$3 Million Beachfront Foreclosure Now a $200,000 Fixer Upper?

Inside Editition’s story,  $3 Million Foreclosed Home Destroyed, profiled a mansion with damage so extensive that it “wouldn’t fetch $50 on Craigslist,” according to the realtor profiled in the piece.

Located in upscale Huntington Beach (a community right outside close to LA), the cost to repair this destroyed mansion cost more than most Americans pay for their homes — a whopping $200,000.

Some of the havoc wreaked on this gorgeous-on-the-outside mansion include: tipped out toilets; missing sinks, cabinets and countertops; and torn out stair rails. To see more view the video of this $3 million trashed foreclosure.

Copyright © 2009: Foreclosure Business News

Home Prices Post Record Drop; Foreclosures to Blame?

As foreclosure homes for sales clog the market, much of the movement in the real estate sales sector centers around moving this inventory. As explained in the CNN.com article, Record drop in home price index:

The nation is grappling with historically high foreclosure rates, . . . Much of the [real estate] sales traffic is in foreclosure inventory, which may be skewing price statistics downward because distressed properties are often in poor condition.

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Cities With the Biggest Home Price Drop

Phoenix logged a 48.5 percent drop;
Las Vegas, Miami, San Francisco and San Diego each logged drops of over 40% from their all-time highs; and
Denver and Cleveland drop just over 5%.

Cleveland was a surprise, as this manufacturing city has shed many jobs, which brings us to the underlying problem prolonging the foreclosure crisis — job losses.

It’s practically impossible to talk about the foreclosure industry without talking about job losses. In spite of the glimmer of good economic news recently, the economy is still shedding jobs. This means that more foreclosures may be on the way, which has many wondering, “Where is the bottom? When will the foreclosure crisis end?”

Unfortunately, no one seems to know.

Wondering about where your state ranks in the foreclosure crisis? You’re not alone. Find state-by-state foreclosure rates, as well as state-by-state unemployment rates.

Copyright © 2009: Foreclosure Business News

Clean Foreclosed Homes: Where to Find Clients Who Need Your Services

Since the foreclosure crisis started a few years ago, one of the most often-asked questions by business opportunity seekers has been, “How do you start a business cleaning out repossessed and foreclosed homes?”

But perhaps the first question should be, “Who will I market my foreclosure cleanup services to?” For marketing is the lifeblood of every business, and without a clear idea of who your clients are going to be, it’s going to be really tough to succeed — no matter how hot a business opportunity foreclosure cleaning is.

Following is one group to target that you may not think of right away, but who make fertile ground for which landing foreclosure cleanup jobs.
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Junk Haulers: A Great “Partnering” Opportunity for Foreclosure Cleaning Companies

“Why junk haulers? Aren’t they ‘the competition?'”, you may be thinking.

Yes, they may very well be. But junk haulers make good companies to market to for the following reasons:

(i) Not Multi-Service Firms: Many junk and debris haulers are just that — they clear out and haul away junk and debris — and that’s it. While debris removal may be a service your foreclosure cleaning company offers as well, you can partner with a firm like this and outsource this portion of the job to them, while you handle the other portions of the job (eg, interior cleanup, minor repairs, lawn maintenance, etc.).

(ii) Not Fully Insured: Many junk haulers are not insured like a full-service foreclosure cleanup company would be. This makes them ineligible to handle a lot of what needs to be done to foreclosed homes for sale.

You see, most of these jobs are handed out by the REO (real-estate owned) departments of banks and/or realtors who handle foreclosures. The reason it’s important to know this is that they require proper insurance and business licensing before they will subcontract the work these properties need.

Their subcontracting guidelines vary by state, lender and/or municipality, so check with them to know exactly what you need in the way of insurance and business licensing. As a heads up, some of the types of insurance you’ll be asked for are liability, workmen’s comp and/or an official business license.

