The Revolution of Rehabs
United Field Services, Inc takes on "zombie" properties.
GLENDALE, Calif., January 25, 2018 (Newswire.com) - United Field Services is one of the most assorted and experienced providers of mortgage services. Its industry-leading solutions support the entire spectrum portfolio life cycle, from REO Property Preservation, construction to rental renovation. We strive to provide professional, high quality and accurate property preservation and REO services, for the default asset management and mortgage management industry. The services, we provide, allow us to be the one-stop resource for pre- and post-foreclosure management and field asset services.
In times of economic hardship, the number of homes subject to foreclosure increases significantly. Homeowners are unable to meet their mortgage obligations and banks seize the home to satisfy the debt owed. Homes that reach the real estate owned (REO) phase of foreclosure are often in the worst structural condition. Foreclosure is a complex process, so an REO property has likely been sitting empty for months or sometimes years with little maintenance or care. The consequences are things like mold buildup, broken pipes, and pests or bug infestations. Evicted homeowners might have sold valuable appliances or done deliberate damage to the home. Uninhabited homes also fall victim to squatters and trespassers, often leaving properties in more disarray.
These empty properties, sometimes referred to as “zombie” properties, are a nuisance to neighboring homeowners, and lower the value of the properties in the neighborhood. Up until now, banks and mortgage servicing companies were only performing property preservation services to maintain the property and to prevent code violations, but mostly properties were selling as-is.
However, we are now seeing a shift in the market. To recover their investment, banks are presenting the property for sale in marketable condition – or in industry terms, “conveyance condition”. Banks or investors will typically gather information from local real estate agents, comparable properties in the areas, and historical appraisal reports depicting changes over time. They can then decide to sell the property as-is, or explore the repair strategy. The bank or mortgage company calls upon contractors or national real estate companies, like United Field Services Inc, who then provide a comprehensive bid to renovate and/or rehab the property. These repairs can be minimal or extensive based on the condition of the property and the local real estate market.
Renovation or rehab projects can be as small as new paint and carpet, to extensive renovations involving roof replacement, drywall replacement, flooring replacement, bathroom updates, etc.
Choosing the right partner is key. Contractors/Vendors must be experienced in completing and managing the entire process; from market analysis, bid, obtaining permits, completion process, and final stage of quality controlling the quality of the work.
By identifying the exact project to boost the property, a significant portion of the expense can be passed on to future owners in the form of increased property values. The return on investment (ROI) of any given renovation project is a combination of local market characteristics, the condition of the residential real estate market when the property is sold, and the quality of the work performed. Historically and on average, certain projects, such as the addition of a wood deck, kitchen and bathroom upgrades and window replacement, have shown the greatest ROI irrespective of the property's location or the state of the residential property market.
Banks and mortgage servicing companies are taking advantage of the rise of home prices and the limited supply of available properties on the market. By investing funds to renovate a property to market condition, it results in higher asking price, and ultimately, net revenue on the asset. This is an additional benefit to neighborhoods as selling for a higher price benefits the neighbors, as opposed to selling a “zombie” property, which lowers value and comparable throughout the neighborhood.
The real estate industry is ever-changing. Where once properties were selling in as-is condition, they are now being renovated in turn-key style to be able to meet the demands of potential buyers. Investors and banks alike are now understanding the importance of bringing forth the necessary changes a property needs to sell while still securing and maximizing profits.
Source: United Field Services, Inc.