Banks who spend the extra cash to rehab a foreclosed or REO property stand to sell the property much faster than a non-rehabbed REO, according to a new study by Field Asset Services Inc., a property preservation and REO asset management company.
For the last two years, the company has analyzed the number of days on market for remodeled foreclosure or REO properties versus those that are not remodeled.
In reviewing 17,252 properties across 13 states, researchers found that the average days on the market for REO properties that were not rehabbed was 222.8 days. On the other hand, properties that were rehabbed sold, on average, in 69.8 days.
"When a home looks better, it sells faster," Javier Zuluaga, director of sales and marketing for Home Repairs and Remodeling (HR&R) LLC in Tempe, Ariz., told Inman News.
However, the rapid number of foreclosures may be making it difficult for banks to keep up with the pace to do fix ups, which once were more prevalent, says Zuluaga. “Sometime around 2009, the banks simply said, 'We are not going to put all this money into it. We are just going to get the properties cleaned up and if it is missing cabinets, it is missing cabinets--that's just the way it is.'"
But Dale McPherson, president of Field Asset Services, says that based on the study results banks might want to reconsider. “In a market such as Phoenix, where there is an immense amount of foreclosed homes, you might see five or six REO properties on the same street,” McPherson says. “If you want to compete, you need to have the best-looking house on the block."
Source: “Rehabbed REOs Spend Less Time on Market,” Inman News (April 22, 2011)