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Rehabbed REOs spend less time on market

Investors perform fix-up work that banks can't afford to do

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Most Realtors recommend sprucing up a home before putting it on the market, because a nicer-looking home sells quicker. The same theory permeates the foreclosed, or REO (bank-owned real estate), sector. A recent study undertaken by a national field service company that works on REO properties not only confirmed what was at most an empirical belief among Realtors, but accentuated the difference between rehabbed and nonrehabbed properties. Ironically, all this proof of purpose comes down at a time when the banks have not only slowed the rehab of REO properties, but also constrained the pipeline of REO properties for the open market. Field Asset Services Inc., an Austin, Texas-based property preservation and REO asset management company, for two years now has surveyed foreclosed and REO properties comparing number of days on market (DOM) for remodeled properties versus those that are not remodeled. In the company's initial study two years ago, rehabbed properties spent 54.6 pe...