Managing REO – The Dirt On Cleaning House
Safeguard Properties was mentioned in an article in Managing REO magazine about the many tasks involved in maintaining vacant properties.
The Dirt on Cleaning House
By Jennifer Harmon
From walls to floors and cabinets to countertops, asset managers have to cover a lot of ground in order to make sure an REO property is clean and ready to sell.
It is a wise move for asset managers to give their real estate agents, brokers and service providers a guide to use when getting real estate-owned assets spic-and-span, according to CJ Gehlke, president and founder of REO Nationwide in Newport Beach, Calif.
Let’s get down to specifics. Inside the home, Ms. Gehlke recommends to take a close look at the kitchen. Remove the refrigerator if it is inoperable and not repairable. If it is in working condition, remove the kick plate at the bottom front of the refrigerator and remove and clean the defrost pan. Defrost the fridge, remove and clean all shelves, racks and drawers. After cleaning, reassemble the refrigerator, and turn it on, setting the control at the warmest setting.
For drawers in the kitchen, empty and clean all stains and food particles by washing them with mild soap and warm water. Remove any worn paper lining. Wipe out drawers. It is important to clean the interior of the dishwasher and remove any food particles. Clean the soap holder, racks and trays. Clean the exterior by wiping with mild soap and warm water.
Next, move down the hallway of home to the washer and dryer. REO Nationwide says it’s important to clean the interior thoroughly and include any filters. Remove all mineral and dried soap deposits from the top of the washer.
“For the furnace, remove and thoroughly clean or replace filter in the bottom of furnace. Clean all windows inside and out. Don’t forget the screens. Vacuum Venetian blinds to remove dust and spots,” says Ms. Gehlke. “Wipe the window sills to remove dust, spots or stains. The walls and ceilings take up a great deal of time. Brush out all corners to remove any dust. Clean the ceiling surrounding all vents.”
There’s more work to be done. Inside the bathroom, make sure to sanitize all tile and shower doors to remove lime deposits and mildew. Scrub the tub as well as the shower and sinks. “It is important to clean thoroughly any woodwork, including doors, door frames and baseboards.”
Also, sweep and mop hardwood floors, title and linoleum. Don’t forget to take care of the carpet. Remove stains and shampoo when this is requested. Empty and tidy up shelves, drawers and closets thoroughly. Remove, dust and replace the light fixtures. All fixtures should have an operable 60-watt bulb in each socket, says Ms. Gehlke. “If the house has a fireplace, go over it thoroughly to include the ash compartment. Sweep, clean and remove all trash and debris from the back porch.”
Don’t forget the garages and carports. Get rid of all trash and debris, and sweep clean these areas of the property. Remove the oil and grease from floor of carport/garage and driveways. Vacuum any vents in the property and haul off items from the storage sheds and make sure to sweep this area clean. And of course, remove all items of personal property.
If the amount of personal property exceeds a certain threshold (industry standards are $500), the personal property goes through an eviction process in accordance to state and local requirements. When it comes with dealing with the outside of the home, Cheryl Lang, president of the Houston-based Integrated Mortgage Solutions, says in the summer, contractors mow the lawn every two weeks and trim the bushes during April to October.
She says part of property preservation means ensuring that all hazardous materials have been removed from the property. This may include removing swing sets, tires, paint, boarding up in-ground pools or removing aboveground pools and draining ponds.
“The process of preserving property has been greatly improved by the use of digital imaging,” describes Ms. Lang. “Because contractors may miss something or deem a property vacant when it is occupied, most vendors today require pictures to verify contractor’s work. It is estimated that roughly 20% of contractor mistakes are caught using digital photos.”
Some vendors today even provide phones with camera capabilities to contractors, so they may collect and share real-time photos in order to expedite the property preservation process. As more and more REO homes need to be monitored and preserved, technology ultimately allows more details to be presented on every property.
Photoinspection.com, a Buffalo, New York based company, provides property inspection services for the insurance and mortgage industries. The company, which was established in 1999, has focused on developing a robust and functional technology platform from the very beginning. The company has built a national network of inspectors, which was not an easy thing to do for a small company that was surviving on a bootstrap financing, says Ted Onyeji, president.
A network that includes several thousand appraisers located across the country has become the backbone of the company, he describes. Inspectors are monitored on their first 10 jobs to make sure they comply with industry standards. “We’ve noticed a lot of inspection companies are beginning to add inspectors across the country, especially in the areas of Florida and Michigan because of the glut of houses out there.”
The biggest goal is to make sure the vacant property is not an eyesore.
Safeguard Properties, a privately held field services company located in Valley View, Ohio, makes sure the grass is cut, that there are no broken windows and if there is a gas or water leak inside the home, the company addresses those types of problems immediately.
Safeguard also offers maid services. Contractors are to follow the maid services checklist included in the work order and leave it at the property signed by the person who completed the services. This is a requirement when completing the initial services order. “You have no idea what we find in some of these properties. We will wash the counters down, clean the fridge, put in air fresheners so it doesn’t smell like an REO,” says Mr. Klein.
Bleach and household cleaners are used to rid a property of a smell, along with a powder scent put down on the carpet before vacuuming. Contractors bring a hot water supply with them to perform the cleaning. If carpet is in deplorable condition, the contractor will notify Safeguard to have it removed. “The lender wants to sell the REO as soon as possible to a homeowner who will live in the property. You want to make it as attractive as possible. You have to make it look and smell good. We try to do the best we can. We do as much as we can so the neighbors don’t have a rundown home with 50 tires in the front yard,” he adds.
Properties are becoming more seriously damaged as well. Some homeowners in foreclosure are so frustrated they will do serious damage to the property. They take out appliances, put holes in the walls and holes in the floor, he says. “There is no rhyme or reason. They are taking their frustration out on the system or the process. We are seeing that more and more.”
By the time the mortgage company gets a hold of one of these properties, it is sometimes problematic. Safeguard hire various contractors they have built relationships with to do repairs such as re-roof a home. In today’s market the industry is seeing an increase in the amount of repairs being done to vacant REOs.
“The goal of the mortgage company is to sell this property as quickly as possible. Every day they hold on to it is costing them money, in addition to the foreclosure process. It’s a bigger financial loss. We want to make the house inviting and attractive to the possible homeowner.”