What is property preservation?
Property preservation is the preservation of foreclosed properties. It is as simple as that definition but there is more to it. You may have heard of situations where banks or asset management companies take over properties. Many times, these organizations take over such properties because the owner can no longer pay their mortgage.
In some other cases, the property is collateral and the owner could not fulfill the terms of their loan.
When these organizations take over these properties, they either sell them, rent them out or use them. No matter what the organizations intend to do with the foreclosed property, they would want it to look good. The aesthetic is an important factor in the valuation of properties. If the property is of high quality but does not appear as such, clients may undervalue it. Many people will not want to pay top money for a property that does not look like it is worth it.
They will also want the property to be functioning as it should. It would not speak well for the organization if the property they sold or let out is largely dysfunctional. From time to time, the property might also need maintenance services.
This is where property preservation comes in. A property preservation company will offer repair and renovation services leaving the property as good as new. They also carry out maintenance services such as cleaning, lawn maintenance, and boarding. It is easier to find faults and repair them quickly while carrying out routine maintenance services.
Some other property preservation companies also offer insurance claim management. This service is only useful when the property is insured. What they do as insurance claim managers is to help process your claim for coverage following damage to or loss of the property.
At this point, a more encompassing yet simple definition for property preservation goes thus: Property Preservation is all the services rendered for the good of foreclosed properties.
Who usually needs property preservation and why?
Property preservation companies do not serve themselves. Their business is to work for other businesses or individuals. Any business or individual might need the services of a property preservation company. But the following are the usual clients of property preservation companies:
Banks are one of the organizations that commonly foreclose assets. It could be because the owner of the property got a mortgage from the bank for the property. But he or she cannot pay the mortgage back. It could be that owner of the property got a loan from the bank. That during the process of getting this loan, the owner made the property collateral for the loan. When this person is unable to pay the loan or fulfill the terms of the loan, the bank can legally foreclose such property.
Banks are certainly one of the biggest clients of property preservation companies. But several banks usually refrain from using the word ‘foreclosed assets’. Many times they prefer to refer to these assets are Real-Estate Owned (REO) or Bank-Owned. They usually opt for these adjectives because it is less distressing.
Foreclosure is so common with banks that many banks have a department dedicated to these assets. If you desire to go into the property preservation business, the REO department is your entry point in banks.
When these properties are foreclosed, the banks need a property preservation company. They need the company to renovate the property to look better. They need the company to repair any damages that may be on the property. They might also need the company to carry out maintenance services on the property if it becomes occupied by tenants. Also, if it takes a while before the property is sold off, it may need maintenance services.
Like banks, mortgage companies also foreclose properties. Their case is slightly different from the cases of the banks. What is similar is that a mortgagor goes to the mortgage company for a mortgage. The mortgagor is unable to adhere to the terms of payment of the mortgage. Then the mortgage company forecloses the property for this reason. The difference here is that many times the mortgage company gets the funds they give to the mortgagor from client financial institutions.
As it is with the banks, mortgage companies prefer the term ‘REO’ to ‘foreclosure’. This preference is likely for the same reason too. Mortgage companies and banks would get the services of a property preservation company for similar reasons.
Certain government agencies like the department of housing and urban development (HUD) and the federal housing administration (FHA). The department of housing and urban development is known to offer loans to occupants of primary residents. Their loans come with a low down payment and it can even be accessed by NGOs for housing reasons. The FHA helps insure mortgage loans to ensure that mortgagees do not lose when the mortgagor defaults on payment.
In some cases, the HUD has to foreclose a home and repossess it. After they do, the property preservation company comes in and refurbish the house. When the house is refurbished, they are auctioned off. With the FHA, property preservation companies can help mortgagees with insurance claims management.
When things go wrong and the mortgagor can no longer fulfill the terms of the mortgage, the property preservation steps in. They help the mortgagee to process the request for compensation from the FHA.
Real Estate Companies
Real estate companies deal with many houses at once. There are 6 main sectors in the real estate industry. These sectors are property management, sales & marketing, brokerage, development, lending, and professional services. Of these sectors, property management and development would need the services of a property preservation company the most.
Real estate developers are involved in the construction of new buildings and the renovation of old ones. This is where the services of a property preservation company come in. They can help to build and renovate houses for real estate companies. Real estate property managers are in charge of maintaining the property. They manage the occupants of the properties and fix faults. Property preservation companies can help with the maintenance of real estate properties. They help fix faults and improve the outlook of the properties.
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