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72 a property ‒‒ is as much art as science. For understanding what an individual property might need, Wells relies on property preservation partners like Alacrity Services, an Atlanta-based preservation services company owned by Lowe's. It is an elegant ecosystem. Wells has a network of bank-owned properties around the country; Alacrity has a network of professional contractors around the country; and Lowe's has roughly 1,800 retail centers around the country. When Wells wants to get a property off its REO rolls, Alacrity supplies local contractors to identify the repairs needed and do the work. Meanwhile, contractors hired through the partnership can buy supplies at a nearby Lowe's at a discount. "ey're the ones with boots on the ground," Smith says about the bank's reliance on Alacrity's network of contractors. And while it's taken time to get in sync, Smith says the Wells/ Alacrity partnership has jelled well. Alacrity partners now know what the bank is hoping to do with a property and Wells knows better what the contractors need to get the job done the right way. Knowing how to right-fit a property can certainly be an involved equation. ere are, of course, calculations for physical repairs, which in most cases involve one or more of the "big five" repairs needed ‒‒ paint, carpet, flooring, plumbing, and electrical. But then there are issues like mold that often show up in some houses, and depending on the type and extent of mold, it could add a significant amount to the total bill for making a house saleable to everyday buyers. ere is, of course, no one-size-fits-all formula. Rather, Smith says, figuring out what to do, is a matter of finding "that sweet spot" where money invested in a property is not just a lot of lost money. It may surprise you, actually, to learn that optimal repairs for houses Wells wants to make financeable to occupying buyers is not actually a moneymaker for the bank. e best-case scenario, Smith says, is typically a break-even. is is actually what puts Wells' approach ahead of so many other institutions when it comes to investing in foreclosed properties on its books. So many institutions have shied away from putting some extra money into their properties because they do not see the profit. Well, the profit isn't immediate, and it's not all about hefty financial gain, but it is there. Remember, good will is part of the equation. Wells wants its customers to know that it actually cares about the neighborhoods. And the money the bank could make will come from someone who buys an REO property and makes it a home and get financing through Wells. Smith says that properties are not necessarily getting to the market faster, but that homes are selling faster once they're actually on the market. For example, it might still take two months for a house to go from vacated to sold, but it would not be on the market for the whole two months. Repairs might take, say, one month, and then time-on-market another month. "It's not about time," Smith says, "it's about the return." However, the time a property spends getting from vacated to sold is greatly affected by its geography. On the East Coast, for example, where houses are older and have been exposed to more types of weather for more years than houses on the West Coast, a property could reasonably take two or three years to get sold, Smith says. ese properties simply need more work, but the work pays off by leading to a home that is in far more stable and appealing condition than a fixer-upper that's in really bad shape. One slice of geography where's Wells' efforts are making a notable impact is Chicago, and Smith is glad to see some positive attention paid to the usually dour foreclosure/resale news coverage there. Most news stories about the fate of neighborhoods hit by recessions and foreclosures are negative. And while this might sound like the obvious way to cover neighborhoods in crisis, Smith says that too much coverage about what's gone wrong has the far-reaching effect of keeping a neighborhood in crisis. "A negative story in the news every week has a negative impact on homes in a neighborhood," Smith says. People hear that an area is in decline and conclude that it's not the place to make a home. Consequently, values stay low, community pride suffers, and neighborhoods wade through the miasma of a self-defeating dynamic. "We're trying to reverse that," he says. e banks efforts are being noticed in Chicago, which was one of the country's worst-hit areas during the recession. But the work done by Wells and Alacrity to right-fit homes, to invest a little more time and money in making vacant places actually livable again has helped pull neighborhoods there from that self-defeating cycle. So far in 2015, according to Wells Fargo data, the bank has increased the value of its REO inventory in Chicago by an average of 13 percent. "We have spent over $29,000 per property to do this," Smith says. Along with more involved repairs, Wells also allows owner-occupants the first crack at buying an REO property. e first two weeks a property is listed, the bank only accepts offers from those who want a primary residence. e one-two punch of better repairs and occupant-friendly sales periods is paying off big, especially in Chicago. is year, Wells reports, nearly 79 percent of its repaired REO inventory there has sold to owner-occupants. at is no insignificant statistic, by the way. Nationally, the percentage of people who own a home and use it as their own primary residence is hovering around 65 percent. "If we didn't do anything," Smith says, "we'd be at the national average." As for the future, both Jay Rebello, vice president of new business development and corporate innovation at Lowe's, and Alacrity CEO Jonathan Miko see the evolution of the partnership as nothing but positive. Wells will continue to provide access to properties and handle the financials, Alacrity will provide the experts, and Lowe's will make sure the contractors get what they need when they need it. "I think we'll keep expanding to different parts of the country, and we'll continue to serve their brands of business" Rebello said of Wells Fargo and Alacrity. Miko said: "I see a lot more steady work that's more spread out and not just concentrated in one area at a time." "A negative story in the news every week has a negative impact on homes in a neighborhood." –Tyler Smith, Wells Fargo

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