A "Black Friday" Frenzy Type of REO Marketing Approach
Disposing of the growing inventory of REO properties held by the GSEs, lenders/servicers and investors is a daunting task that would test the creative marketing abilities of any organization. It still is anyone's guess how long it may take this inventory to clear.
A recent hypothesis regarding the inventory of one such entity predicted it would take up to 15 years to clear the backlog of REOs held as they appear to be growing at a more rapid pace than REOs disposed of. This is a call to action for those burdened with managing, marketing and selling these distressed portfolios.
Serious lessons could be learned from the retailing industry on how to initiate “Black Friday” like frenzy in the housing market.
Insights into the Black Friday phenomenon were recently presented by Jacob Jacoby, an expert on consumer behavior at New York University. “There's an awful lot of psychology going on here," Jacoby stated, "There's the notion of scarcity — when something's scarce it's more valued. And a resource that can be very scarce is time: If you don't get there in time, it's going to be gone."
Though there is not a shortage of REOs available there is a shortage of assertive marketing strategies to reach to the potential audience (general buying public) and offer them something that is a good deal, immediately habitable and available to them on a limited basis.
Homeownership is something that has lost its luster but if owning a home provides a more affordable solution to housing than renting then buying an REO property may be the next “big screen television for under $200.00” these potential buyers seek.
Assistance with closing costs and home warranty programs are a good start to incent buyers but they are not enough to get the wave rolling.
Ramping up marketing efforts to move REOs with an assertive campaign may require taking cues from the Black Friday marketing approach and creating a new appetite for REO homes to potential homebuyers just waiting in the wings.