Securing Properties: High-Tech Ways To Protect Homes
REO asset managers are working in an always evolving, high-tech world when it comes to property preservation. In order to keep real estate owned properties looking their best, many companies are using systems made up of keyless entrance doors as well as rear security doors and window protection, which add an extra level of protection never seen before.
These innovative designs not only enhance a property's appearance, but they also fit over exiting openings on windows and doors and use no bolts, which means no property damage. But even as REO specialists are using new, unique products to enhance a property's curb appeal, asset managers continue to use traditional approaches when securing a property and getting it in tip-top shape, which leads to a faster sale at the maximum price. Inspecting an REO property and keeping status reports must be done in the quickest amount of time possible, as well as, completing a full broker's price opinion with color photos, including estimates for repair work and valuations of an "as is" and a "repaired" sales scenario. It is crucial to be advised if there are any visible code violations of the property. The best agents and brokers conduct ongoing troubleshooting to resolve all property-related issues.
Securing methods for foreclosed properties often create more problems than they solve and their appearance may cause further vandalism, according to Linda Carter, national sales manager, REO division of Vacant Property Security, Inc. "Using boards or other materials to secure your vacant property may seem less expensive. But, boards offer virtually no property protection and pose safety hazards and costly liability risks," Ms. Carter said.
VPS offers a rental system that protects vacant foreclosed properties against the risk of theft, vandalism, and unauthorized occupation. The VPS solution is a system that consists of attractively designed modular steel-plated doors and perforated steel window screens that can be used for as short a time as a weekend or a months or years. Boards prohibit any natural light from entering the property. "Our product allows natural light and ventilation doesn't damage the interior or exterior." The VPS system is custom fitted externally over existing openings by VPS professionals who install and remove the system. The company offers both keyless and master locking doors for better access control.
The national company has offices in Baltimore, Chicago, Cleveland, Detroit, New Orleans, Newark, and Philadelphia. "Many communities are taking an aggressive, pro-active approach in dealing with vacant properties. If a vacant property is not secured, city governments may issue abatement violations. In some large cities such as Philadelphia, plywood boarding is prohibited in certain areas. The VPS system is aesthetically pleasing and does not negatively impact the neighborhood's image."
Empty Building Security, LLC, was created to alleviate the squatters, vandals, thugs and break-ins that occur when foreclosed properties, rehab properties that are secured with the old conventional method that just does not seem to work in inner city areas. The rental system company installs its metal doors in the building and maintains it using a non-duplicable key assuring hat only the people issued a key to have access to the building. EBS doors are secure at nine locations around the frame and fitted with a custom lock.
Their door is constructed of galvanized steel so it can stand all elements without rusting. Like a safe, the door has nine locking points that prohibits prying from any angle or direction. They also offer window locking and installation. They do not use screws, nails, nuts or bolts to secure the property.
Safety, security, and easy-access, that is ultimately what many asset managers are looking for when it comes to preserving properties.
While most REO specialists have the same basic concerns for preserving their assets, it's the approach each manager takes that is different. Speed-to-market is a very important factor when it comes to preserving properties, says Allan Martin, chief executive officer of Mortgage Contracting Services in Tampa, Fla. The national field service company inspects properties in default and preserves them on behalf of mortgage servicers.
The foreclosed property needs to be put into sales condition as soon as possible. There are two ways to approach this. One is through an inspection company like MCS to determine the date of vacancy. The second is to use a network of brokers.
"It can be a time saving approach to find a national vendor, a person who does the inspection and initial securement," said Mr. Martin. "The trend seems to be to use a national property preservation company to do this. It usually takes five days from when the order is placed, and the asset manager can bring the average down to two days. In this business, saving three days in a single step is huge." Many asset managers work with brokers to do the property inspection and securement. They will arrive at the property and change the locks at minimal. The property will be put into broom-swept condition and there will be removal of exterior and interior debris. The broker will be responsible for making sure the grass is cut and to maintain the property on behalf of the asset manager as well as make sure utilities are managed as quickly as possible.
The company supplies an immediate bid to have the proper work done when it can sometimes take extra steps for the broker to determine what it will cost first and time lags in the process. "If the asset manager doesn't have an efficient process and someone else does the trash out and the place is in horrible condition, there will be a third step for someone to come in and supply the bid," he said. "Speed is crucial. It is faster to have an inspection company do the initial securement and trash out. We do all of it at one for a flat rate. Turn on utilities in one step. It's a perfect scenario.”
Trailing expenses are managed through various marketing periods, which normally take five months on average. The servicer or asset manager has to complete all expenses and account for them in order to be reimbursed from the investor such as Freddie Mac, Fannie Mae, and VA. A single accounting problem can mean a loss of $2 million a year if an invoice for property preservation is not presented on time.
"A national vendor is effective at billing in a timely manner, taking care of invoices and bid formats. As a single vendor, we pay you for services billed with a 30-day sale for the REO property. Trailing expenses are a critical piece. It puts the responsibility on us to invoice in a timely manner." Efficient bidding practices are crucial, Mr. Martin said. "If there's anything I've learned is that pricing can be very inefficient in this business."