REO asset management handles the task of sustaining a property owned by a mortgage lender or a bank. For that is what REO stands for, Real Estate Owned. These are the properties which have come into the bank’s hands as a result of foreclosures, when the owners cannot make their mortgage payments. These holdings would have failed to attract any bid in the event of an auction (if an auction did take place) and had a market value less than the amount owed to the banking company. Such holdings will usually be in a poor condition due to lacking upkeep by the possessor or tenant, which is why the lenders would need such services.
Because an REO home is a nonperforming asset for the financial institution, they would want to sell it, so they would like for it to be in a healthy (even if not top) shape. This is why they take the help of REO asset management companies. The teams commonly remove debris and waste in and around the holding, perform janitorial services, board up the windowpanes (to keep the property protected from vandals), and re-key and secure all doors. The services also include landscaping and improving the landscape or outdoors of the holding to a decent state. They also do the planning for winter (winterization) if necessary.
Property preservation becomes challenging if the property is occupied. As a result, dispossession is provided as one of the services property preservation contractors. These are of course the initial services. Property preservation companies also provide repeated and regular services such as inspection, maintenance, and at times, even cleaning.
The firms also prepare the holdings before sale. This preparation may include lawn trimming, cleansing the house inside out, and scrutinizing and renovating plumbing, HVAC, electrical furnishing etc. Generally banks prefer to sell these houses in an “as-is” condition; but if they want to do renovate or remodeling to increase the home’s equity or to prevent a deal from falling through, property preservation contractors may also offer these services.
Presently, maybe due to the economic situation, the number of foreclosures and REO properties has been on the rise. This has got an increase in the requirement for REO property preservation, as banking companies and lenders end up with with more and more non-performing assets that need to be improved, to be of any value in real estate. When handled well, the preservation services often ameliorate the REO property’s standing in the real estate market.