How Much Do Banks Pay To Clean Foreclosed Homes
One of the fastest growing segments of our industry today is cleaning homes that have been placed in foreclosure. Sadly to say, the demand for cleaning these properties is unprecedented in recent times. Although a foreclosure property is someone's misfortune, it at the same time, is an opportunity for the cleaning business owner to keep employees working and to charge a premium for their work. While it is another income source for the business owner, is it worth your time and effort? Can you benefit from targeting this fast growing market?
There are companies springing up across America called Property Preservation Companies, whose core business is the cleanup of foreclosure properties. Their services include interior cleanup, yard cleanup, hauling of rubbish and debris, lock changing and other general cleanup of the home and yard. You don't have to be a Property Preservation Company to get involved in foreclosure cleaning, but you will probably be asked to provide at least some of these services. It will be your decision to make regarding what services you will agree to provide.
While having an influx of calls for new business is very enticing, cleaning foreclosure properties comes with real opportunity for making estimating mistakes. There are other potential problems when cleaning "trash-outs" or foreclosures. Here are just a few:
- The homes are most always in very bad condition. Previous owners are angry, upset and often times take out this anger on the physical elements of the home. Some homes have been stripped down to the frame work with little else left.
- Other homes will appear to have been abandoned "on the spot" looking as if the homeowner just went for a walk. You might find TV's left on, food left in the refrigerator and animals left on their own.
- Banks can be very slow to pay for the cleanup of an abandoned foreclosure. Most often they will try to not pay what the work is worth.
- There are safety and sanitary risks to employees that go far beyond what is found in an occupied home.
- Often power and water is turned off making cleaning impossible.
- At times the smells of rotting food or decaying dead bugs can be sickening.
- Mold and other hazardous situations can be present.
Always inspect the property. Be sure you take the time to look at a foreclosure before you price it or agree to clean it. There are many uncertainties that can cost you profit dollars. Check for power and water, damage to the home's interior, holes in walls, exposed electrical wiring, damage to floors, broken windows, nonworking bathroom fixtures, spoiled food or other garbage covering floors and other elements that would make the property unsafe or unsanitary.
Determine the payment process with the bank or realtor. You will want to have a clear understanding of the timeline for payment to you. Is the money coming from the bank or the realtor? How fast will you be paid? Have a written contract in place outlining payment terms.
Deciding what to charge. This is not the kind of pricing situation where you will want to be the low ball estimate. There is a premium for working in and cleaning up typical foreclosure properties. Here is where seeing the property is critical to pricing accurately. If the home is not in terrible condition, you may want to charge your normal rate or increase it slightly. If it is disastrous, you should feel comfortable charging a premium or higher rate than you would normally. If you agree to remove any debris from the property, you should be charging extra for that service.
Remember, that often these properties are some of the worst you will see and you should not be charging the same rate you would for cleaning a regular client's home. Even if the home is not a disaster, foreclosure cleaning will be a specialty and niche cleaning and your charges should reflect that. What's typical? You might want to start by adding $10-$15 per hour to your regular charges and when warranted, add more. The amount to add is your decision to make.
Charging only by the hour giving a "best estimate" range of what the charge will be is a safe plan for pricing. For example you might quote a price of 32 to 45 labor hours with the open ended statement that this just an estimate. The fee could be higher. Never commit to a firm, flat rate unless you are certain you will finish within that time frame. You may uncover many "surprises" when cleaning a foreclosure that will cost you time and money.
Also consider the additional supplies you will need such as face masks, heavy duty gloves, extra disinfectant and trash bags, boots and in some cases a full body haz mat cover-up. These materials should be added to your cost.
And finally, how do you market your foreclosure business? Start by contacting all the local realtors in your area who deal in foreclosures. Contact local banks and mortgage lenders, they all have foreclosure departments. Create a flyer to distribute, announcing that you are taking on foreclosure work and always indicate that you are licensed and insured. List your experience in the industry and contact information on the flyer. Go to networking events to get the word out about your new diversification.
In the end, you are the only one who can decide if this kind of cleaning is for your company. It will be a segment that is strong for a few more years and if properly managed, can bring excellent revenue streams.
For more information about Sharon Cowan, visit her Profile Page or her website at www.MaidForSuccess.com.
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How Much Do Banks Pay To Clean Foreclosed Homes
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