Knowing that REO DOM is one of the key factors asset managers look at when choosing an agent, FORCE members discuss their strategies to maintain a low REO DOM rate. Topics discussed included pricing the property correctly the first time and negotiating asset manager expectations.
Experienced asset managers know that myriad factors go into finding a qualified agent/broker to list their properties. However when an asset manager needs to partner with an agent/broker they have never worked with before, sometimes all they can rely on is an agent’s stats. Whether they are looking at your years in REO, your average number of listings, or even your affiliations, asset managers use your REO stats to get a fuller picture of what to expect when they do business with you. Considering this, one of the most crucial factors that speak to your expertise is the DOM—or days on market. Savvy agents and brokers are targeting inventive ways to lower their DOM rate and increase their business along the way.
THE INITIAL ASSESSMENT
When it comes to lowering your overall REO DOM rate, it is crucial to assess a property as quickly as possible after acquiring it in your inventory. This will ensure that the decisions necessary to developing a targeted marketing plan for the listing are not delayed; and any obvious problems with the property, such as easy repairs and security concerns, are addressed. In addition to getting the ball rolling on your property to-do list, early action on the REO can generate much-needed buzz among buyers.
Samantha Roper of Team 21 Asset Management, Inc., in San Antonio, Texas, knows firsthand that early assessment can help her meet her asset manager’s expectations. “Once the property is vacant, secured, and cleaned, I start sending local investors out to preview the property. This helps get the word out to the investor community [since] news travels like wildfire in our market,” notes Roper. With her 39-day DOM rate, Roper is known in her area for moving properties quickly, and reports that by using the strategy of early action, she usually ends up with multiple offers on the first day the property is listed on the MLS.
“To achieve the lowest possible DOM, I try to accurately value the property so we can list it at a realistic price,”
PRICING CORRECTLY TO LOWER MARKET TIME
Besides creating a buzz in the marketplace, one of the most important reasons to assess the property early is to use the knowledge gained to set an aggressive, yet well-informed, price point for the listing. Roper notes that when it comes to your overall DOM, getting the initial listing price right is make-it-orbreak-it for an agent.
“The most recent challenge affecting days on the market [in San Antonio] is the initial list price coming in at 120 percent of the highest value the seller receives. This can make the days on the market increase dramatically because we are unable to submit for price reduction until 28 days on the market,” says Roper. “To achieve the lowest possible DOM, I try to accurately value the property so we can list it at a realistic price,” says Louis Parker of Lou Park Realty in Blue Ash, Ohio. “I also market the property with all the resources available to me, such as local advertising, social media, open houses, current investors, and retail buyers”
Kentucky Realtor Debbie Richardson of Louisville Home Store Realtors, Inc., who reports an average DOM rate of 67, sees a similar response from pricing her properties accurately for the market. “If a property is properly listed compared to other homes in our low inventory markets we can generally get multiple offers and most times they are over the list price. Since most banks will not view an offer until the property it is on the market for eight to 10 days, this also creates multiple offers and insures “Fair Housing.”
MANAGING SERVICER’S DOM EXPECTATIONS
As Roper, Parker, and Richardson note, determining a realistic price point is part of the bigger picture of setting realistic expectations with asset manager, bank, or servicer you are working with. By making sure all parties involved in the sale are on the same page from the get-go, agents can cut down on surprise problems along the way.
“I start by setting a realistic expectation about what price the home needs to be marketed at,” notes Parker. “Then, I stay in constant communication with [the asset manager] and keep them updated on how the property is showing. I also communicate all of the feedback that we are getting from showings to accurately advise them as to whether or not the list price is accurate for the proper DOM they are seeking.” Roper agrees, remarking that, “there are going to be some properties that are difficult and the more knowledge we give the seller regarding the property and the current market, the more they will be able to understand our difficulties in meeting the expectations.”
Once reasonable expectations have been established with the seller, it is important for the agent to keep the lines of communication flowing throughout the entire listing process. “Weekly inspections, condition feedback, and updated BPOs help keep a market check to ensure that we are marketing the properties competitively,” says Richardson. National, regional, and local market factors will continue to influence DOM rates. But agents can attract sellers that are competitive by employing these realistic steps to tackle the challenges seen in each stage of property listing.