Mistakes & Solutions
Whether in REO disposition or outsourcing environments, many asset management companies struggle with these issues and opportunities to improve.
You can't do everything yourself and retain efficiencies, according to C.J. Gehlke, president and cofounder of REO Nationwide. "You do have to stay involved to make sure it is done and done right. Even technology, which is not driven primarily by human effort, is dependant on oversight and monitoring, requiring human intervention from time to time."
Asset managers can hone their skills to better ensure success, minimizing complications down the line.
Sometimes a new asset has challenges and is going to be time consuming. How many times has an asset like this been in inventory months later?
Ms. Gehlke says to outsource it to a firm and an asset manager with at least 10 years experience and get it off your desk. "Let experts who specialize in this pay the attention to it that would take you away from your other responsibilities."
Do you know whom you are working with? Ms. Gehlke recommends that companies choose two outsource vendors carefully and make sure they know the person who is in charge of the assets on a daily basis. "Working with two reputable firms gives you greater control and intellectual capital to draw from and makes the best fit for you easy to recognize. Always give the new relationships at least six months to season before eliminating a vendor," she said.
"When making your selection, note that some companies may put the focus on ads and strong salespeople, but your success is primarily in the hands of your asset manager."
Evictions are costly and time-consuming, which is also costly. Cash for keys can get the occupants out. Has the asset manager authorized cash for keys and then been told the occupants are still in the property? Ms. Gehlke says the solution is to get a different address and mail the cash for keys money thereafter verifying the property is vacant and rekeyed.
No one can predict what will happen when a repair job gets underway. Did the asset manager fail to authorize repairs that could have brought the company a hefty return on their investment at closing? The solution, she says, is experience. "Experience solves most all of these issues. If any of this worries you, speak directly to the contractor and find two separate and objective professionals who give you pretty much the same answer before you decide what to believe."
Know your market and deliver the condition and pricing that will move the asset in a timely manner. "At the end of it all, the price is what a ready, willing and able buyer is willing to pay." Ms Gehlke says the solution can be underpricing, which is rare but most easily resolved. "Multiple offers can be encouraged by taking a few days to respond to an offer. If the property is genuinely underpriced, multiple offers will likely be generated giving you the opportunity to create a "bidding war" of sorts. Counter back "highest and best" instead of a price.
What happens when a manager isn't getting the performance he or she is entitled to from their agent and has another 60 days to go on the listing?
Never list for more than 90 days, says Ms. Gehlke. "Even with the best of agents, circumstances affecting their ability to do a good job for you can change. Better yet, outsource to a carefully selected outsource firm paying particular attention to the person you will work on a daily basis. That firm should allow you to list directly with them instead of directly with the agent."
Advertising within the REO industry is now filled with opportunities to reach those of you who have REO assets to list and each of these opportunities is extremely costly to the REO agents. Without those agents, is the asset manager getting the best offers? And is your list price correctly set?
The solution, Ms. Gehlke advises, is to ask them if they belong to the board of Realtors and the MLS system in which the property is located. "Then get the MLS printout and read it. Make sure it is from the actual board of Realtors where the property is located. Many agents now print out a 'listing' that is either generated from their own website, their own software or an out of area board of Realtors."
Does the asset manager know for certain he or she has addressed everything possible that will benefit the seller and still close the deal?
Ms. Gehlke says to check around. "It's another reason to benefit from the intellectual capital of experienced outsource companies. Gain the knowledge without paying additional staff. Ask how they address their counters specifically differentiating between the different forms and regulations."
Does the outsource company send usable reports with quality and accurate content and do you use the information in the reports every time you get one?
If the content is unusable, ask that it be improved or change the agent, she says. "If it is usable, respond. Give the relationship the best opportunity to work well for everyone involved. Offer clear benchmarks on what has to happen to get to the mutually agreed upon goals. Address the challenges and construct available solutions. Access-based spreadsheets can track most information you require on your asset including but not limited to assignment date to list date, rekey date, BPO as is, BPO repaired values, sale price to BPO value, days on the market, redemption periods, invoices and lots more."
E-mail mistakes are No. 1, says Ms. Gehlke. "Affect the most positive change avoiding this one mistake. We are all human, and most of the time we misread the intention of the e-mails we receive, most particularly the really important ones," she adds. "Marketing REO is in part an intuitive process. Intuition does not translate well across a two-dimensional communication medium. The e-mail medium is fast, but the solution is to pick up the phone when there is a problem.
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