Videos Create Efficiencies for Lenders and Homebuyers
Philip Wegener, president of Malibu, Calif.-based Central Mortgage who has been working in the REO business for 39 years, believes he discovered the missing link to help asset managers and brokers figure out how to price bank-owned properties correctly.
Instead of relying upon still photos and long-written reports from listing agents which Wegener said does not convey a coherent picture of a property, REO-TV is a new marketing tool that allows a prospective homebuyer to feel like they are on a “virtual tour” of a property even though they are only looking at a video on their computer screen.
“Video is the next evolutionary step of the home buying process,” Wegener told this publication. “Like the old saying, ‘A picture is worth a thousand words,' we feel that a video is worth a thousand pictures.”
The three- to five-minute high-quality videos that do not have any upload delays like a YouTube video are generally taken two times. The first video is shot when the bank acquires the property back while all the trash, graffiti damage, broken windows and overgrown weeds are still in place. The second video occurs after rehabilitation work is completed on the home so the REO asset can be put on the market to prospective buyers.
The broker, who walks the asset manager through the property pointing out any defects, problems, repairs or rehabilitation suggestions, narrates the videos.
Wegener said viewers have the ability to see whether there are vacant homes or gang activity near the property by watching the videos that they normally would not see on photos. He added that another advantage a video provides for viewers is that they get to hear the outside noise at the home to know if it is located near a major freeway or busy street or if there are high-powered lines buzzing at the site.
“Adverse conditions and factors like that do affect pricing,” Wegener said. “While an agent is always pushing for the lowest possible initial listing price, the banks and asset managers are pushing for the higher price. What typically happens is that you have a situation where the price reductions will occur over a period of time, but the banks and asset managers are chasing the market down.
“Whereas if the asset manager had gotten a good feel or a more comprehensive you are there picture of the property for the initial list price, they probably would have priced it more realistically to begin with, thereby saving time on market,” he added.
REO-TV allows potential buyers to take a virtual tour of a half a dozen or more bank-owned properties just by going to either a lender or broker's website rather than scheduling an appointment and viewing one home at a time. This feature saves both a listing agent and purchaser valuable time because the video can prequalify and narrow down who needs to see the property.
Wegener said the number of days a property remains on the market is key in helping a lender save thousands of dollars, and that all boils down to having more efficient pricing and better exposure to future homebuyers.
“This product is leaps and bounds above what they are doing now because you are limited to a tiny thumbnail showing the property, a bedroom and bathroom map count and then contact information for the listing broker,” Wegener told Mortgage Servicing News.
Wegener has been testing REO-TV since 2009 and he said there has been positive feedback for the product. Wegener said he wants to establish relationships with lenders and servicers as well as the government-sponsored enterprises to market their REO properties using REO-TV.
Freddie Mac, which has an REO inventory of approximately 75,000 homes, has been in discussion with REO-TV since last year to begin a pilot program to try the video system for its assets, Wegener said. Additionally, Wegener said he has had several conversations with Bank of America about adopting REO-TV to market their properties.
“Rather than reaching out to individual brokers who may have two or three REO listings at a time, we felt the best way to get this service at optimum levels was to have servicers and lenders adopt this for their entire REO portfolio,” Wegener said. “The idea of a motion video is just more captivating than scrolling through several still images. A video provides a much more comprehensive picture of what a property is really like in the context of the neighborhood that it is located in. Even in still photos, a not so great property can look pretty good in the context of a three-inch-by-five-inch image.”
According to Wegener, the best feature of this entire service is that could be structured as a zero net cost for the lender. The cost of the video would be added on as a service fee for closing that would allow the lenders to recoup the entire cost of doing that video, Wegener said.
“This is a win-win-win situation,” Wegener said. “This is a win for the asset managers and the banks. This is a win for the listing agents because it saves them time and money and optimizes prices resulting in quicker and more efficient sales. But beyond that, this adds a whole new dimension to REO marketing because now the public can see each and every property that the lender has on their website and can view it in a push of a button. What lender would not want to take the leadership stance to adopt technology like this?”