Survey: Default Servicers Investing in REO Improvements

The vast majority of servicing professionals said their organization is currently investing to improve the condition of REO properties under management and most said their organization is currently making a significant investment, said Altisource Portfolio Solutions S.A., Luxembourg.

The company’s Default Servicing Survey of 200 default servicing professionals found 93 percent said they are investing in improvements to their REO properties under management; 62 percent said they are making “significant” financial investments.

“For many home buyers, access to conventional financing and move-in ready condition are requirements to purchase their next home,” said Min Alexander, Senior Vice President, Real Estate Services with Altisource. “Distressed properties, including REO, have historically been marketed in as-is condition, at times limiting the potential buyer pool. Servicers are changing this by increasing investments to maintain or improve the condition of these properties, attracting more owner-occupant home buyers.”

Tight housing inventories are driving the investments. The survey reported servicers are increasingly working to meet demand–and divest assets–by making REO assets a more appealing and viable option for consumers. A majority of servicing professionals surveyed (82 percent) ranked their investment in improving the condition of their REO asset portfolio among their top three most effective ways for attracting traditionally minded consumers to the REO market.

Servicing professionals also pointed to offering financing options for REO [such as FHA 203(k)] to make purchasing these assets more achievable (76 percent) and offering buyers the opportunity to work with a real estate agent (43 percent) as two other leading tactics for bringing consumers to the REO market.

Altisource noted with technology increasingly driving consumer participation in the real estate market, servicing professionals are leveraging online platforms to market real estate assets. Most servicing professionals surveyed (95 percent) said they believe consumer-friendly technology, such as easy-to-access online auctions, has had a positive impact on consumer participation in the default market. Sixty-one percent indicated that providing helpful property and neighborhood information on online auction display pages–such as virtual tours and school information–is among their top three methods to attract consumers to the REO market.

“The REO market offers both servicers and consumers a compelling opportunity to meet each other’s needs and solve for today’s supply-demand disconnect,” said Marcello Mastioni, President, Real Estate Marketplace with Altisource. “Technological innovation, such as online real estate marketing platforms like Hubzu, can help savvy buyers discover a new pool of properties. Servicers’ investments in consumer-friendly features, along with improvements in property conditions, are broadening home buyers’ horizons and encouraging them to consider the REO market.”