When an agent receives a property assignment, rarely will they find a property in turn-key condition. There is a lot of hard work involved in getting an REO property ready for the market especially when repairs are highly recommended. Agents are relied upon to present their opinion on how to best market the property. Establishing the marketing strategy is crucial in fulfilling Fannie Mae's goal of stabilizing neighborhoods and providing homeownership to owner occupants.
On one of Fannie Mae's southern California property inspections, we visited several properties and noticed that those assigned to Misael Vasquez, an agent with Century 21 Allstars, in Pico Rivera, California, stood out from the rest. First, we noticed his properties had impressive curb appeal: the exterior landscaping was well maintained, grass was neatly mowed, shrubs were trimmed, mulch covered the flower beds and there were no weeds growing between the lines of the concrete driveways. The interior of the properties didn't disappoint either. They showcased the quality of all the repairs; new flooring, interior paint, matching fixtures and updated kitchens.
Fannie Mae asked Misael to share a few of the best practices that he adheres to when working with our assets. Misael graciously shared with us his involvement in the repair process and how he was able to accomplish remarkable improvements on his properties.
Fannie Mae (FM): Can you tell me the steps you take in recommending an 'as-repaired' strategy?
|This property professionally repaired by Economu Construction and listed by Misael Vasquez.|
Misael: The first thing that I do is to research the past 12 months listing history of the property. This helps me understand the marketing history and the condition the property was in prior to becoming a REO. In addition to researching comparables in the area, I also survey other properties in the same neighborhood bought by investors to find out the type of materials used when they repaired their properties. This gives me an idea of what is currently being offered in our market, which helps in completing the Broker Price Opinion (BPO). We need to paint a clear picture of the property, the competition and the repairs that the property requires to make it competitive with the other listings in the area.
FM: What do you do when bidding for the repairs?
Misael: As soon as the repair vendor is identified, I make an effort to schedule a meeting with the repair vendor at the property. We go over the list of the suggested repairs and walk through the entire property; this is when the repair vendor makes his repair recommendations. Meeting with the repair vendor early in the process allows me to capture the change orders and incorporate the additional repair items at the beginning of the bidding process.
FM: Do you use any type of method or tools to compile your list of repairs?
Misael: I do have a template that I use as a guide and I also have pictures of the best comparables in the area on my tablet to show the repair vendor what our competition looks like. It helps them understand what I'm trying to accomplish for this particular asset.
FM: What type of reaction do you get from the repair vendor when you share with them your vision for the property?
Misael: They get it. Walking the property with the repair vendor and showing them photos help them understand the repairs that I am recommending. We now see buyers who are looking for better quality on repairs. Buyer's standards have changed in terms of color schemes and the type of flooring used. We're seeing more gray tones, white kitchens, and laminate flooring.
FM: You mentioned earlier that meeting with the repair vendor minimizes change orders. What do you do that is effective in avoiding additional change orders?
Misael: It's important to meet with the repair vendor before bids are submitted and then anticipate that other repairs will be needed, so we should add those to the scope and make the recommendation up front. The key is walking the property room by room, inch by inch and looking at the property as if I'm the owner. We try to capture all the repairs that the property needs at the beginning of the process.
FM: Once the bids have been approved, what is your involvement when the repairs are ongoing?
Misael: As I perform my weekly inspections, I take the time to check on the progress of the repairs to ensure that the work is up to par. I always communicate with the repair vendor and let them know if repairs are not acceptable so that the issue is addressed immediately. This gives the repair vendor the opportunity to submit change orders if necessary.
FM: When the repairs are nearing completion, do you have any additional process in place before signing off on the repairs?
Misael: I ask the repair vendor to notify me when the repairs are almost complete. This allows both of us to conduct a final walk through of the property and identify last minute, minor repairs. The repair vendor is then able to submit a change order to ensure that the property is completely done prior to listing it.
FM: Any final thoughts on working with REO assets?
Misael: I know we are all doing our best to make it easy for our client and encourage everyone to do their jobs right the first time. Agents are the first to see the property prior to trash out and their level of engagement in bringing the property into marketable condition influences how well the property will be received by the buyers.
FM: We are grateful for the opportunity to learn from Misael, who has demonstrated that market knowledge, collaboration, setting expectations up front and keeping an open line of communication are the key to successfully repairing a property. Fannie Mae is excited to share these best practices - HomePath Pro agents and repair vendors are all on the same team; working towards the same goal of being the industry's leading housing provider.