Default Management: Innovation At Work: Marketing REO Properties: A Holistic Approach

*Marketing REO Properties: A Holistic Approach*
**By Joseph Badalamenti**

***Effective marketing is critical to successful REO asset disposition. However, to be consistently effective, REO Marketing is best understood as part of the overall asset management process, not a substitute for it.

****Disposition Alternatives

****With today’s inflated REO inventories, not all properties are suited for sale through traditional channels. Alternate strategies ? particularly for low-value, high-risk properties ? must be identified, assessed and implemented, as appropriate. REO asset management providers with strong field service networks can be highly effective partners in helping to leverage these opportunities, whether large-scale bulk transactions, transfers to development agencies or public auction. That said, property-by-property marketing continues to represent the most effective alternative for the majority of REO assets.

****Property-by-property optimization of REO assets requires independent process management and localized control. What’s needed is an REO asset management partner who knows the property and its pre-sale history, can plan and execute property preservation/enhancement services, understands municipal ordinances and code compliance issue, and can objectively assess, select and manage local brokers.

****The Right Marketing Partner

****With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-sale services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods and preparing a detailed property/market analysis, as well as providing turnkey auction management or assigning and managing a broker, as appropriate

****The right REO service provider can deliver maximum REO results in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns and property-by-property follow up, including ongoing detailed progress reports. Most important, they can assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length broker relationships characteristic of many REO asset disposition programs. Successful REO asset disposition means, first, knowing the property and tailoring a marketing strategy to match; and second, being able to apply independent, on-the-ground monitoring of the disposition process. Integrated REO asset management companies with strong field service networks are uniquely qualified on both fronts.

****Many Pieces, One Solution

****The fact is, disposition of REO assets is a multi-front affair. Success means winning a series of small but important battles: It takes knowledge of the property and local market awareness to critically assess BPOs and the brokers who provide them. It takes experience and follow through evaluate and monitor property marketing activities. It takes strong field presence to assure the grass is cut, trash is removed, interiors aren’t gutted or vandalized, the HOA isn’t ready to enforce a lien, and fines for municipal code violations aren’t accruing. It takes people, skills and know-how to negotiate cash for keys.

****Integrated REO asset management providers with proven pre-sale and post-sale capabilities are in the strongest position to help lenders/servicers address these and other needs critical to REO asset marketing success.

Joseph Badalamenti (Joe Bada) got his start in the default management industry in 1967 as a HUD contractor. Now, 43 years and over 5 million inspections later, Joe has built Five Brothers into a highly successful and respected industry leader offering a full range of default management services and technology solutions. His strong belief in client-centered partnering has spawned a nationwide network of highly effective customer and field service professionals. Advanced technology solutions created under his leadership the industry’s first web-based workflow management system, FiveOnline, a complete document management and processing system (MARS), state-of-the-art loss mitigation software (MOTZ), which allows quick and efficient loan modifications according to FDIC and HAMP guidelines, automated document storage/workflow management software (IntelliStorage) and HUD claims processing system (ClaimSys). Joe remains an advocate of client-specific business solutions, an approach he believes is Five Brothers’ most important competitive advantage.