Real estate-owned (REO) properties in the hands of a lender are often those that have been foreclosed on. Those that fail to sell at foreclosure auctions may not be bought until renovations are completed, even if the lender offers the property for sale at a discount. These REO properties are often in disrepair and are sold “as is.”
Lenders who own this type of property are interested in selling them as quickly as possible. The key is to make a property more attractive to buyers, whether it needs aesthetic or cosmetic work or a massive overhaul to bring it all up to code. This process is where commercial general contractors or residential contractors come in, depending on the property.
It is the job of the general contractor to get distressed properties ready to hit the market quickly. REO renovations are often more challenging than normal renovation projects. How do owners of these REO properties choose a general building contractor? What qualities are required to ensure a job well done?
Relationships with Mortgage, Housing, and Government Entities
General contractors who perform REO renovations should have long-standing relationships with housing-related entities, government-affiliated or not. One of the largest of these companies is Fannie Mae. When a general contractor is partnered with an entity like Fannie Mae, it signals that the contractor is aware of and abides by the strict stipulations for renovations set forth by that entity.
Charter Construction Group, for example, is a primary business partner for renovations of Fannie Mae REO properties. Suppose that you are looking for a general contractor. In that case, you can rest assured that if Fannie Mae, one of the largest REO property owners in the country, trusts a company to get properties market-ready quickly, you can trust that company, too.
Expert Understanding of and Experience with the REO Industry
REO properties come with more associated complexities and requirements compared with non-REO properties. You need commercial general contractors that have an elevated understanding of those complexities. This understanding will enable them to create renovation strategies that will satisfy requirements and maximize ROI for everyone involved in the sale of the property.
Understanding and experience enable general contractors to provide unmatched REO renovation services with a reach across states. Contractors who can provide or coordinate appropriate inspections, appraisals, and property preservation services also demonstrate a high level of experience with REO renovations.
Appointment of Dedicated Project Managers
Assigning project supervisors, directors, and managers is critical to avoid delays and mistakes during any REO property renovation project. Remember that the whole point of REO property owners hiring a general building contractor is to get the property market-ready as fast as possible. Therefore, mistakes and delays are not acceptable.
Having dedicated team leaders on the projects will significantly improve the timeline for completing a project. Commercial contractors need to have all of the resources, relationships, and connections required to meet even the most challenging requirements for every property in a client’s portfolio.
The Ability to Match Teams to Renovation Tasks
Every REO property renovation project includes multiple tasks and sub-tasks. These could include installing a new electrical system, cleaning the property’s surfaces, replacing plumbing, updating the HVAC system, and any combination of a thousand other tasks. No one person can perform every one of the hundreds of jobs needing attention at many REO properties.
For this reason, a good general contractor for REO property renovation projects will be able to match teams of experts in each respective industry to the property owner’s needs. Choose a general contractor who has a network of licensed professionals ready to complete services as needed.
Common tasks include winterizing properties, removing debris, renovating basements, securing the property, and removing pests. General contractors need to meet the needs of an REO property owner regarding location, services required, and timeliness.
Prioritization of High-Quality Standards and Efficiency
Making high-quality standards a priority includes complying with current legislation and building code compliance. There is no wiggle room, no compromising, and no cutting corners with this. The best general contractors will be knowledgeable about such regulations, and if they are not, they know who to go to.
General contractors must always have information that is up to date on regulatory requirements and must be well-trained enough to recognize when and to what those requirements apply. Professionalism and a high level of commitment ensure efficiency.
Legal ramifications for any renovations that are not up to code include the potential for heavy fines, among other penalties. Standards must be high for the complete and timely completion of a project that allows the property owner to sell it quickly and recoup any lost funds.
Want to Learn More About Choosing a General Contractor for REO Operations?
Contact Charter Construction Group today to see why so many REO investors trust us to turn over their distressed properties for quick sale.