A foreclosure cleanup business does everything from lawn maintenance to trash removal, cleaning, pressure washing, gutter cleaning, repairs, and more.
The foreclosure dump industry is proving to be a lucrative business option for hard-working entrepreneurs. With one in 25 homes in foreclosure, according to Michael Williams, CEO of Fannie Mae, and with millions of adjustable-rate mortgages set to reset in the next few years (creating the prospect of another round of foreclosures), companies Emerging foreclosure cleanup companies are perfectly situated to have evergreen ventures for years to come.
Although foreclosure cleanup is a thriving industry, due to the large number of jobs available, foreclosure cleanup can be a slim-margin business if employers do not price their services to make a profit.
Pricing for profit can be tricky for new property preservation business owners who don’t know the ins and outs of how contracts are won, who gets paid first, where on the totem pole they stand to get paid , etc.
A good tool to use for pricing for foreclosure and garbage collection jobs is HUD’s pricing guidelines for property preservation type companies, BUT, using this tool alone can be a serious mistake.
When using HUD’s guidelines to price jobs, business owners should keep in mind that the tables list the maximum amount that HUD will generally pay to the PRIMARY contractor for a foreclosure cleanup job.
As a smaller business, business owners need to know where they are on the totem pole in terms of actually getting paid in order to know how to get paid using the charts. They must also learn to determine if they are the main subcontractor, number two in line, number three, etc. This will not only help them figure out how to price, but also guide them in figuring out the best strategy to use to win jobs.
Foreclosure cleanup business owners can’t just look at HUD’s price charts and use those figures to make a bid, or they will certainly overbid a job and lose. Tables have to be dissected effectively.
Remember, HUD’s pricing guidelines for foreclosure cleanup are what HUD will pay, at most, for a service (although certain scenarios will allow them to go higher with supporting information). The amounts listed in the tables are actually for that main contractor.
Anyone can set prices, but “for profit” pricing in the booming foreclosure cleanup industry is an art. New foreclosure cleanup companies should plan to do their research so they can learn how to dissect HUD charts and effectively trade for profit to win more cleanup business.