A foreclosure cleaning business does everything from lawn maintenance to trash removal, cleaning, pressure washing, gutter cleaning, repairs, and more.
The foreclosure junk industry is proving to be a lucrative business option for hard-working entrepreneurs. With one in 25 homes in foreclosure, according to Fannie Mae CEO Michael Williams, and with millions of adjustable-rate mortgages poised to reset in the next few years (raising the prospect of a new round of foreclosures), businesses Foreclosure cleanup startups are perfectly placed to have perennial businesses for years to come.
Although foreclosure cleanup is a thriving industry, due to the large number of jobs available, foreclosure cleanup can be a business with slim profit margins if entrepreneurs don’t price their services for 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 foreclosure and trash removal 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 for pricing jobs, business owners should note that the tables list the maximum amount HUD will generally pay 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 so they 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. Not only will this help them figure out how to price, but it will 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 pricing charts and use those figures to 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 prime contractor.
Anyone can set prices, but pricing “for profit” in the burgeoning 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 price for profit to win more cleanup business.
