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Dissecting a Foreclosure Cleanup Work Order: Things to Look Out For When You Receive a Foreclosure Cleanup Work Order

It is not uncommon for a small company to receive four to six work orders at one time. Here are some key things to look out for when you start receiving foreclosure cleanup work orders so you and your business are protected.

WORK ORDERS. In your foreclosure cleanup business / REO trash out business, you will work with many types of clients. Some will be larger preservation companies. Many larger property preservation companies will send out "work orders" to smaller foreclosure companies in order to have work completed on foreclosed homes. The work orders will most often arrive as faxes or as email attachments to the smaller company.

The work orders should have the primary contractor's name and contact info, the property's address, and specific job instructions, at minimum.

MORE THAN ONE AT A TIME. It is not uncommon for a small company to receive four to six work orders at one time. Most small companies will simply be happy to start getting work orders in numbers, and, unfortunately, they will dive into doing the work before dissecting the work orders carefully.

CAUTION. Dissect each and every order carefully before doing anything. Stop, read, re-read and query. First, don't assume that you have the "work" because you get the "work order." Call the property preservation company directly to verify they are indeed sending your company the work orders for completion. Develop a phone rapport with a specific person (i.e., the field services coordinator or vendor procurement manager) at the company so you can work out the details of the work orders.

EVERY DETAIL. Remember, your company is getting ready to spend time and resources to get the job done, so you want to make sure you understand every detail. It will benefit your company in the long run; and theirs, too.

DON'T ASSUME. If you are unsure of what the primary contractor is asking you to do, simply ask. Don't assume. It will cost you dearly in the end if you do. Further, if some wording in the work order is unfamiliar to you, ask them to clarify that portion. Don't try to be something you're not or you may wind up losing money on the job.

SAMPLE WORDING. Here is sample verbiage from a work order: "RUSH ORDER: Complete initial yard maintenance if within allowable. Bid if over allowable and provide ample photos to obtain bid approval."

ALLOWABLE? Notice the word "allowable." "Allowable" means "within their company's pricing guidelines," or, "based on the amount they will pay your company for the portion of the job outlined."

If you see the word "allowable," that means the company has its own set prices from which they work. How would you know what a company's allowable expenditures are unless you have their pricing guidelines on hand? Ask the property preservation company for their pricing table, or bid chart, or pricing spreadsheet (if it is not included in their vendor package or contract), so you can see if you can actually complete the job and make a profit.

IT'S OKAY TO SAY NO! Some work orders you may actually have to decline because there may not be enough room for profit. Remember, you're in business to make money.

PRICING: Note that in working with some clients and companies, you will be able to set your own foreclosure cleanup prices. But many property preservation companies will follow HUD's pricing guidelines when coming up with their allowable fees -- but often only as a gauge in setting their own prices. And their prices will depend on where "they" are on the totem pole in getting paid. We discuss "totem pole" in great detail in the Foreclosure Cleanup Pricing ebook.

OVER THE ALLOWABLE AMOUNT. Notice the work order verbiage above states the foreclosure cleanup company should "bid" if they believe the cost to complete the job is over the "allowable." This means that if the property preservation company's pricing is too low for your company to perform the job and make a profit, then you should simply place a written bid on the job. In this case, you are not working this portion of the job; you are simply bidding on it.

ATTACHING PHOTOS TO BIDS. Many companies will ask for photos with the bids you may ultimately place on a certain part of a work order. Use your judgment on this. In some scenarios, you may want to simply submit a written bid without the photos because you don't want to become the "unpaid" eyes for their properties by submitting bids and never hearing back. But, if there is extensive damage that you want to document pictorially, snap the shots and send them over with your bid.

VERBAL AGREEMENTS? Once you establish a phone rapport with your contact at the property preservation company as it relates to the work order, it will not be uncommon for you to notice other damage at the property for which you may want to seek approval to complete. The person on the phone may say, "Sure, go ahead and do this or that." Don't. Get the new duties approved in writing, first, or you may have a hard time getting paid for it because it wasn't on the work order.

REMEMBER THESE POINTS. Remember, everything is negotiable in foreclosure cleanup. But keep in mind the following when you start getting work orders: make sure the work order is intended for your company; find out what the company's allowable amounts are, if applicable; you don't have to complete every work order you receive; you should read, re-read and ask questions; and, you should put bids in writing and get approval in writing so you don't have a problem getting paid for work completed.

Good luck, and continued success with your foreclosure cleanup business!

NOTE: Throughout the web and in real estate industry literature/publications, 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.

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Article by Cassandra Black, Author of How to Start a Foreclosure Cleanup Business and several foreclosure cleanup industry Guides, Reports and Forms. Sign up as a Premium Newsletter Subscriber. You will periodically receive foreclosure clean-up job leads and consultative advice to help you grow your foreclosure cleanup business!

For more industry information, visit the foreclosure cleanup blog and the foreclosure cleaning newsletter archive.

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