Home : Blogs : Mark Hawley : Mark's Blog

Property Condition for Foreclosed Homes

I have noticed, as have many others the condition of foreclosed homes as far as curb appeal and creating in some cases a public nuisance or even a safety hazard

Some of these conditions including:

Brown Grass and Dead Trees: due to lack of water since this was shut off when bills stopped being paid.

Untreated Pools: Filled with Algae, mosquitoes and trash. Broken gates to pools are also a danger to children.

Missing lights: Not only are they dark because of power being shut off, but fixtures are often taken by the previous owners.

Broken Gates & Locks: Many properties have the locks not functioning properly, inviting squatters and thieves.

Boarded up windows: Certainly not appealing for potential buyers or for neighbors who still have to live in the area.

I have heard talk of legislation that would require bank-owned properties to be maintained at least to some degree by the lender holding the note. I know many agents won't (Or don't even have time) to take a broom to the listing to at least make it presentable for potential buyers.

Here is an example of a pool at a listing I previewed recently:

Foreclosed Pool

Who do you think should be responsible for maintenance of the property when it is put back on the market and why?

Posted by Mark Hawley on 03/10/2008 02:13 AM

Comments (15)

foreclosed, pool, clean up, bank owned

15 Comments on Property Condition for Foreclosed Homes

MAR

2008

I think banks should be at least held to the same CCR's as the homeowners. When the banks loaned on the homes, they took the risk of one day owning the home. Now that they do, they should maintain the homes just as any owner in a neighborhood has to. The HOA's should send someone to maintain the property and send the bank the bill, if they don't pay, sue them.

That's a tough one. I think banks should have to do some maintenance to at least make them no longer a hazard. Similar to how HUD's operate would be my preference. I too have shown homes that were REO where we nearly fell into holes cut into the floor, busted pool gates, pools developing their own habitats, etc. As an agent, I carry a huge flashlight with me, and smaller ones for my clients, to avoid killing ourselves in the dark.

But I can understand that the bank isn't in the renovating/lawncare/cleanup business and might find it difficult to contract locally for that sort of thing.

Most of the foreclosed homes I have shown (even before the mortgage meltdown) have looked like that. I think there should be some maintenance from the banks or a warning from the listing agent when you show the house.

I too, believe the banks should be responsible for the upkeep of these homes. One of the neighborhoods that I'm in often, there are homes over 2 mil. and to drive down the street and see some of these homes with the condition they are in, is horrible! I've seen where people are uprooting the Palm Trees, can't see the house because the grass is that overgrown and when you can, the windows are broken etc.....

Awesome responses!

Michael, That is a good point about the HOAs and the HUD requirements. I wonder if the HOA would win that case against the bank easily?

A lot of these homes won't make it through loan processing and the bank refuses to pay for repairs.

Sheree, I am hoping with Daylight savings time I won't wear out my 4D maglite that I keep in my passenger door pocket. The agent should give some decent decription about condition. That is why I rarely show an REO without previewing. Nothing turns off a buyer quicker than when you walk in and are surprised by large amounts of trash or a animal pee smell so strong it makes you gag. The worst was the dead cat floating in a green pool

Laura, I agree, but is the bank going to call a local gardener or cleanup crew? The question I am posing is whether as agents we need to negoatiate as part of the listing contract with the bank that some maintenance will be performed and that they will pay for it. Or should there be some legislation to make sure it becomes part of future contracts?

Dawn, if the $2 million dollar homes look that bad, are they paid out on a percentage? If the agent is unable to get the bank to pay for anything, is it in the agent's best interest to shell out $100 and have the grass cut?

Now here are some more questions. I have a lot of questions since I have shown over 50 REO properties in the past 4 months. A lot of my clients ask me the same questions about who is responsible. They also ask why the agent doesn't handle small things if the bank won't (ie: at least sweep out some small trash) in order to make it a more marketable listing

How much responsibility do you feel the agent should take in the cleanup of the property?
Should the agent pay for a cleaner to come in?
Should the agent send the bill to the bank or is it just the cost of doing business?
Do you feel there may be agents who purposely keep the listing dirty or in disrepair so that they can have the "lowest priced listing" due to condition? (in this case I am talking about trash, not holes and major repairs)

I have not listed any REO properties myself, so if I do some day, I would like to know what I am getting into in negotiating with the bank.