Many junk haulers may have some or none of these. Because many start out as sole proprietorships and never grow beyond that, they don’t have the full battery of qualifications to be able to take on jobs from banks and realtors as primary subcontractors. But, they make perfect subcontractors for you if you’re a full-service foreclosure cleaning company with the proper credentials in these areas.

So be sure to target junk haulers when you start to market your foreclosure cleanup services. While everyone else is inundating realtors and banks (and you should be also!) with their marketing materials, you can also start building relationships and pulling in jobs from these types of businesses as well.

May be reprinted on your site, blog, newsletter, newspaper, etc., with the following attribution, in full: To learn everything you need to know to start a foreclosure cleaning business, log on to ForeclosureBusinessNews.com for 200 pages of first-hand information from the owner of a leading foreclosure cleanup company in Atlanta, GA.

© 2009 Yuwanda Black for Foreclosure Business News

Why Foreclosure Cleaning Is a Lucrative Biz Opp No Matter What the RE Market Is Doing

Many are diving into the foreclosure cleaning business right now. It’s easy to see why; foreclosures are in the news every day and unemployment is rising. So, many are thinking, “Why not take the plunge and start a business cleaning foreclosures?”

While starting a foreclosure cleanup business is a good idea right now, it is a lucrative business opportunity no matter what the real estate market is doing. Following is why.

3 Reasons Foreclosure Cleaning Companies Thrive – In Good & Bad RE Markets

Foreclosure Cleaning Businesses Thrive in Every RE Market

Real Estate is Bought and Sold Every Day: As long as houses change hands, there will be a need for foreclosure cleaning companies. Even in good economic times, there are foreclosures, evictions, voluntary departures, etc.

So, houses will need all the services that foreclosure cleanup companies offer, which brings us to the next point, ie . . .

Foreclosure Cleaning Companies Offer Many Services: When a homeowner or tenant leaves a property, there is almost always maintenance and cleaning that needs to be done to get it ready to go back on the market.

Whether the owner/lender plans to sell or rent, the property has to be what real estate agents refer to as “market ready.” In tough economic times, a broom-swept clean may be good enough; in booming (eg, competitive) market conditions, the house may need to be white-glove clean.

Either way, it is something a full-service foreclosure cleaning company can handle.

Foreclosure Cleaning Companies are Malleable: That is, they can switch their focus on a dime – if they know how to market themselves right.

For example, in bad economic times where foreclosures mount, they can pitch themselves as foreclosure cleanout companies to realtors and banks. In booming economic times, they can pitch themselves as real estate clean up or property maintenance firms.

A good example of this is found in the 3/1//09 New York Times article, Foreclosure Trash-Out: Ill Fortune and Its Leavings, where a company reinvents itself. The journalist writes: 

. . . WSR Sales and Management, a real estate company based in nearby Riverside [NY] that has been around for 27 years, but has lately reinvented itself as a specialist in “home preservation” — the process of cleaning, securing and maintaining foreclosed properties for banks that begins with the process referred to as trashing out. . . . Companies like WSR have been starting up (or similarly retooling) across the country in the last year . . .

The service offerings are the same; the marketing is just different. This is why it’s extremely important to know how to market your foreclosure cleaning business in order to thrive – in a good real estate market, or a struggling one like we find ourselves in now.

© 2009 Foreclosure Business News

Cleaning Foreclosures? Why You Should NOT Give Detailed Job Estimates

If you have a business cleaning foreclosures, or are thinking about starting one, there is plenty to learn. This is especially true when it comes to pricing, bidding on and giving out estimates for jobs. Here, we will tackle the estimate – as in, two reasons you should not give a detailed estimate.

 

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Foreclosure Cleaning Business Owners: 2 Reasons Not to Give Broken Out Estimates

 

Estimate Source: One reason not to give detailed estimates is that many times, you are just being used to as an “estimate source.” 

 

To explain, most of your foreclosure clean out jobs are going to come from realtors and/or the REO departments of banks. This is important to know because many of them have to submit two or three estimates to their superiors before they can outsource a job (ie, hire a foreclosure cleaning company).

