How to Price Foreclosure Cleanup Jobs For Profit Using HUD's Guidelines
How to Price Foreclosure Cleanup Jobs For Profit Using HUD's Guidelines
A foreclosure cleanup business / property preservation business does everything from lawn maintenance, to trashouts, to cleaning, pressure washing, gutter cleaning, repairs and more.
The foreclosure trashout industry is proving to be a lucrative business option for hardworking entrepreneurs. See some stats below:
- Per recent article, "More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year."
- "August [2010] makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The
previous high was in May." Source.
- "Lenders took back more homes in August [2010] than in any month since the start of the U.S. mortgage crisis." Source.
Further, millions of adjustable-rate mortgages are poised to reset in the coming years, creating the prospect of a new round of foreclosures. Foreclosure cleaning startups are perfectly situated to have evergreen enterprises for years to come. However, though foreclosure cleaning is a burgeoning industry, a foreclosure cleanup enterprise can be a business with thin profit margins -- if entrepreneurs aren't pricing their services "for profit."
Pricing for profit can be tricky for new property preservation business owner who don't know the ins and outs of how
contracts are won, who gets paid first,
where they are on the totem pole in getting paid, etc.
A good tool to use in pricing foreclosure and trashout type jobs is HUD's pricing guidelines for property preservation type
companies -- BUT, to use this tool
alone can be a grave mistake.
When using HUD's guidelines to price jobs, business owners should be aware that the tables list the maximum amount
HUD will generally pay the PRIMARY contractor of a foreclosure cleaning job.
As a smaller company, business owners should know where they are on the totem pole in actually getting paid to know
how to charge using the tables. They should also learn how to figure out whether they are the primary subcontractor, number two in line, number three, etc. This will not only help
them figure out how to price, but will also guide them in figuring out the best strategy to use in winning jobs.
Foreclosure cleanup business owners cannot simply look at the HUD pricing charts and use those figures for bidding, or
they'll certainly overbid a job and lose
out. The tables have to be dissected effectively. (See Pricing Guide for Foreclosure Cleaning & Real-Estate Service Businesses: How to Price Jobs for Profit for a list of HUD's guidelines.)
Remember, the HUD pricing guidelines for foreclosure cleaning are what HUD will pay, maximum, for a service (though
certain scenarios will permit them to go
higher with substantiating information). The amounts listed in the charts are really for that primary contractor.
Anybody can price, but pricing "for profit" in the burgeoning foreclosure cleaning industry is an art. New foreclosure
cleanup businesses should plan to do their
research so they can learn how to dissect the HUD charts and price effectively for profit to win more cleanup business.
Continued success in your foreclosure cleaning business!
NOTE: Throughout the web and in real estate industry literature, you may see the names mortgage field services, property preservation business, foreclosure cleanup, foreclosure cleaning, foreclosure clean-outs, foreclosure clean, clean foreclosures, cleaning foreclosures, REO trashout, REO trashouts, field asset services, property field services, field service, and field services used interchangeable. The main thing to remember is foreclosure cleaning and foreclosure cleanup generally refer to smaller entities; while property preservation generally refers to larger companies.