I think whoever owns it should be responsible......Banks should be held to the same standards in my opinion. Neglect and Blight do not care who owns a property :)

MAR

2008

Mark, something as simple as the grass being cut, then maybe the Realtor should do it. We do have to spend money to make money. Although, I do still believe if the Bank owns the property, they should ultimately be responsible for the upkeep.

MAR

2008

"Listing agents must oversee all home maintenance requirements for the property."
http://www.realtor.org/rmomag.NSF/pages/feature2mar08?OpenDocument

According to that statement, culpability for the condition of the property is on the listing agent. However, "With a standard 90-day listing agreement, considerably shorter than the six-month consumer contract, sales associates must provide lenders monthly status reports that document every action made to sell a property, including the number of open houses and private showings. And if the home isn't sold during the 90-day period, lenders are likely to reassign rather than renew." http://www.realtor.org/rmomag.NSF/pages/feature2mar08?OpenDocument

The bureaucratic processes associated with code enforcement are very lengthy and poorly enforced. Code enforcement officers likely won't go out of their way to track down the current person responsible for maintaining these properties.

MAR

2008

That is what I am worried about. Since code enforcement won't go out of their way, will they be happy to settle with fining the agent?

I have an update to this posting on my blog. The Indio City council has passed ordinances to fine owners of neglected properties.

JUL

2008

Folks - Here's some food for thought that might help. We too are having similar issues within our HOA. Not sure if all these incidents previously mentioned are within an HOA neighborhood. But if so, what we are considering doing as an HOA, is notifying the Banks of the violations and the needs, in writing and with pictures. If they do not respond to a 2nd notice, then the HOA hires the work out and bills the Bank. If the Bank refuses to pay, then the HOA takes them to Small Claims court where almost certainly with the track record of letters and pictures, the Judge will rule in favor of the HOA. No need for expensive legal fees or Attorneys.............

Another idea (pros & cons to it), is to raise the homeowner fees to cover the cost of maintenance on foreclosed homes. The Bank is still billed for the work, but the funds are readily accessible to get the work done. Pros : Each homeowner is in effect, investing into the values of the whole association, which helps the value on their own property. And, those that take pride in their homes and yards, no longer have to live next door or across the street from an "eye sore", or suffer the effects of pests and rodents. Cons; Homeowners have to pay higher dues, even when they are maintaining their home and yard.

Anyway, I'm open to others input and suggestions since we're not sure what we are going to do. Only that something needs to be done. This simply isn't fair (or safe in some instances) that thse of us who take pride in our homes have to suffer because the Banks couldn't give a "rats a - s" about anything.

AUG

2008

Hi Mark,

Finally, someone is discussing trash-outs!

I've started a small property preservation or "trash out" company here in South Florida (MMGroup) and while I know that there is a need for this sort of business, I've yet to land an opportunity here. But of course, it's been barely two weeks!

So basically here's the concept; I go in and clean out debris and junk from the interior and exterior of the property and haul it away. (services include: dusting, moping, cleaning, vacuuming and wiping down the dwelling keeping the property ready to show)

I also offer another service that includes bi-monthly lawn care (cutting and trimming) plus an interior dust, disinfect and wipe down.

Thanks for talking about removing trash and debris! Maybe we can create a buzz here in South Florida!

Regards,

Mitchell McCoy

AUG

2008

Mitchell,

That sounds like a great business for this market. Do some research and get flyers or make phone calls to the leading REO agents in your area. Send flyers to RE offices to as far as you can. Do it personally whenever possible. Explain your services. Do it soon. This REO market will not last forever, so you'll want to be in place with the leaders when the larger percentage of bank-owned properties have dwindled down.

NOV

2008

As a former Code Enforcement Officer responsibility falls to the one who holds the deed. A person, bank, or other entity. If the deed is in the name of a deceased person responsibility falls to the heirs.

MAR

I agree, I am the owner of a foreclosure trash out business here in Arizona and after doing the clean outs of some of the homes I have come across, I would be very embarrassed as well as concerned for anyone that would walk into some of these homes.

We are starting to find some vacant home where homeless people are starting to move in and overall they are just becoming disgusting with what we've seen. We've found people living in the attics and some rooms in the home.

It is truly a concern for communities and neighbors. I hope someone does something soon..

Thanks for the posting on this one.

MAR

Hey Will,

Yes it is a booming business right now. (most) banks are really starting to take responsibility for the homes they have foreclosed on. Not only are they cleaning up the inside and the yards, in some cases they are hiring out people (through the agents) to paint, carpet and replace fixtures to make them appealing to buyers as well as neighbors.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?