I’ve held a real estate agent’s license since 1980 and I’ve remodeled and flipped a handful of homes over the past couple of decades. As a result I’ve had plenty of opportunity to view dozens of foreclosed properties over the the years. I’ve always been puzzled as to why the property managers charged with the responsibility for marketing these foreclosed properties never seem to follow any of the etablished rules for marketing real estate.

A majority of foreclosed properties are inadequately maintained and in disrepair when they are taken into the possession of the property managers employed by the government or the mortgage servicer charged with liquidating these bank owned properties.

Even though the government, mortgage servicers, and banks have deep pockets, they all seems to adhere to the policy that repairing or otherwise spending money on these properties for the purpose of preparing them for sale is throwing good money after bad.

Successful real estate brokers understand that staging a residential property prior to listing it is the most important element of marketing a property. Statistics show that sellers that “stage” properties prior to listing them for sale achieve significantly higher prices for homes compared to those that are inadequately prepared.

Statistics show that an unfurnished property sells for more than 10% less than a property that is unfurnished during the listing period. In some neighborhoods the unfurnished property may sell for as much as 20% less than its furnished competitors.  By investing a few thousand dollars for repairs, paint, and rented furnishings, home owners, including the government and mortgage lenders that own repossessed homes, will achieve sales price increases that easily exceed the amount invested in repairs and staging.

During periods of reduced demand, lender and government owned properties comprise a significant percentage of the properties being sold and often are the only properties an appraiser can utilize in arriving at an opinion of value.  Because it is common practice to spend no money preparing a property for sale these properties are often sold below market value. This combination of factors has the undesirable effect of artificially driving down the values of these properties and has contributed significantly to the rapid decline in real estate property values seen throughout the United States. 

Any policy aimed at mitigating losses incurred by lenders and home owners alike as a result of foreclosures must include a serious reevaluation of current policies followed by the agencies, entities and individuals charged with the responsibility for liquidating foreclosed real estate. These property managers must be provided adequate budgets to repair all mechanical and structural deficiencies, make appropriate design and cosmetic changes, employ ”staging” professionals to furnish these vacant properties, and hire and compensate the real estate agents whomarket these properties based on their success and productivity.  Instituting a program that enables property managers to adequately prepare and position a foreclosed property to obtain the highest possible price will mitigate losses to institutional lenders and their shareholders and will curb the decline of property values by assuring that foreclosed properties compete in terms of quality and price with other properties listed in the same or adjoining neighborhoods.

My name is Ken, and that’s my take on it.