It might surprise you to learn that the average house in the US costs approximately $507,000 according to World Population Review. While this is out of many investors’ budgets, purchasing a real estate owned (REO) can potentially save a substantial amount of money. Choosing the right REO contractor is a crucial step in maintaining and improving foreclosed properties.
Whether you’re managing a single home or an entire portfolio, it’s essential to work with someone who understands the unique demands of real estate-owned projects. Here are 10 tips to help you select the best contractor for your needs and avoid common issues.
- Assess Their REO Experience
It’s essential to hire a contractor who has specific experience in REO projects. They need to be familiar with particular challenges, such as managing properties that are vacant or in disrepair.
Contractors with REO experience understand the urgency of completing jobs quickly to prepare properties for sale. Always ask about their previous REO work to ensure they have the knowledge and skills required.
- Look for a Full Range of Services
Many REO properties require a wide range of real estate services. From maintenance and repairs to complete renovations, the right contractor should be equipped to handle it all.
A contractor offering construction management and general property upkeep will make your job easier. You won’t have to juggle multiple companies to get the property market-ready.
- Ask About Licensing and Certifications
Licensing and certifications are important when hiring any contractor, but even more so for REO properties. Ensure that the contractor you choose is fully licensed for their services, including property management and maintenance.
Certifications in foreclosure services are also helpful, as they indicate specialized knowledge in handling distressed properties. Always verify credentials before hiring.
- Review Their Foreclosure Portfolio
Looking through the contractor’s portfolio is a great way to gauge their expertise. They should be able to show examples of REO properties they have successfully worked on.
Whether it’s a simple repair or a full renovation, the portfolio can demonstrate the contractor’s ability to handle complex foreclosure projects. Contractors with a strong portfolio tend to offer more reliable services.
- Evaluate Their Communication Skills
Good communication is key in any project, especially with REO properties that often require quick decisions. Your contractor should be able to explain their approach clearly and keep you informed throughout the process.
Miscommunication can lead to delays and cost overruns. Make sure the contractor is easy to reach and proactive in providing updates.
- Check Their Response Time
Time-sensitive work is often required in the REO industry, so quick response times are important. Whether it’s for emergency repairs or general maintenance services, the contractor should be ready to act fast.
If a contractor takes too long to reply or schedule a job, the property may remain in poor condition for longer than necessary. Always ask how quickly they can respond to urgent needs before deciding.
- Examine Their Cost Structure
Budget is often a major concern when managing REO properties. It’s crucial to find a contractor with a transparent and fair cost structure.
Ask for a detailed breakdown of their pricing so you understand what you’re paying for. Surprises can be avoided by working with someone who is upfront about their fees and the scope of work.
- Request Client References
One of the best ways to evaluate a contractor is by talking to their previous clients. Real estate services, especially those involving REO properties, require a level of trust and reliability.
A contractor who can provide strong references is likely to deliver good results. Don’t hesitate to ask for client testimonials to confirm their reputation.
- Look for a Focus on Compliance
REO contractors must follow specific regulations, particularly when dealing with foreclosure experts and legal processes. The contractor should be well-versed in local building codes and compliance standards to avoid future legal problems.
Contractors who emphasize compliance demonstrate professionalism and attention to detail. Always inquire about how they handle regulatory requirements.
- Ensure They Use Reliable Subcontractors
Subcontractors often play a large role in REO projects, particularly when specialized work is needed. Your contractor should have a reliable team of subcontractors who are experts in their fields.
Quality maintenance services and repairs depend on experienced, trustworthy subcontractors. It’s essential to confirm that the main contractor thoroughly vets anyone they bring on to the job.
Red Flags to Watch for
Not all REO contractors are created equal, and some exhibit red flags you’ll need to keep an eye out for. Otherwise, you risk falling short of your project’s goals and causing unnecessary complications. Listed below are key ones to consider.
Inconsistent Communication
Clear and consistent communication is essential when working with an REO contractor. Contractors who are difficult to reach can slow down the entire project. You need someone who responds promptly and keeps you informed about progress and any potential issues.
Unclear Pricing and Hidden Fees
A lack of transparency in pricing is a significant red flag when dealing with any contractor. If they’re vague about costs or include unexpected fees later on, you might end up facing budget issues.
Always ask for a detailed breakdown of all costs upfront to avoid unpleasant surprises. Honest contractors should be willing to provide clear pricing without hidden charges.
Lack of Proper Licensing and Insurance
Proper licensing and insurance are non-negotiable when hiring an REO contractor. Contractors who lack the necessary credentials could put your project at legal or financial risk.
Always verify that they hold the required licenses and insurance to protect yourself from liability. Hiring someone without these essentials can lead to complications later on, including fines and project delays.
Find the Right REO Contractor
With the right REO contractor on your side, you’ll have no issue getting the right outcome for your needs. From here, you can maximize your property’s value and make the most of your investment.
Nutone Construction provides comprehensive REO asset management and renovation services, specializing in both residential and commercial properties. With over 15 years of experience, our team handles projects up to $5 million and provides reliable construction management.
We operate across Arizona and Nevada, delivering top-tier service with a commitment to growth. You can contact us today to learn more about our capabilities.