With this and other cost that may come into play, you will have to charge your client whatever your cost was plus an additional charge to cover a profit. No one wants to break even! Also remember, do not charge the maximum price that almost everyone stated with this response. Be fair and be able to get more deals. People want to save money and you want to make money. If everyone is charging me $2500 and someone comes along at a lower price to do the same thing, I am going to jump on the lower cost.
Market yourself as a great quality worker with an inexpensive price. You have to learn to target the frugal buyers.
Thank you Don & Greg!
Answers are right on + there's a few more facts:
Not only am I an agent, but my husband has been in the business of providing a "full" service Trash Out, Sales Clean, handyman, etc. company.
During the "mean & lean" times, there are several companies out there that just want to "underbid" companies that are "Licensed, Bonded, & Insured" business' & contractor's. We've been providing this service for over 2 years and have seen a dramatic change even in this type of industry.
The only image of this type of "service" is that it's an "easy" way to may "GOOD" money. Well, from experience, there are times when you receive payment and say "I actually made a profit on this one!!"
Many lender's require you provide "2" bids if the estimate is over $495. That does bring in the competitveness. On several jobs, our company has received the approval even though the estimate comes in higher?
Why? The experienced REO agents provide "due diligence" to their lender's by researching and making sure the companies they hire are "insured".
If you are allowed onto the property for a clean-out, repairs, or any type of maintenance and the contractor/sub-contractor, or employee is injured, it can become a complicated situation.
Good REO Trash-Out companies are covered by a minimum of a $1,000,000.00 insurance policy. Two lender's that I'm ($aware of actually insist on having proof by a "Certificate" from the insurance carrier or you don't get the job. Insurance premiums can be exceptionally expensive for these companies, ($1,400-$2,100 in CA) + Workman's Comp.
My advice for you Santa is to set your business up the right way in the beginning. Get the proper Insurance, equipment (cleaning supplies as they become expensive), professional marketing materials, and MOST of all invest in "Quickbooks".
When you do all that, you then do some simple math and figure in all of your proposed overhead. Simple division, and you can move forward with how much you should charge.
Whew......sorry for the long answer but it's a little more complicated than to just "Clean" foreclosed homes/properties.......if you want to do it the right way anyway!!
Best of luck!!!
Get your deal...I can refer you to a foreclosure agent anywhere in the country, just contact me!
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Mount Vernon Realty
I hope this answer helped you.
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As a smaller foreclosure cleanup company you have to know where you are on that totem pole in getting paid -- and you have to know how to figure that out.
Anybody can price, but pricing "for profit" is an art, so plan to do your research and price to keep $$ in your pocket for your foreclosure cleanup jobs.
Good luck with your business, Santa!
There are folks that have been involved in real estate in one capacity or another and they have jumped on the opportunity which at first providing a very good profit margin. As with any business, margins keep getting smaller and smaller...there is still work out there, but it is becoming a commodity more and more, every day.
While it is a good short-term solution, please be careful not to put too much time and energy into starting or maintaining a company that does this sort of work. You can expect banks to to present, what may appear to be, a great price on a house, but once the relationship is moving forward they will reel in your profits in little ways...just be careful.
The other problem is that this is not a long-term strategy...with all of the companies popping up all over the place it is only a matter of time before your profit margin erodes even more. I honestly don't mean to be as negative as I am being, but I have already seen more than one savvy investor lose even more money by getting into the foreclosure clean out business.
Keep your head about you and pay attention to what is going on and you can make some decent money at it, just be realistic about the business and recognize when things begin to turn south.
Good Luck and God Bless!
Also, know who you are bidding for. Realtors "Reo' agents will be paying for this out of there own pocket and are always concerned with cash flow, offering the Realtors that handle Reo properties a discount can help and possibly get you more work.
Another thing to remember, there is HEAVY billing involved and if you do not stay on top of your billing to the banks and asset management companies, you will not get paid ontime. Banks and Asset Management Companies pay on average from 45 to 60 days when billed properly.
There are several variables when it comes to pricing: 1. The Size of the Property 2. How many square feet the residence is 3. How large of a job it is "ie. average or massive trashout"
In Cottonwood, Arizona they are charging between $15.00-$20.00 per hour. Every state is different but I do want to you know that I have been to your wonderful area and had a pleasant time.
Sandra J Steele
Cassandra, Foreclosure Cleanup, LLC, Atlanta, GA
Team West Real Estate
You asked "What should I charge to clean foreclosed homes?"
