When you are in trouble it is beneficial for you to think of an out of the box solution. So also for the foreclosures crisis which has whetted all normal options and calls for creative solutions.
A bank’s primary interest is to lend money. By its corporate mentality, it tends to deal with defaulted mortgage payments in one line of action- that of foreclosures. This policy may work in the short term with a small department in the bank taking care of foreclosed properties. But the current foreclosures crisis with thousands of foreclosures requires a more creative solution.
Foreclosed properties should not be handled in such a way that one shoe fits all. If you put more homes in the market it will not result in increased sales. Rather, increasing employment opportunities corresponds to more home sales.
Properties should be listed in the following four categories in the same sequence:
1. Properties that may be rented back to the owners in order to collect some income. The owners need a place to live, after all and they will take care of the property better than any tenants.
2. Properties that need a small amount of work and can be put for sale into the market after making the minimal repairs.
3. Properties that need a little work but are in satisfactory condition to be put on the rental market as soon as possible with minimum effort. A rental property need not be in shape as much as a property for sale.
4. The remaining foreclosures are the most difficult. After making most of the cost effective repairs, the property is kept in waiting till it can replace a property in category 2 or 3.
Whatever be the category of the property, it is vital to maintain the visual appearance of the property. Usually maintenance of the property stops with foreclosure. General cleaning, maintaining the yard, preventive maintenance etc. help render the home in the best condition to rent or sell. Dumping properties in the market with no maintenance puts down ward pressure on their prices.
If foreclosed properties grow into disrepair, it starts a vicious cycle in the area. When property values decline, it will lead to more foreclosures, with one problem leading to another.
The second priority is to act quickly whether to accept or reject a buyer’s offer. In ordinary marketing, sales personnel get more aggressive pushing problem products. Foreclosure managers need to learn from them. Foreclosure managers are not savvy with customer relations while selling foreclosed properties. Many buyers report shabby treatment.
At the national level the foreclosures are a long term problem and a problem of great magnitude. Those responsible for selling foreclosures do not have the people, management or marketing skills to be successful.
