As the industry -- and the rest of the nation with it -- worked its way through the foreclosure crisis, much of the media attention (and the attention of industry vendors that served REO asset managers) was focused on the industry’s larger companies. This is where the bulk of the distressed real estate ended up and so it was natural for many to focus on these players. But in the greater scheme of things, this is a relatively small subset of the overall industry.
As part of a firm that serves hundreds of asset managers and companies of all sizes, I can tell you that few focused their attention on the smaller companies during the crisis. That is still true today.
In fact, it may be more true today because the distressed assets we see now are more evenly distributed among the many REO sellers in the market. Most of these companies are relatively small and have a unique set of needs, especially when it comes to the technology they use to complete their work.
This includes asset management teams working independently as well as inside the shops of smaller banks and mortgage servicers.
In our experience, we have found that there are three needs that these smaller companies have that larger ones usually do not. These players will seek out vendors who can meet these needs in order to remain competitive and accomplish their goals.
1. More than a product or service provider
By definition, vendors are companies that exist to sell things to others. While there are certainly products and services smaller REO sellers need to purchase to complete their work, what they really need is a vendor who provides a true partnership.
Many companies claim to offer a partnership, but quickly prove otherwise. This becomes readily apparent when they offer a solution out of the box without taking the time to understand the needs of their clients, and then tailor the solution to meet those needs.
Because smaller customers don’t justify going to the expense of making every installation a custom job, many firms will create a version of their product that they say will meet the customer’s need with very little configuration. This is almost never the case.
Useful software must be matched to the company that uses it and this requires a hands-on approach where the vendor works closely with the customer, providing as much support as they require. Not every smaller asset management company needs this level of support. There are plenty of smaller firms that know exactly what they’re doing. But a vendor isn’t really a partner if that support isn’t available when the customer needs it.
Many of the firms we have supported over the years bought into our platform as a first step away from doing most of the work with pen and paper. They were figuring everything out and they needed a partner to help them work through that process. Today, those companies are doing great, but it’s important that we still offer that level of support in case a new customer comes along that is just starting out.
Being a partner means more than being available to customize software. It means being close by with advice and support regarding industry best practices, tips for using automation to shorten timelines between key milestones in the REO process, and just being available to help them get the most out of the platform they have invested in. For example, customers may need support in grouping tasks into packages that can be sent out on a batch basis automatically, saving them the time required to log in and do that work manually.
This leads us to the second big thing that smaller firms really need: workflow.
2. Providing the knowledge to know what happens next
Some companies who develop technology sometimes forget that the client needs more than just software – they need a complete solution.
The assumption some vendors make is that their customers already have a process in place that they want to automate. We’ve found that this is not always the case. In many instances, a little support in setting up the right workflow is much appreciated.
In fact, I would go so far as to say that if the vendor is not willing and able to help a customer set up the workflows that will allow them to make the most of the software they are providing, there is very little chance that the tool will ultimately meet that customer’s needs. This is especially true for those smaller clients with limited prior exposure to technology.
We have helped a number of companies migrate their REO disposition process from spreadsheets to a real technology platform and the difference it has made in their businesses is profound. Just getting all of their REO-related communications into a central repository has provided a huge efficiency and compliance lift for these firms. Many firms are unable to achieve this on their own and they shouldn’t have to.
3. Access to a robust third party vendor database
Once they get the right platform in place and customized to their needs, and build up the necessary processes to support the new automation, many smaller firms find they can still use some help connecting with the third party vendors they need to get their REO properties moved back into the marketplace.
Most firms are already working with a few agents, but when they realize they can have access to a large national network of real estate sales professionals through their new technology, it makes everything about this part of their business better. In fact, we don’t think of ourselves as a technology provider so much as a solution provider because REO sellers need both the tools and the connections to do their jobs well.
Most of the customers we support are happy to have access to new relationships with both real estate agents and closing companies. Since we have thousands of these companies inside our database, it’s easy for our customers to get access to the professionals they need. Again, without this, any software will only be a partial solution.
And that’s the bottom line. Smaller firms need a complete solution, just like their larger counterparts, but they often have far fewer internal resources with which to create it. They need support from vendors who think and act like partners, and who offer software that can be customized to meet their needs. They need the advice and consulting necessary to set up robust processes around this automation. They need the industry relationships to do their jobs in an efficient and compliant manner. This type of complete solution is available to anyone who refuses to settle for less.