In its U.S Foreclosure Market Report for May 2012, Irvine, California--based RealtyTrac Inc. reported that foreclosure filings increased 9 percent from the previous month. Overall foreclosure activity in May exceeded 200,000 mortgages per month for the first time since the previous three months. * Even as the housing market shows signs that a modest recovery may be on the horizon, the fact remains that foreclosure activities are on the rise. * For mortgage servicers and investors, the ongoing threats are longer sales cycles, higher maintenance costs and lower returns on their real estate--owned (REO) property portfolios. For field service companies, the opportunity lies in delivering service quality improvements that reduce maintenance costs, shorten the sales cycle and result in higher REO sale prices.
New approaches lead to better results
Field service companies need to re-evaluate every step in their REO processes to ensure that REO properties are put in the highest marketable condition and remain so throughout the sales cycle. A key component in the process must be a mechanism to routinely evaluate and improve the performance of contractors working in the field.
Safeguard Properties' REO department has developed a new quality-assurance process that has resulted in significant improvements in quality. The company's REO department witnessed a 39 percent overall increase in properties with no deficiencies or quality issues since Safeguard started the program in November 2011.
The purpose of this new quality-assurance process is to provide Safeguard's clients with REO properties that are in the best marketable condition and comparable to other properties in the neighborhood.
To accomplish this, a field service company, like Safe-guard, needs to improve internal quality scores, external scores from clients and brokers, drive contractor behavior and, ultimately, increase overall client satisfaction. Field service companies need to raise their standards and deliver properties that are deficiency-free, hazard-free, have properly reported damages and are in clean, marketable condition.
The program begins once Safeguard's contractors complete initial services. When the first contractor enters the property, he or she removes debris, remedies health hazards and completes a deep initial maid-service cleaning. The contractor will also inspect the property for any damages that may be present.
Also during the initial service visit, all properties are secured according to the field service company's client's specifications. In general, all locks are changed (including deadbolts) and keyed to a client-specified code. Pad-locks are then placed on all outbuildings and sheds. Pool areas are secured with padlocks on surrounding fences.
The contractor will install a lockbox with working keys inside to facilitate future access for contractors, inspectors, the listing agent and buyers' agents. In addition, any openings that present a security risk, including broken windows and doors, and unsecured crawlspaces, are boarded based on Federal Housing Administration (FHA) standards.
Following a script to ensure quality
Under its new quality-assurance plan, Safeguard will have a team of inspectors visit the property and assess the work completed during the initial service visit. The new process includes a 178-question script that inspectors...