Foreclosure!!! The sinister word that everyone seems to be afraid of in the real estate universe. And one cannot fault them, nobody wants their property taken away. Foreclosure is a process whereby the lender (bank) takes back a housing property to settle for the owner’s debt.
Most times, investors take loans from financial institutions, like a bank, to invest in real estate properties based on an agreement.
When the investor fails to fulfill his end of the deal, the bank takes back the house and puts it back on the market. This is how they get their money back from the investor.
As a cleaning company, getting in business with realtors who work hand-in-hand with banks can improve your outreach.
This article will talk exclusively on foreclosure cleanup listings, how to get cleaning contracts from listings, and every other information you need to know.
How do I get a bank to hand me foreclosure cleaning contracts?
After an investor breaches the bank’s agreement, the bank takes control of the property and puts it on the market. That’s a green light for cleaning companies to approach the bank for cleaning contracts.
However, many people lose the contract because they are unaware of the requirements.
You need to understand who is in charge of the foreclosure listings, what they check (their requirements) and how to go around it.
In this section, we will discuss how to get a cleaning contract with a bank.
What are REO Properties?
“REO” is an abbreviation for Real Estate Owned. The bank has a section dedicated to handling foreclosed properties. The bank has lost some money, so they are hoping to get it back very fast.
The REO department is in charge of the foreclosed housing properties. You are likely to get a cleaning contract from the REO department. These pointers may give you an edge while negotiating a foreclosure cleaning contract
- You need to understand the bank wants to sell the houses quickly, so they are looking for a cleaning company with a fast turnaround time.
- The REO department is looking for a crew whose services will include a deep cleaning of the entire property.
- Be ready to offer the total cleaning package. That includes labor, deep cleaning, and so on. The REO department wants a cleaning company that is ready to work extensively.
- Get your business permit and insurance. A bank will never work with a company that doesn’t have a business permit or coverage. A business permit indicates that you are allowed to offer cleaning services in the state. A coverage shows that your business is covered peradventure you damage something while cleaning.
- Lastly, approach the bank with a professional guise, showcasing your flyers and past jobs as reference.
Starting a Foreclosure Cleanup Business : Pros and Cons
Before diving into bidding for cleaning contracts from banks and other financial institutions, it is important to understand some basic information.
A foreclosure cleanup business entails looking for foreclosed houses, winning a cleaning contract and executing the job.
In this section, we will discuss the pros and cons of starting a foreclosure cleanup business. This section will tell you what you stand to gain in the business and the challenges you might encounter.
- It is easy to start. You don’t need a lot of capital to start this business. Starting a foreclosure cleanup business requires you to get some documents such as a license for your business, insurance, identity card, business cards, a website, and some cleaning equipment.
You can start on a small-scale by handling lawn maintenance and interior cleaning. As you earn more and gain more contracts, you can purchase some other cleaning tools and hire more people.
- You don’t need office space. Most people think you need a big office space to start a foreclosure cleanup business. The bank isn’t coming to you; you are going to the bank.
You only need to look professional, have all the requirements, and a portfolio of successful jobs. You can decide to rent an office space once you start earning big contracts.
- You are your own boss. This is my best point! You don’t answer to anyone except the bank. Once you get the contract, you are your own boss. There is no one to tell you how to do your job.
However, it is important to always do a good job. As a small startup, leaving a first good impression will enable the bank to give more cleaning contracts.
- You can add other services. Through these contracts from the bank, you can become popular in the cleaning industry. You can add other cleaning services such as garage cleanouts, monthly cleaning contracts in offices, schools and academic institutions. This will help your brand grow exponentially and in the long-run, you can eventually dominate the industry.
× The payment is usually slow.
Most times, banks take time before issuing payments. Sometimes, it takes up to three or four months before a simple invoice is paid. However, you can sell your invoice to a company for money. These companies will pay you part of the money until they can cash the invoice. If you don’t have enough positive cash flow, you may be unable to sustain your business.
× You cannot do it alone.
You will need to employ the services of some extra workers which you have to pay per job. These workers represent your business’s image. If something goes wrong during the job, your reputation is soiled. That’s why you have to scrutinize and vet the people you will hire properly. Ensure that they are well organized and the best at the job. Also, if anything gets damaged in the house, the damage is on your insurance.
× It is not a get-rich-quick business.
You have to start small and work your way to the top.
× It requires hard work.
If you aren’t ready to do some back-breaking work, don’t start a foreclosure cleanup business.
How much does a foreclosure cleanup costs?
The state fines any bank that leaves foreclosed housing properties dirty. So the banks are willing to hire cleaning companies to carry out the cleaning as soon as possible. The average cost to clean a foreclosed property falls between $500 and $1500.
Finding foreclosure cleanup listings may require a strong connection with the bank workers or house cleaning staff.
Since you are not the only cleaning company looking for foreclosure contracts from the bank, it is advisable to seek a reliable information source.
Check the internet for possible listings and prepare to approach the bank with the requirements.