Aggressive Approaches to Rehab.

Tampa, FL-As cities across the nation get creative in handling vacant properties, there are plenty of things that asset managers can do to improve the movement of their REO properties.

While in the past, mortgage servicers had the option to be selective about the repairs being done, today, they are much more aggressive in their approach to marketing REO properties, evolving beyond basic cosmetic repairs, according to Allan Martin, chief executive offer of Mortgage Contracting Services.

Larger repairs, such as roofing and replacement of appliances, have become more commonplace, but with the growing amount of work, the entire industry is quickly reaching capacity.

"That can be very dangerous. As everyone feels the pinch of an increased workload, asset managers must retain firms that have the expertise and experience to properly rehab their REO portfolios, from the accurate allocation of staff to financial resources," he said. "Doing the minimum is not enough in a market that is saturated with vacant properties."

Where do asset managers even start? When it comes to REO properties, asset managers must use analytic tools that enable them to balance bid pricing, said Mr. Martin. Historically, these tools have been used by insurance agencies to balance bid pricing, giving asset managers the ability to estimate project costs with modifiable data. A tailored computer program assesses an entire portfolio quickly with cost estimation and bidding that enables servicers to make better decisions based on accurate data.

Asset managers that outsource the work may use this as criteria for selecting a third-party provider, deciding to work with companies that provide software tools for the analysis of bids.

As a positive for asset managers, the robust market has led to a more competitive environment, he added. "When the mortgage industry boomed in the beginning of this decade, there were huge opportunities in real estate, which led many - some unqualified - to become Realtors to turn a profit," said Mr. Martin.