You didn't ask: "What will HUD allow?" Doesn't matter what HUD allows. You asked what you should charge. You should charge enough to cover your costs and make a reasonable profit. I've seen plenty of instances in which the government sets maximum rates for products or services. Sometimes those figures are reasonable. Often they're not. The HUD figures don't reflect what your costs are. At best, they may reflect some national or regional averages.
You didn't ask: "What do foreclosure Realtors pay?" If you read the answers immediately below, you'll see answers of $2,500, $500, and $100. Give me a break! I can tell you that if you charge $100, you'll go broke almost immediately. Beyond that, though, your question was "What should I charge to clean foreclosed homes?" Not: "What do others pay?" Broken record here, but you should charge enough to cover your costs and make a reasonable profit. You can define "reasonable" however you want. But you have to start from a base of covering your costs.
You didn't ask: "How much should I undercut the competition?" One answer here suggests finding out what your competition charges, then pricing a bit lower. Wrong. Your competition's cost structure may be entirely different from yours. You asked: "What should I charge?" Broken record here, but what you should charge is enough to cover your costs (not the costs your competitor may have) and make a reasonable profit (the definition of which may be different with you and your competitor.)
I keep repeating: "enough to cover your costs." That means knowing what your costs are. Knowing how much you're worth per hour. Knowing how long a specific job will take, and it'll vary greatly. My original post provides more details.
And one good piece of advice from several other posters here: It doesn't matter whether you're cleaning up a foreclosure or another type of property. Your time is your time. The value of your time is its value.
Look: There's plenty of great advice below:
Cassandra: "Anybody can price, but pricing "for profit" is an art, so plan to do your research and price to keep $$ in your pocket for your foreclosure cleanup jobs."
Terry: "It depends on the amount of debris. The kind of debris. What size dumpster you need and how many would be where you start. Then if there is just trash this is light weight and perhaps one or two people can clean this out and take a few hours. So you would determine what you think a person would be paid per hour. If it is a lot of heavy furniture, etc you would increase due to the manpower you would need."
Kathy: "My advice for you Santa is to set your business up the right way in the beginning. Get the proper Insurance, equipment (cleaning supplies as they become expensive), professional marketing materials, and MOST of all invest in "Quickbooks". When you do all that, you then do some simple math and figure in all of your proposed overhead. Simple division, and you can move forward with how much you should charge."
Jeff and Ginny: "You should charge a fair price by the hour because some homes are in terrible condition, having been damaged and/or neglected while others have been left in very good condition and just need a typical cleaning. There should not be one set price because your time and effort will not be equal for every home."
Bill: "Your fee for this service should strongly depend on the scope of the work needed."
I apologize if I've left out other advice along the same lines.
Hope that helps.
P.S. I've put a link below to an association representing janitorial and custodial companies. They have some good information on bidding and estimating.
First, anyone who throws out a flat number is wrong. You'll find that jobs vary from simple and quick to complicated and time-consuming.
Second, be skeptical of anyone who says, "I think..." or "In my opinion..." It has nothing to do with opinion.
Third, while it's interesting to know what your competition might be charging, it has absolutely nothing to do with what you charge. Nothing. Nada. Zilch.
So, what's the answer? Very, very simple. You determine what your time is worth per hour. $15? $20? $25? $30? That's totally up to you. Then you determine how many hours it'll take you to clean the property. Multiply hours needed by hour hourly rate. Add in any supplies you need. (In most commercial cleaning companies, labor is about 70% of total cost. Supplies typically are about 10%.) The number you come up with is your base price. Charge any less and you'll be underpricing yourself.
Note that this figure won't take into account your overhead and marketing expenses. Those may be minimal, but most folks tend to underestimate those. For instance, cleaners who work out of their home figure they can charge a lot less because they don't have space they're renting somewhere else. For instance, cleaners often forget to factor in time they spend marketing, developing estimates, viewing properties. As a professional, you need to add that time and that expense onto your estimate.
And stick to your guns. If you calculate that a fair charge to clean a home (based on the number of hours it'll take and what you've determined to be a fair hourly rate) is $400 and you're met with: "I've got a bid of $325. If you can match it, you can have the job," your answer is simple and clear: No. If someone else thinks they can do it for $325, let 'em. Maybe they can. Maybe they can't. Maybe they're willing to work for less than you. Maybe they've underestimated the time it'll take. Doesn't matter. What matters is how long it'll take and what you feel you're worth per hour. Period.
Look: I worked for an association representing building service contractors (Building Service Contractors Association International) for eight years, conducted research surveys and wrote books on bidding and estimating (among other things)--feel free to look them up on Amazon. The only factors are the time involved and what you're worth per hour. All the rest are meaningless distractions.
Hope that helps.
Century 21 My Real Estate Co.