 

And, this is why giving out detailed estimates – in the beginning – can be a waste of time for you. Putting together a detailed estimate takes time. So in the beginning, just give whoever is asking for the estimate a job rate – on your company letterhead of course, so it’s official.

 

If they ask for a more detailed estimate, tell them that you can provide that if you’re hired for the job. Stress that the job estimate won’t change, but that it is your company policy to only give out detailed estimates once a contract has been signed.

 

The next point will clarify even further why this is important.

 

Price Shop: Many times when you provide a detailed estimated, it is used to subcontract out certain parts of a job – to other foreclosure cleaning companies.

 

For example, let’s say you bid on a job that came out to $5,000. You included $1,200 for the painting; $600 to hang sheetrock; $2,000 for the trashout; and $1,200 for exterior painting.

 

Now, your profit is built into each of these. So a realtor, banker, investor – whoever asked for the estimate – could ostensibly take this and start to price shop. Take the painting. What if the person requesting the estimate called around and got someone to do the interior and the exterior painting for $1,500? That’s $900 less than what you charged (a total of $2,400 for exterior and interior).

 

With your estimate in hand, they can use you as a bargaining chip, ie, “We already have a company that’s going to do it for $2,400? Can you beat that?”

 

And, this is why if you own a business cleaning foreclosures, you should only quote job rates – until a contract is signed. Then, and only then, should you give a more detailed estimate.

 

May be reprinted on your site, blog, newsletter, newspaper, etc., with the following attribution, in full: To learn everything you need to know about how to start a foreclosure cleaning business, log on to http://ForeclosureBusinessNews.com. The site offers a plethora of information on buying foreclosures, preventing foreclosure, starting lucrative foreclosure businesses and the most recent news in/on/about the foreclosure industry. If it’s about foreclosures, you’ll find it at ForeclosureBusinessNews.com!

© 2009 Yuwanda Black for Foreclosure Business News

Foreclosure Cleaning: 3 Things You Can Do to Price Your Services Just Right

One of the most often-asked questions many new foreclosure cleaning business owners have is how to price their services. Especially if you have no previous business experience, it can be difficult to know exactly how to do it so that you don’t under charge or over charge. Following are three specific things you can do to price your foreclosure cleanup services right.

Foreclosure Cleaning: What to Charge?

Foreclosure Cleaning: What to Charge?

Know What You’re Pricing: Underpricing is one of the main reasons many small business owners fail. If you own a foreclosure cleaning business — ie, a service business — it’s particularly important to figure in the “cost” of time and labor. And, this is why so many small business owners fall short in their pricing.

So, how do you come up with a fee for your time and labor? Quite simply, think of yourself as a hired worker. How much would you hire yourself out for, eg, $10/hour, $15/hour, $20/hour, etc. Then, you simply add that on to the cost of “hard goods,” which brings us to the next item on the list — the cost of supplies.

Pricing Supplies: Pricing supplies for your foreclosure cleaning business is very easy. Before we get to how to price them, you may be wondering what types of supplies you will need. They include cleaning chemicals (eg, bleach, degreasers, glass cleaners, chrome cleaners, mold and mildew cleaners, etc.). 

Then there is the cleaning equipment you will need, eg, brooms, mops, gloves, buckets, sponges, dusting cloths, masks (it’s a good idea to get in the habit of wearing these because some properties you encounter will be so filthy you won’t be able to stand the smell), etc.

Now, on to the cost of supplies. You can find this out in a couple of ways.

2 Ways to Price Supplies

(i) Visit local stores that sell cleaning supplies. This can a Lowe’s, Home Depot or Sam’s Club. It’s best to visit those that sell in bulk, because ostensibly, that’s how you will be buying supplies. Spend several hours visiting several outlets and write down the prices. This is business research and will serve you well for a long time. You’ll be able to price jobs much more quickly when you know off the top of your head in and around what supplies cost.

They would be very much willing to help you out since you are now a prospective client. In fact, they might even make your job easier since they can give you a brochure of their products.

