Technology Solutions for Monitoring and Marketing Properties

Cutting edge technology helps create accuracy and efficiency for asset managers, especially for those who are busy handling more transactions.

By Jennifer Harmon

The Internet has changed the REO disposition process, increasing the amount of properties that can be managed. That is why maintaining the right software is so important in the past foreclosure process in order to keep track of each property's status from the time it is listed until it is sold.

More and more homebuyers are looking to the Internet as their first point of contact, according to Duke Olrich, president of DRI Management Systems in Newport Beach, Calif. "With the help of unique web portals, the time it takes to monitor a foreclosed property after it moves into REO and to market that home is dramatically compressed via the Web."

The real estate broker is often hired electronically through online databases. The asset manager sends an email regarding the specific property, normally hiring three or four different brokers to handle properties in nearby areas to make sure one broker is not overused. Over the Web, these brokers are listed and graded on their performances. The asset manager will likely give more business to the broker who is most effective and efficient.

Brokers become responsible for recording evictions and deciding whether or not to rehab and list REOs. It is up to the broker if a price reduction is needed before taking offers on the home. This person must continue to watch the property up until closing status on the Internet.

With the help of technology, the broker keeps track of the physical attributes of the property. A property preservation company can be hired using the Internet to change the locks if necessary and to cut the grass in order to make the property more presentable. A field service company can provide an advantage for an asset management company, because it seriously reduces liability. "If the property is vacant, the broker will walk through and make a BPO as to what the value of the home will be. An assessment is sent to the asset manager in about three to five days and is used to come up with a marketing plan," said Mr. Olrich, whose company's loss mitigation tool provides an online analysis of foreclosure vs. other user-defined loss mitigation approaches.

A marketing plan for a vacant property is determined when the asset manager runs the property through the economic model and determines if the property is a gain or loss. Will they sell it repaired or as-is? According to Mr. Olrich, most REOs are sold as-s and 30% are repaired before they are sold. "The industry is talking more about something in-between. Adding some paint to the outside of the home, adding carpet and drapes."

Brokers, attorneys, and servicers are notified of any activity for the property via the Web portal. Each step is documented for any work that has been completed.

"Marketing is very methodical for REO properties. Through the real estate broker portal, it is determined if these properties need rehab to sell them. When the job is done, an officer is typed in for these properties sold as-is and may offer the borrower a certain amount of money to paint the house, put in drapes, fix the roof, and maybe do some landscaping. Electronically, the broker gets an officer and shows the servicer," added Mr. Olrich. "Everything is negotiable."

In-house technology helps create accuracy and efficiency for asset managers, especially for those who are busier handling more transactions now. It allows brokers and managers to multitask and keep the process flowing.

Cutting edge technology enables asset managers who partner with banks to outsource large number of properties more effectively, according to Robert Klein, chief executive officer, Safeguard Properties. That is why in order to compete most efficiently in today's business environment, many organizations utilize third parties to outsource "non" core business activities, thereby allowing management to focus on the core activities that drive the growth and revenue of an organization. "Outsourcing can eliminate the necessity for investing in hiring, training and providing space and benefits for new employees," he said.

A national vendor can be effective at billing in a timely manner, taking care of invoices and bid formats. As a single vendor, companies pay clients for services billed with a 30-day sale for the REO property. Trailing expenses are a critical piece. It puts the responsibility on the vendor to invoice in a timely manner. Multiple contractor bids are critical to have for any assignment of more than $2,000.

Many companies are running on a "pre-fix" method where they offer a flat price per property that includes a range of servicing for a particular price. Others do it "a la carte" where a line of invoice is detailed for every step taken to preserve the property.

When it comes to selecting an outsource vendor, it is important to know that the vendor has longevity in the industry and will be there for the client when times get tough. Compare your internal staff structure vs. the outsource company. Study personnel costs and payroll as well as benefits and facility costs. Use the best tools for measuring, and reporting vendor performance and in-house performance.

Vendors are graded on meeting specific measurements as defined by servicers who create a report card and vendors are paid based on their performance.

When dealing with property preservation and trash outs, servicers and asset managers need to make clear what is expected in terms of selling turn-time and billing, as well as what they see as possible defects for field service companies to maintain the REO. "The vendor shouldn't wait to find out at the very end. They should be measured and scored a percentage based on how they perform and take corrective action. Evaluate the vendor to make sure it is fit for coping with these properties."

Mold and other environmental issues can also effect the timeframe and holding cost management of an REO property, which leads some companies to no remediate the home but simply disclose the problem and sell it "as is."