Disposing of REO Properties Still a Challenge.(Managing REO)

Byline: Jennifer Harmon

With markets across the country reporting excess REO inventory, it's important to come up with strategic ways to actually move these properties.

Part of the marketing strategy for asset managers is the desire to come up with new initiatives to attract buyers from other states and other countries. This is what industry insiders discussed at the REOMAC fall conference in Hollywood, Fla., during a session on "Turning REO Properties in a Saturated Market."

"There are 50 properties for every one buyer. Some agents have the mentality to have more volume - that they will only turn a certain percentage. That's the market we live in," said Todd Mobraten, COO for US Real Estate Services Inc. and its subsidiary Res.Net.

"The turn ratios of the total portfolios of servicers have gone up. It keeps going up every month. Not too long ago, we saw this huge REO market flood in. Everyone hoped there would be a 9%-11% turn ratio. In a matter of six months, it bumped up to 15%-17%. Now everyone is asking for 21% and it will be 30%. As more and more inventory comes in, they have more and more loss."

When it comes to alternative marketing strategies, asset managers continue to look at the option of auctions, which is a very scary word for a lot of agents, he said. "They see it as a threat taking away their business and livelihood. It is another strategy to get the home moved and it can help you capture a larger audience and a wider marketplace."

Michael Harris, vice president of operations, First American REO Servicing, says his company works with national online auction firms while simultaneously working with the local market MLS. This increases the buyer pool, according to Mr. Harris. "There is greater competition for the purchase of the homes. It shortens the marketing times," he said during the panel.