(ii) The second way to find out the cost of supplies for your foreclosure cleaning business is to buy some and do a cleaning job. Start with your house or the house of a friend. This is good because not only will you find out the cost of supplies, you’ll find out how much of each it takes to clean a home of say, 2,000 square feet.

This will also give you insight into how many hours you will spend to clean a house of this size, which means you can figure out how much to pay yourself (or workers) for labor.

Pricing Tip: When you visit local outlets, tell them what type of company you’re starting. They’ll more than likely go the extra mile for you — a prospective new business client — by giving out product brochures, telling you which cleaners work best for which jobs and other cleaning industry trade secrets professionals like you will need to know.

Check the Competition: One of the most important things you need to do when trying to figure out how to price your foreclosure cleaning services is to find out what the competition is charging. While you may want to pay yourself say $25/hour, you may find out that this cost is making you much more expensive than the competition, so you need to scale back to $20/hour.

Simply call up a few companies and pretend to be a customer in need of their services (yes, it is a little underhanded, but it is done all the time in the name of free enterprise; it’ll happen to you to if you start a business, so don’t think you’re doing anything terrible). Be prepared to give specifics, ie, how many square feet, what services you need done, etc.

Another advantage of doing this is that you get a good idea of how to handle service calls. Pay attention to how they question you, what they ask you, how they ask to schedule appointments, etc. You can use this information so formulate your own phone consultations.

If you do these three things, you will be able to price your foreclosure cleaning services almost right. And the reason we say almost is because there is a lot of on the job learning in this business. Every foreclosure cleanup job is different and you will learn from each one that you do.

But, if you’re new to this business — or small business in general — these are excellent tips to use to start pricing your foreclosure cleaning jobs.

May be reprinted on your site, blog, newsletter, newspaper, etc., with the following attribution, in full:  To learn everything you need to know about how to start a foreclosure cleaning business, log on to http://ForeclosureBusinessNews.com. The site offers a plethora of information on buying foreclosures, preventing foreclosure, starting lucrative foreclosure businesses and the most recent news in/on/about the foreclosure industry. If it’s about foreclosures, you’ll find it at ForeclosureBusinessNews.com!

© 2009 Yuwanda Black for Foreclosure Business News

 

Foreclosure Cleaning Business Owners: How to Decide Which Services to Offer

Foreclosure cleanup businesses can offer a broad range of services to realtors, bankers, mortgage companies and private investors. Which services to offer depend on a lot of factors, five of which are discussed here. Just because a business can offer a service doesn’t mean they should. What is meant by this? Read on to find out.  

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Foreclosure Cleaning Companies: 5 Factors That Help Determine Service Offerings

Startup Capital: This is perhaps the number one thing to consider when trying to decide which foreclosure cleaning services to offer. As home foreclosures mount, many would-be entrepreneurs recognize the potential of this type of business and want to jump in with both feet. This is understandable.

But, much like learning to swim, you have to learn how to navigate the shallow waters before you can dive into the deep end. Otherwise you can find yourself in real trouble – ie, out of business – before you even get started good.

 

So, if you don’t have all the equipment necessary to open a full-service foreclosure cleanup business, start with simple trashouts. This requires little more than a vehicle and some muscle. And, you can rent a truck if you don’t have one already.

 

Know-How: Again, foreclosure clean out business owners need to have knowledge in a lot of different areas – ie, contract negotiation, pricing, how to hire and work with subcontractors, placing bids, etc. Every job is a learning experience. If your knowledge is limited in business, again, start small –  offering one or two services – and then add on as you feel more comfortable.

 

Simple services like lawn maintenance and trash/debris removal are two major requirements of this industry. So, start with these services. Once you’re comfortable pricing these jobs, invoicing for them, hiring workers, etc., then you can add small repairs, then painting and on and on and on.

 

Location: Location is a factor in determining which services to offer in your foreclosure cleaning business for several reasons:

 

Cost of Supplies: This goes to your startup capital. If you live in the northeast, you might find that supplies are more expensive than in the southeast. For example, do you have snow removal equipment – which may be required of some jobs in the northeast. If you started a foreclosure cleaning business in the south, you wouldn’t have to worry about that as a cost.

