Friday, April 30, 2010

REO Vendors Trades Are Exploding By Megan Griffin

As the economy went south a couple of years ago and the housing bubble burst, there was a huge amount of foreclosures slamming into the banks and real estate markets. For most people in construction or real estate, it signaled widespread layoffs and unemployment. At the same time, in the arena of REO vendors, the opposite thing happened. REO vendors were slammed with more work than they usually had and it became a challenge for most to keep up with the demands on repossessed or foreclosed properties. Someone has to step in and perform these services.

Vendors in the REO world come in a number of trades from appraisers and inspectors to clean-out and moving and storage trades. Each REO vendor has to document precisely what was done and provide detailed pictures and reports to back it up. As this industry began to ramp up a couple of years ago, there was some sloppy reporting because of the pressures of so much work being thrust into the marketplace. For example, a simple winterizing could pay approximately $100. It would require pictures of the antifreeze actually going into a drain for each drain or toilet and then there are stickers placed on each plumbing fixture and the main shutoff valve is sealed and tagged.

The point is that there is a prescribed procedure from FHA and specific REO lenders, but there were about 50% of the time when the pictures were improper or the passed the deadline or something happened to backlog the huge amount of work on all these new foreclosures. The result was that more displaced construction workers or real estate sale people who were out of work, felt that they could capitalize as an REO vendor. The market became flooded with these inexperienced workers who had no training in the art of documentation of work in the REO world.

A number of entities have created a sort of cooperative for them so that those in need of specific services can simple go to specialized websites and find an REO vendor. One example is REOallstars.com. They can match one for a particular area and specialty. This is a great help in the industry because it should weed out some of the less experienced providers who really don't know what they are doing. Choosing the experienced REO vendor can save a lending institution lots of time and money in getting the job done right the first time.