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31 December 2024 F E A T U R E S T O R Y December 2024 » Q: How have market condi- tions, such as shifts in inter- est rates or the overall economy, impacted the property preservation landscape this year? What changes do you anticipate in 2025? Inflation and rising wages have been significant challenges this year. Preservation pricing for most investors remains unchanged and outdated. When combined with lower volume, loss mitigation, and forbearance efforts, etc., some vendors have exited the industry since 2020. This has led to longer preservation timelines in select and rural areas due to reduced vendor coverage. If recent trends continue, the mortgage servicing industry will see further consolidation and acquisitions. This will lead to volume increases for preservation vendors working in those shops, which helps larger national pres- ervation companies keep our networks engaged. One additional area we are watching is, if interest rates continue to decrease, what effects will that have on homebuilding and some migration of skilled labor to that market? Q: What primary new tech- nologies or innovations are property preservation companies adopting to improve efficiency and service quality? How is AI impact- ing this sector? AI is being leveraged to help with QC and reading/interpreting legal documents, such as code violations. Our current view is there still needs to be a human component for most actions until machine learning becomes an "ex- pert," but the use is proliferating to re- duce cost and increase speed of service delivery and quality. Outside of AI, there are other technologies we are tapping into to improve timelines, efficiency, and service quality in both the inspec- tion and field services space that are in the pilot stage. At this time, Cyprexx is absorbing these costs to provide proof of concept, at which time we will engage the investors to seek approval for these services. Another area where the industry has expanded efforts is new-and-improved technologies in cybersecurity. Like all in- dustries, ours is under attack every day by malicious threat actors trying to dis- rupt business operations and potentially steal important information. As such, Cyprexx has invested heavily in new technology, personnel, processes, and security awareness training to mitigate that risk and protect our business. Q: How are you adapting to the need to service more remote/rural properties, necessi- tating more "windshield time?" A lack of property concentration outside of metro areas is negatively impacting inspection routing and pres- ervation vendor coverage/timelines. We are working with the Five Star Property Preservation Executive Forum and the investors directly to change inspection guidelines and combat these challenges. We are also layering our preservation network with more regionals to offset the loss of smaller vendors in rural areas, due to rising costs, insurance requirements, and lack of steady work. Unfortunately, this drives preservation costs higher. In many cases, we are see- ing an increase in trip charges from our vendors when traveling to rural proper- ties, which further drives up costs. Q: Are there challenges maintaining a sufficient workforce? How do you recruit and retain talent? We carry more staff than required to manage volume fluctuations and the onboarding of new clients. While this prevents us from being short-staffed, there are still challenges with recruiting and retention due to rising wages and the widespread adoption of remote work that leads to more options for job seekers. Internal surveys showed employees ranked remote work second only to wages—ahead of other tradi- tional benefits like PTO, bonuses, and health insurance. While we offer all of those, we know employee job satisfac- Our current view is there still needs to be a human component for most actions until machine learning becomes an 'expert,' but the use is proliferating to reduce cost and increase speed of service delivery and quality. " —Tony Maher, EVP of Business Development, Cyprexx Services, LLC