How to Price Foreclosure Cleanup Jobs For Profit Using HUD’s Guidelines
A foreclosure cleanup 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. With one in every 25 homes in foreclosure, per Michael Williams, Fannie Mae CEO, and with millions of adjustable-rate mortgages 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.
Though foreclosure cleaning is a burgeoning industry, due to the sheer number of jobs available, foreclosure cleanup 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
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.