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Utilize An REO Servicing Business To Improve Property Quality

Published March 18, 2011 in Bank America Short Sales - 0 Comments

REO servicing handles the task of sustaining a property owned by a {mortgage} lender or a bank. For that is what REO is, Real Estate Owned. These are the holdings which have become the bank’s property after foreclosures, when the owners cannot handle their mortgage {payments}. These properties would have failed to draw any bid during an auction (if an auction did take place) and had a market value lower than the debt owed to the banking company. Such holdings will usually be in a bad shape due to low maintenance by the owner or tenant, which is why the lenders could benefit from such services.

Since an REO property is a nonperforming asset for the banking company, 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 services of REO servicing companies. The teams normally remove debris and waste in and around the property, execute janitorial services, board up the windowpanes (to keep the property safe from vandalism), and re-key and secure all entries. The services also include landscape gardening and improving the landscape or outdoors of the property to a decent condition. They also do the preparation for winter (winterization) if necessary.

Property preservation becomes difficult if the property is occupied. For that reason, eviction is offered as one of the services property preservation contractors. These are of course the basic services. Property preservation companies also provide repeating and periodic services such as review, sustenance, and at times, even cleansing.

The companies also prepare the properties before sale. This preparation may include lawn pruning, cleansing the home inside out, and inspecting and repairing plumbing, HVAC, electrical furnishing etc. Usually banks prefer to sell these houses in an “as-is” condition; but if they want to do repair or remodelling to increase the house’s equity or to keep a deal from falling through, property preservation contractors may also offer these services.

Recently, maybe due to the economic situation, the number of foreclosures and REO properties has been increasing. This has brought 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 developed, to be of any value in real estate. When rendered well, the preservation services often better the REO property’s standing in the {real estate} market.

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