Tuesday, May 04, 2010

Property preservation services are hot

ELGIN, IL - MAY 12:  A home is offered for sal...Image by Getty Images via Daylife
As the industry works through this downturn, bank owned real estate is piling up. As institutions work to get these properties on the market and sold without completely destroying neighborhoods by dumping too much inventory all at once, they must also work to keep these properties maintained and in good shape for a future sale. Banks, of course, are ill-equipped for this work and seek outside partners.

Seeing this opportunity, Retreat Capital Management Group, Lake Forest, Calif., an end-to-end provider of loss mitigation and portfolio management products and other services for lenders, servicers, asset managers and investors, recently began offering property preservation services to its clients.


“If often doesn’t take much for a vacant foreclosed property to fall into such disrepair that disposition becomes significantly impaired,” said Jim Orth, managing partner for Retreat Capital Management. “Our property preservation services give our lender clients a simple way to get and keep their REOs in top shape so they can shorten their time on the market and maximize their returns.”

Retreat Capital is offering its new services through a partnership with Elevate Property Services. Together, the firms will offer inspections, initial securing services (such as lock changes and removal of debris), code violation abatement, ongoing maintenance, and full renovation services (such as paint, flooring, and repairs). These services, which can be ordered individually or in customized packages, are standardized so lenders can be sure that each property will be handled in a uniform and consistent manner.

“We’re partners in optimizing outcome,” says Andrew Layland, vice president of Elevate Property Services. “We focus on maximizing the value of properties through high-quality maintenance services and standardized renovation, all provided in cost effective design packages derived from market experience.’

I asked Orth what was the first criteria a servicer or investor should consider when engaging a property preservation specialist? Here is what he told me:
"The first criteria a servicer should consider when choosing a property preservation specialist is their track record, particularly as it relates to consistent and timely communications. The servicer should almost never have to initiate a call about the status of a property. Although communication is primary and vital, quality, speed, and knowledge are also key considerations in choosing a property preservation company."

"The reason communication is so important is because the timeliness and accuracy of information can significantly impact the selling time and sales price of the property. A lot of property issues need to be addressed as soon as possible to prevent further loss, and servicers should have some indication that the property is being monitored on a regular basis. There's also the issue of the types of personnel the property preservation company has in the field, what reporting they provide, what communication systems they use, and how easy it is to obtain follow up information from the field when needed. Servicers should remember that a lot of property issues aren't cut-and-dried. The property preservation specialist will need to make judgment calls and prioritize issues -- so knowledge is a key factor. As for the issue of actual repair, renovation and upkeep, speed and quality are important for obvious reasons."

Can't argue with any of that.