REO Companies wanting to rehab

Is anyone else seeing an increase in REO companies wanting to potentially rehab their property to increase listing price??  The last several years  we are seeing an increase in REO companies wanting rehab bids during pre marketing and even as far as going the route of rehabbing the property and selling home at Subjects top market value.  I have 2 currently being rehab between $18-30k and  have had 4 properties rehabbed this year ranging between $10-35k. The most frustrating thing with this is for 1 the asset companies expect us to dish out the Money for the rehab. I'm in Arkansas so our average home sales price and commissions are smaller on the average than say California or New York. 2nd if anyone has ever dealt with companies that use LPS you know how frustrating it can be to get paid with no complications or delays.3 the subject is a foreclosure and being sold for top market value in its area. Most buyers/investors do not want to buy a foreclosure that you cannot get any equity out of. Is anyone else having to do rehabs as well? Thanks

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  • This is really nothing new. The "NEWER" part is agents being expected to pay for massive rehab costs out of their own pocket. More than 5 K anyway. (5000.00 in agent covered costs per asset has been a requirement for quite a long time now with many REO AMCs and clients.) BUT all of this is being caused by the agents themselves. Just like agents paying utilities, past due water / sewer, even rekeys and mopre. Agents doing cash for keys and assisting in evictions free of charge and all of the other non paid work ..... ALL of this is the REO agents fault. Agents wanted to "get in on the REO  business" so bad they were willing to offer up their bank account and self respect for the chance. Reduced commissions, platform fees, covering expenses, doing all the work now expected for low low commissions...all the agents who "wanted in REOs are now in" and have made the REO field a non profit organization so to speak.  There are still many more agents who WILL offer to cover expensive and massive rehabs out of their own pocket to keep the REO clients happy. Who didn't see this coming? Originally REO agents were paid well and fairly paid for everything they did to assist the REO client but when the REO field was seen as lucrative niche well then all the new REO agents offered up the REO industry work on a silver platter. Crazy how we as a group of professionals never even communicated with each other on just how we would work with REO clients. Traditional Real Estate has expectations of clients and the commissions and duties  but not REO. All thanks to the REO agents themselves we are now the lowest paid and over worked agents in the industry. REO agents now work for free, pay all expenses up front, do evictions, cash for keys, get bids and over see all of the work, all for nothing. We now even pay to submit our reimbursement invoices !!!.Good job guys! If agents refuse to do all of this for free, refuse to pay the bills out of their own pockets and take back their self respect, if agents begin to act like true professionals who get paid for ALL of their work, what do they have to loose ? Really how desperate are Realtors anyway?

  • I'm in California, and I have had REO as my niche since 1993. I was recently working on two REO listings for a company; I had taken care of them from occupancy through cash for keys (including eviction process), handled the monthly maintenance, utilities, etc. on both of them for about a year before they were finally ready to go into pre-marketing. That also includes bi-weekly visits with photo reports for preservation accountability, monthly status reports, and bi-monthly BPO for market value.  When we went into pre-marketing I was asked to get bids for repairs.  The lowest for each was $62k and $44k.  The asset manager then told me that I was expected to front the money for the repairs and they would reimburse in 60-90 days.  I laughed, thinking she was joking.  No, she was serious. She had the attitude that we're a company and should have money set aside for these things; my attitude was that they were a company who owned the properties and should have money set aside for their properties. The listings were moved to an agent who is located 2 hours one-way away from the properties, doesn't belong to the local Board or MLS, and is acting way out of scope in doing so according to the Code of Ethics -- but apparently has $100k of liquidity to spend on two properties.  By the way; the commission on these two properties, at 2% to the listing agent, would have been a total of $8k net.  Needless to say, I do not accept any assignments from this company anymore.

  • Well I talked to one of the banks today I do foreclosure listings for. Luckily, they said I do NOT have to front the money for the renovations. I just have to have the contractors fill out a W-9 and they will issue checks to the contractor. Whew, I was worried!

  • I have no problem with them rehabbing but its not coming out of my pocket that's for sure

  • Yes! I am seeing it in Jacksonville, FL. Never had an asset manager ask me to pay out of pocket ...yet. I do not like the sound of that. As an independent agent and not a broker I do not have the funds for that. 

  • I am seeing this also. Asset company on one of my foreclosures just told me they don't just want repairs done, but want to update the bathroom, plant sod/lay down mulch, install granite counter tops etc. Kinda surprised. I understand us fronting money for rekeying, cleaning, trash out etc, but for big renovations too?

  • I have an REO in Oregon with a company who has not yet provided a Payee Code for reimbursement for rekeying and monthly utilities - its been 6 weeks+ and I am still unable to even upload invoices into Loan Sphere.  Now they want repair work done in the amount of just under $2500.  I am not sure I am willing to stick out my neck on this one.  Has anyone had trouble getting reimbursed for repairs they asked you to pay for?

  • I work with one asset management company (actually a hedge fund) that rehabbed 4 out of the 5 listings they gave me.  They came out to site for the one that exceeded $200K in rehab (waterfront proeprty) and sold that one as is.  The investor who bought it never was able to get it sold.  The other four ranged in repairs from $10K to $24K.

  • Just got one REO where we did a partial rehab and spent about $22k.  Homes that have good presentation will sell for more and it reduces the investors who want a bargain for the homes. 

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