A key part of the due diligence process is to get recent photos of the property. There are several reasons why you need to do this. One is that you will want to know if any major repairs are required. Second is you will want to get an idea of how much pride of ownership the borrower has. Flower pots, American flags, and fresh cut grass are all good signs. Trash in the yard, roof problems, tall grass not so much…..
While in the pre-bid phase of my due diligence process I use photos I can find on Google Maps, and occasionally Bing Maps. You can also sometimes get photos from the county website as well. Of course these photos will typically not be current. With Google and Bing the image will have the date when it was taken. If the photo was from 2011, then obviously the condition of the property may be radically different now. The condition often doesn’t get better over time, but that’s not always the case. I’ve seen some examples where a new roof was put on and the home was painted since the Google picture was taken. When putting together bids I assign a qualitative rating to the asset based on the condition of the property in these older photos.
Once I’ve made a bid and its been accepted, then it is time to get current photos. In most cases I’ll find a local realtor to do a BPO, which will include photos and their estimate of the value. In some cases for performing notes where the borrower has significant equity based on old BPO’s and Zillow / Trulia values, I may not need to get a full BPO. Then I might just order an AVM and have someone from Craigslist take the photos. With Craigslist mileage varies a lot depending on the city, but for $30-40 you can usually get someone to take pictures pretty quickly. I’ve also used WeGoLook, although they are more expensive and now have some additional requirements.
I had a case recently on a non-performing note where the Google images looked decent. Here is what the asset looked like in 2012:
I couldn’t tell too much from this, but the asset looked ok and felt it was good enough to proceed with a bid. Now of course with the photo being 6 years old I knew the asset could look much different now. Here’s what it looked like in May 2018:
Not good…. Yard turned into a mud pit, screen door off the hinges, trash strewn about. I can’t image what the inside of the home looks like but I’m guessing its not much better. I won’t share it here but I was also able to get a photo of the borrower. She seemed like an interesting character. Its possible that she just had a long shirt and short shorts, but I’m pretty sure she wasn’t wearing pants. I won’t share my entire due diligence checklist, but one of the items is that when the borrower is outside they wear pants….
Unfortunately I had to cancel this bid. I sent the before and after pictures to the seller with an explanation of why I was cancelling the bid, and they were completely fine with that. The good news is I had 3 other accepted bids with that seller that did work out. I also got a new tape from the same seller this week and will hopefully be buying some more assets from them soon.
So remember to always get current photos of the asset before closing, and don’t assume anything. You never know what you are going to run into.