The current national real estate crisis, with the enormous amounts of foreclosures in some parts of the Lower 48, is a long-term problem that needs a creative solution to resolve and not an assembly line approach. Here are two ideas, that when used together, could create better results.
The first is to place foreclosed properties into one of the following categories:
#1 Properties that can be rented back to the current owners to collect some offsetting income.
#2 Properties that need minimal work and can be placed on the market for sale, once repairs are completed.
#3 Properties that need some work, but are in good enough condition to be put on the rental market immediately with minimal effort. A rental property doesn't have to be in as good a shape as a property for sale.
#4 The remaining foreclosures are more challenging. After the most cost-effective work is completed, the property is held off the market until it can replace a property in category 2 or 3.
The second idea is that maintenance shouldn't stop after a property is foreclosed. Maintaining the yard, general cleaning and preventative maintenance helps preserve the home in the best condition to sell or rent. Dumping properties on the market without preparation guarantees the lowest price possible. As foreclosed properties slide into disrepair, a vicious circle starts in the immediate area. As property values slide, the next foreclosure could be the neighbor. One problem creates another.
In Alaska, we don’t yet have a foreclosure problem, but we need to learn from the mistakes we see on a national level where the current system is overwhelmed. To be successful, it will require a change in attitude with better property management, marketing and people skills.
Barbara and Clair Ramsey are industry leaders in residential real estate marketing in Alaska.
