper insulation.
Create curb appeal
First impressions matter, and curb appeal plays a vital role in forming the potential buyer’s opinion of a property. A 2016 report from the National Association of Realtors points to lawn care as the No. 1 project that appeals to buyers. This is good news, as basic lawn care is inexpensive and returns an estimated 303 percent on investment. In addition to the lawn, inspect the external areas of the property – pick up debris, trim low branches and pull weeds. Now is also the time to properly secure the yard, get the pool swim-ready, and clear gutters and downspouts, ensuring they are draining properly and distributing water away from the property.
Nearly every REO property requires significant cleaning, so don’t let this item fall off your checklist. It’s hard for buyers—especially first-time buyers—to look past cosmetics and see the potential in a property. If the property is dirty, potential buyers will have a hard time imagining themselves in the home. Give the property a thorough cleaning inside and out. Remove any debris, treat carpet stains, clean windows, and give the entire property a deep clean. While the cleaning crew is going room to room, have them make sure that every fixture has proper lighting to show off the newly-cleaned rooms.
Focus on the kitchen
It is essential to give the kitchen a little extra attention. The kitchen is the center of most homes and the area where significant value can be added. First, ensure all appliances are in working condition and remove those that are not working or can’t be quickly repaired. You don’t have to upgrade a kitchen for it to be ready for sale, but it should be thoroughly scrubbed: remove all debris, defrost the refrigerator and turn it to the warmest setting, clean all appliances inside and outside, and vacuum out all drawers.
Inspect for pests
Properties that sit empty over the winter months, or that fall into disrepair, are prime candidates for pest is¬sues. Thoroughly inspect the property for any existing insect or rodent issues, and address them immediately. Be sure to check for any new entry points and seal them off. Depending on the property and the location, it may be necessary to schedule recurring exterminator appointments to keep the house pest free while it is waiting for a buyer.
There are a few tasks you may need to consider, depending on the season and property location. This includes cutting the grass or cleaning the pool during the summer (or year-round if your property is in Florida), and winterizing the plumbing to prevent freeze damage in the winter or cold climates. Additionally, winter storms can cause both property damage and liability from slip-and-fall accidents. Most municipalities require the property owner to clear walks within 24-48 hours of a winter storm.
Once you’ve done the work, be ready to show it off! Take quality photos of the property and write a thorough and inviting description to accompany the listing. While great images can be taken with a cell phone these days, this may be a valuable opportunity to bring in some professional help. Having great photography that displays a home’s strongest assets will help to bring potential buyers out for a showing. Once those potential buyers are on site, your hard work to prepare the property will pay off.
As an REO manager, it’s essential to take advantage of this favorable market and differentiate yourself from competitors by positioning your properties for a quick sale. Small fixes can make a big difference, so it’s essential to view a property through the buyer’s eyes. The best way to consistently deliver for your clients is to be systematic in your approach, thorough in your execution, and selective with where you choose to invest money. The seller’s market won’t last forever, but REO managers can be optimally prepared by following the recommendations listed above.