BLOG VIEW: Having more than 20 years of experience as a real estate agent and broker – 16 of which have been focused on the disposition of real estate owned (REO) properties – I have built long-standing relationships with countless REO brokers and agents across the country. Interaction with my peers at various industry-related conferences and seminars throughout the years, along with my personal experiences in the world of REO, allows me to be privy to some valuable information.
One recurring topic is the unfortunate animosity that too often exists between real estate professionals and representatives from the national property preservation and repair companies.
Back in the 1990s, when I first became involved in the REO arena, it was common practice by most lenders, servicers and the government-sponsored enterprises (GSEs) to require their listing agents to maintain REO properties following foreclosure. This included all phases of property preservation and repairs: occupancy checks, cash-for-keys negotiations, lock changes, board-ups, trash-outs, grass cuts, snow removal, winterizations, health and safety repairs, renovations, code violation remediation, utilities, homeowners association (HOA) fees, and more. It was a lot of work, and more often than not, the agents had to carry the cost of providing all of these services to their clients for 30, 60 and 90 days or longer. The listing agents had to have the financial reserves to cover these expenditures, and sometimes (too often, frankly), many agents were never reimbursed for anywhere from 10% to 20% of these expenses for a wide variety of reasons – most often because they submitted their invoices incorrectly or too late (or so they were told).
When we, the agents, had control of this process with the autonomy to choose our own contractors, it was a lot of extra work but we had complete control over the timing and quality of the various services provided. We had established relationships with the vendors that we used; they answered directly to us, and because they wanted more business from us, they could most always be relied upon to provide services in a timely manner at competitive prices.
With the large volume of REO inventories that so many lenders, servicers and investors have carried in recent years, it is completely understandable why most sign contracts with national field service companies. The accompanying accounting nightmare created from the tremendous influx of invoices coming from the listing agents is huge. National field service companies provide valuable services to their clients, and in most cases, the listing agents are more than happy to work in partnership with the field service companies.
However, issues do arise. These national firms with whom agents work can sometimes take too long to re-key/secure a property, are often delayed in performing trash-outs because it exceeds the cost allowed, and frequently do not maintain the properties up to our and our clients' standards. Any such delays or complications caused by sub-standard performance by field service providers inhibit our ability to offer the property for sale in its best possible condition and in a timely manner. Ultimately, it is our sign in the yard, and when a property is not being maintained, we are the ones who get the phone calls from the neighbors and HOAs. It makes it difficult to uphold our own high standards and negatively impacts our performance as reflected in our agent quality control ‘scorecards.’
Conversely, the superior performance of these companies can contribute to higher performance and positively impact our standing with our mutual clients. Time is money in REO, so timely disposition of assets is in the best interest of everyone who provides services to the lenders and servicers.
With so many changes taking place in the default servicing arena – and with heightened focus on compliance issues – one solution would be for lenders and servicers to move from a national to regional contracting model. This would, in my view, serve to tighten control and allow for more standardization of services. Rather than multiple vendors and sub-vendors receiving a small portion of the money allocated for maintenance and repairs on any given property, it would ensure less dilution of money and result in an overall higher quality of service.
Field service providers, whether local, regional or especially national, need to make sure they build and maintain solid relationships with listing agents. This can be complicated by the fact that the national firms have extensive vendor networks stretching far and wide. These vendors work for multiple providers and also as independent contractors on local jobs. If the big, nationwide field service firms move to a regional model for contracting, it would go a long way toward building the trust and support of the listing agents – who can either be a strong advocate or a formidable adversary.
Agents and field service companies need to remember that we are all on the same team, working toward the same goal.
Amy G. Dix is the principal broker/co-owner of The House Store in Knoxville, Tenn.
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