With REO inventories increasing, there is a growing responsibility for brokers and field service providers to represent “an emotional interest” in the properties while appealing to potential buyers and their five senses during the marketing process.
It’s difficult for a large institution like a bank to have “that personal connection” with these homes, according to Todd Luckey, AVP of operations at Mortgage Contracting Services, a property preservation company based in Tampa, Fla.
“Obviously, there is no longer a home-owner involved,” he told National Mortgage News. “We are all used to walking into the traditional REO house. In the changing times and higher-end properties that are starting to come on to the market, we really think the attention to detail is going to give it a 'lift’ to that potential buyer.”
These properties need to appeal to the most potential buyers that are out there. The first and most important step is to stabilize and neutralize the bank-owned home. This includes painting the wall a neutral beige color.
Kitchen counters should be clean so visitors are not afraid to touch them. A vase with fresh flowers on the table or a plant on the kitchen counter adds a simple element of warmth.
“Visitors should feel as if it’s OK to put their hands on the counter. When you go through a property, you want to slow down rather than pick up speed because you want to get out of there,” Luckey said.
Second, what can the asset manager do to “bring it back” or bring new life to the home? Staging and other rehabbing techniques are proving to be worth the investment of time and resources to help move REOs off lenders’ and servicers’ books, according to MCS.
Put fake logs inside the fireplace or decorate the space above the mantel with candles or a simple yet decorative piece of art.
“Help the buyer envision what that place could be like—to envision that it’s a home. If you put flowers around the mailbox in the front yard, it conjures up an emotion. Pay attention to something as simple as the flowerbeds. If there are leaves inside, it tells you one thing. If you take them out, it tells you another,” he said.
Beyond what is visually pleasing, the smells and sounds and other intangibles of a home are important.
“The smell of chocolate chip cookies baking. It makes one feel something. On a conscious and subconscious level, it makes it more pleasing,” Luckey said.
“If the smell is not pleasant there are reasons for it. Get to the source. It may be the wet carpet. Get it out of there. The fresh paint, aside from what it does visually, is like the ‘whole new car syndrome.’ You smell it and it feels different.”
If the broker and field service provider have done the initial legwork in terms of “taking care of what’s wrong with the house,” then the scented candles or air fresheners are not “trying to cover something up.” In terms of staging, the agent or property preservation firm should not place an item in the home “to mask something that is damaged.”
These small adjustments are not a high cost for servicers, he said. A lot of preservation officers are going back to the servicers and asking for “what they need.”
“We are being very specific and precise in terms of the scope of work, costs, and time frame to get it done. It helps to make the argument palpable to the servicer,” Luckey said.
Outside, in the front or back yards, take the shrubs down below the windows. Don’t just cut the grass but remember to take the clippings away. This will make sure that grass is not tracked throughout the house during open houses.
When it’s winter and time for snow, make sure the home is accessible. Spend time shoveling snow and removing ice so that visitors can use the walkway that leads from the sidewalk to the front door.
Caroline Reaves, chief executive officer of MCS, says on higher-end properties or homes with odd floor plans, staging helps.
“People don’t realize what to do with a little room,” she told NMN. “If there is one off to the side, people often wonder, 'What in the world would I do with it?’ It is amazing the difference staging can make when you have a small room staged how you want it to be so people understand what the purpose of the room is. Usually if there is a small space, there is a purpose for it.”
Luckey recently walked through an REO property where classical music was playing in the background. The sound was “instantly calming,” he said.
While not everyone may like Mozart, Luckey believes many associate him with “refinement, calmness, and peace.”
More REO properties can be sold if field service companies and brokers conjure up the “sense that this is a place of tranquility away from rushing around and the rest of the world. Music appeals to that.”