 

The Weather: Speaking of climate, it affects the busy/slow season of the foreclosure cleanup business. Hence, the amount of money you can make at any given time. There’s usually more work in this business during warmer months. If you live in a city/town where there are lots of foreclosures – and the weather is in a warmer climate year round, then you’ll probably have more work and with fewer startup costs than someone who lives in a colder climate.

 

As you can see, there are many factors to consider when starting a business – any kind of business. The main thing to remember about starting a business cleaning foreclosures is that it’s okay to take your time. Don’t get in over your head; build slow. For, if you do it right, you’ll  have a lucrative business for years to come.

 

May be reprinted on your site, blog, newsletter, newspaper, etc., with the following attribution, in full: To learn everything you need to know about how to start a foreclosure cleaning business, log on to http://ForeclosureBusinessNews.com. The site offers a plethora of information on buying foreclosures, preventing foreclosure, starting lurcative foreclosure bsuinesses and the most recent news in/on/about the foreclosure industry. If it’s about foreclosures, you’ll find it at ForeclosureBusinessNews.com!


© 2009 Yuwanda Black for Foreclosure Business News

Foreclosure Crisis Lessons: How Foreclosures Affected One Neighborhood

When your neighbors don’t pay their mortgage, it not only affects your property values; there is collateral damage beyond that that is even more damaging, like the following, all of which are clearly illuminated in one USA Today article from 2002, Rising foreclosures reshaping communities

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4 Problems Neighborhoods Face When Foreclosures Run Rampant

Fragmented Neighborhoods: Do you know who your neighbor is? Does it comfort yo to know who’s sleeping in the house next to you? In the article mentioned above, the journalist uses teh phrase, “fragmented community,” to refer to communities where this is not the case, ie: 

As homes fall into foreclosure, a neighborhood frequently turns more transient. Investors often buy homes in foreclosure and rent them out if they can’t sell them. “You end up with a very fragmented community,” . . . When investors buy them and turn them into rental property, it can be Section 8 (a government rental assistance program). Not that there’s anything wrong with that, but folks come in from a different background with different expectations and don’t have the means to keep up the place.

This leads directly to the next problem neighborhoods plagued by foreclosure face . . .

Feeling Unsafe: One of the comforting things about living in a neighborhoods where people who own stay put is that you know who your neighbor is; most likely, you become friends with them. But, if a home is constantly being inhabited by new people, you don’t get a chance to forge that neighborly bond. And, you can start to feel unsafe, especially if you feel that your neighbors are cut from a different cloth.

Actual Crime: While the article above was written in 2007, it could have been written today as actual crime has gone up in many counties with a high rate of foreclosure. In fact, the piece mentions that one resident of the community profiled was dragged behind a vacant home and raped; and a heroin addict had moved into another vacant home.

School Deterioration: Schools are affected as well when foreclosures happen. Property taxes are one of the main ways counties raise taxes for their school systems. When homes are foreclosed on, that’s lost revenue. That means less money for after school programs, hiring (additional) teachers; and a host of other programs financed by taxpayer dollars.

Additionally, there’s the trauma of students coming into the schools. Many have a home life that’s so disrupted that it spills over into the kind of students they become at school. Many fall behind, which means teachers have to teach differently; this disrupts the entire classroom — and the curriculum at large.

There are many lessons to be learned from the foreclosure crisis. And as it continues to drag on, we may be in for a few more.

© 2009 Foreclosure Business News

Foreclosure Cleanup Companies Boom: As Homebuilders Fold, Opportunity Knocks

In the 1/20/09 MSN Money article, Foreclosures sting even best builders, journalist Todd Harrison writes, “Besieged by collapsing home prices and frightened banks scrounging for cash, even the real-estate industry’s brightest stars [home builders] are finding there’s no place to hide.”

