Performing REO Properties
Initial Services Work Orders

REO Properties are bank owned properties that need to be prepared for market. When a foreclosed properties becomes a bank owned property, your client will probably give you an Initial Services work order.

"REO" stands for Real Estate Owned

This work order may pay you a flat fee to do all of the work, they may give you an "allowable", which is the maximum you may charge, or they may break it down and pay you for each part of the job. Each client does it a little differently; make sure you read the work order carefully.

It is not unusual for REO properties to have been vacant for as many as 2-3 years. Now they need to be cleaned up and prepared to put on the market. What you do with this work order is the minimum that must be done before the properties can be put up for sale.

What Do "Initial Services" Specifically Entail?

An Initial Services work order for REO properties may include any or all of the following, depending on the individual client:

  • Trash out (removal of ALL interior and exterior debris and hazards)
  • Sales clean and monthly sales clean including: cleaning of all bathrooms and appliances, vacuuming all carpets, mopping all floors, wiping down all counters, cupboards, walls, ceilings, fans, and fixtures, cleaning interior window sills (windows for some loan types)
  • Broom clean including: sweeping entire property, including carpeted areas using a broom
  • Securing of property
  • Boarding or re-glazing of broken windows
  • Removal of tacks and nails from all walls
  • Removing of automobiles
  • Replacing inoperable sump pumps
  • Securing swimming pool gates
  • Draining and dismantling of all above ground pools
  • Cleaning of all in-ground pools
  • Tarping leaking roofs
  • Trimming shrubs
  • Yard maintenance, including trimming trees/shrubs and weeding
  • Installing light bulbs to the interior and exterior of the property as needed
  • Installing smoke detectors and CO detectors, according to local code
  • Winterization
  • Removing snow as needed
  • Checking HVAC units

Working With an REO Broker

When REO properties have reached this stage in the foreclosure process, the mortgage company contracts with local real estate brokers that specialize in selling bank owned properties. So, typically, the work order will have the name of the broker, along with his/her contact information.

It's always best to call up the broker right away and find out everything you can about the property. They can tell you how much debris is there, and what are the things they see that need special attention. This is especially helpful if you need to travel a significant distance to to the job.

Going Beyond Cleaning

Generally the Initial Services work order will also ask you for bids on some specific items, like:

  • Replacing flooring
  • Replacing carpeting
  • Painting interior and exterior
  • Repairing drywall damage
  • Repairing/Replacing broken/missing gutters/downspouts
  • Repairing/Replacing broken/missing interior millwork
  • Repairing roof leaks
  • Replacing missing plumbing or wiring
  • General repairs

This is where it can be very helpful to talk with the broker, because if he tells you that something needs to be done to make the house marketable, you can reference your discussion with him in your bid verbiage.

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