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» VISIT US ONLINE @ DSNEWS.COM INDUSTRY INSIGHT BEST PRACTICES Vacancy Challenges Minimum Repair Musts The repair strategy is an important part of the overall marketing plan for listing a property for sale, but it is more important to repair any blatant vandalism irrespective of the overall strategy. Graffiti is the most common problem associated with vandalized properties, but it's not one well understood by servicers. Once a vandal tags a property with graffiti, both investors and owner-occupant buyers are scared away because of the uncertainty about whether or not future vandalism will make it difficult to maintain the value of their investment during the life of their ownership. It is not necessary in this situation to do a complete interior repaint—which is a common misunderstanding and prevents many servicers from just painting over the graffiti. One good coat of Kilz goes a long way toward making an as-is property more presentable to potential buyers. POINT— COUNTERPOINT The biggest issue today with vacant property vandalism is A/C theft, which is easy to do because no interior access is required. Next in line is copper pipe theft, followed by pilfering of appliances, and then removal of kitchen cabinetry and granite countertops. It is difficult to completely eliminate this type of vandalism, but there are strategies that can be implemented to deter it. Securing the property correctly is the first fundamental step, but it's not often at the top of a broker's to-do list, even given its requisite importance. Speaking from my own experience in the field, more than 50 percent of the time I am able to get into vacant properties by simply lifting the garage door—evidence that proper security is typically overlooked. A padlock through the garage door track is an effective means of securing it, but it is also important to disconnect the garage door opener from the outlet. You'd be surprised at how many potential buyers press the control pad to open the garage door when they walk through during a viewing of the property, damaging the garage door in the process if it is actuated. Installation of temporary cages around A/C units is also a good proactive action to take. In Arizona, one contractor offers installation of temporary A/C cages as well as removal of the cases when the property is sold, all for around $250. This is an excellent deal when you weigh the cost of a new A/C unit, and these cages are solidly attached. Protective cages should be considered for all homes with functional A/C units, not just the ones in challenging neighborhoods or remote locations because an A/C unit can be removed and in the bed of a truck in less than five minutes by professional thieves. One large client requests that stickers saying "GPS Tracking Unit Installed" are affixed to appliances and A/C units. These stickers significantly reduce the incidence of theft in vacant properties. GROUND FORCES Jokes are bandied among brokers about "shooting an arrow with a suction cup and a message attached" at the front door to make initial contact with an occupant because of the risks and potential problems that can come with occupants' initial reactions. But it is precisely at this time that the broker can maximize the probability that the occupant will not take vengeance with the servicer out of anger, frustration, or a lack of understanding of the current situation. Imagine receiving an REO reassignment from a major servicer whose occupant was so distraught over how he or she was treated that this person invited a group of squatters to take over the property when he or she moved out. True story. Not only was the property vandalized extensively, but the squatters also wrote pointed obscenities about the servicer all over the inside of the vacant pool. A coat of Kilz was painted over the obscenities to minimize the impact of the defacement on potential buyers viewing the property, but the only way to permanently remove the graffiti was to sandblast and re-plaster the pool at a significant expense. It was a high price to pay for something that could have been mitigated through careful initial contact with the occupant. Maintaining constant communication with the occupant is also important so he or she understands what parts of the house he or she can go and what must stay. Use an initial checklist of dos and don'ts during the cash-for-relocation process, review it with the occupant, and a their signature at the end of the conversation. This minimizes any surprises at the move-out inspection, such as a missing A/C unit or a kitchen stripped of its cabinetry. It is also important to do weekly inspections of occupied properties that are undergoing the eviction process to ensure everything is in order. This provides assurance to the servicer that nothing out of the ordinary is occurring. In one case, a house was vandalized and the only things left behind were the kitchen appliances with these stickers attached. Whether or not GPS tracking units are actually installed is between the broker and the client, and buyers' agents can be told that such devices will be removed when the listing broker conducts a final inspection. Condemned and burned-out properties do appear from time to time, which complicates the broker price opinion (BPO) valuation and hinders access for showing the property. It is important that the broker and servicer have an open line of communication. In addition, the broker should have access to advanced remediation technicians in case of bug infestations or excessive rodent excrement (due to the risk of Hantavirus disease transmission) as well as contractors for extensive mold infestations and remediation of water damage. A clear plan is helpful when communicating the remediation steps to all relevant parties, especially because in many cases city authorities are involved in the condemnation process and want to know what steps of remediation will take place, when, and by whom. BEST PRACTICES When the Nest Isn't Empty MARKET PULSE P roperty preservation challenges begin the moment a property is assigned to a broker. If the property is occupied, most brokers are disappointed because it means a delay in getting it into their active listing inventory. However, this is the most important point for minimizing potential damages to a property, and it starts by establishing rapport and understanding with the occupant. To Fix or Not to Fix The repair analysis is a complicated part of the marketing plan and involves many factors 49

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