In plain language, it’s not just homeowners who are being hit hard by the foreclosure crisis – home builders are suffering too. Many of them are going out of business, leaving communities with unfinished homes, empty lots – and lots of opportunity for foreclosure cleaning companies. Following is how.

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When a builder goes under and properties are left unfinished, savvy investors are the most likely buyers. And, before and after they finish a renovation, they hire foreclosure cleanup companies to do the commercial cleaning needed, eg, lawn maintenance, hauling away trash and debris, boarding up broken windows and doors, etc.

According to the aforementioned article, “It’s estimated that over 20% of the nation’s homebuilders have closed their doors . . .” This means lots of unfinished homes to secure, clean out haul away trash, etc.

How to Find  Home Builders to Pitch Your Foreclosure Cleaning Services To

Following are two ways to find out who the major homebuilders in your area are.

The Grassroots Method: When a community is being constructed, usually the builder has a big sign in front, eg, “An XYZ Community,” (with XYZ being the name of the construction company).

Simply by driving around, you can write down the name of the companies that appear on the signs in a newly constructed community and look them up on the internet to pitch your foreclosure cleaning services. While this can be time-consuming, it’s an excellent way to get to know the “players” in the home building game in your community.

The NAHB: The NAHB is the trade association for homebuilders. NAHB is an acronym for the National Association of Home Builders. On their website, NAHB.org, you can find out everything you need to know about builders in every state in the union.

The site also has information about trade shows, other meets and events, press releases pertinent to the industry and a whole lot more. It’s an excellent site to bookmark if you’re interested in building your foreclosure cleaning business and want builders as part of your client base.

Why Builders Make Great Clients for Foreclosure Cleaning Companies

Lots of Business: There’s an old saying that goes, “the shortest distance between two points is a straight line.” For foreclosure cleaning business owners, this means making a straight beeline to builders. After all, they build homes and use companies to do commercial cleaning.

Industry Contacts: Builders have many contacts – like realtors, they know other contacts you can get business from.

Patience is the Name of the Game When Targeting Homebuilders

Getting close to builders is tougher than making contacts with realtors. After all, there are fewer of them, and many already have their contacts in place. BUT, if you can patient and consistently network and market to this niche, eventually you will get business from them.

And, what a payoff it can be! While landing the “big fish” may take some effort, for foreclosure cleaning company owners, builders are truly the “catch of the day” worth the effort it takes to reel in.

May be reprinted on your site, blog, newsletter, newspaper, etc., with the following attribution, in full: To learn everything you need to know about how to start a foreclosure cleaning business, log on to http://ForeclosureBusinessNews.com. The site offers a plethora of information on buying foreclosures, preventing foreclosure, starting lurcative foreclosure bsuinesses and the most recent news in/on/about the foreclosure industry. If it’s about foreclosures, you’ll find it at ForeclosureBusinessNews.com!


© 2009 Yuwanda Black for Foreclosure Business News

Rising Home Foreclosures Lead to Better Deals on Home Renovation Projects

The declining value of homes makes many think less about selling and more about sprucing up the home they have. And, many home renovation experts stay that it’s an excellent time to invest in home renovation projects.

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Foreclosure Crisis Means No Home Renovation Job Is Too Small

During boom times, many contractors, home renovation experts and interior designers are too busy to tackle smaller projects. Many have a project minimum, eg, $50, $75,000, $100,000. As noted in the Washington Post article, A Time to Fix Up, nowadays, these industry experts are much more flexible about the types of proejcts they take on. Once executive of a design-build company featured in the article put it this way:

[We] used to be too overwhelmed with larger projects to take on those under $70,000, but it now [we accept] smaller jobs. [We have] launched a small-projects division to handle such projects at hourly rates, from $65 to $100.

Companies That Innovate to Adjust to Foreclosure Crisis Will Survive

It’s innovative thinking like this that will get smart companies through the foreclosure crisis. Companies that don’t adapt to the current market situation may well find themselves out of business before the country can pull itself out of this whole mortgage mess.

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