Foreclosure Cleaning - Advice on What to Do and What Not to Do When Pricing Jobs

In most cases, when potential clients call you for a foreclosure cleaning job, they're going to want you to give them a rate over the phone. You should patiently explain that you have to view the property before giving an estimate.

Once you clear this hurdle, they're still going to want you to give them a rate immediately after viewing and assessing the job.

Don't.

Following is why.

Foreclosure Cleaning Jobs: An Industry with Thin Profit Margins

Most of the services offered by foreclosure cleaning companies have thin profit margins. This means you have to know what your direct and indirect costs are in order to price a job correctly. This is not only fair to your bottom line - it's fair to clients as well (even if they don't realize it).

Foreclosure Cleaning Pricing: Direct and Indirect Costs Defined

Direct costs are those expenses that can be defined in absolute terms for every job. These are things like how much you pay workers and the cost of supplies. You know these costs are exactly, which makes it easy to factor into a pricing model.

Indirect costs are a bit trickier. They are the costs that are not accounted for in your direct costs for a particular job. However, they are every bit a part of pricing a foreclosure cleaning job as direct costs. Hence, they should be factored into every estimate you give.

Some examples of indirect costs are annual business license renewal, phone, paper and toner for your printer, etc.

The inability to factor in indirect business costs accurately is a major reason so many new small business owners find it difficult to price jobs. Because they leave these out, they usually wind up undercharging and find themselves in the red -- and out of business -- before they know it.

How to "Accurately" Calculate Indirect Costs for Your Foreclosure Cleaning Business

The word accurately is in quotation marks because, by their very nature, indirect costs are not concrete. But you can get pretty close calculating them using some specific formulas and common sense.

Your largest indirect costs are pretty easy to calculate (eg, wages, business insurance, phone).

The intangibles are what will give you headaches, eg, gas for running around giving estimates and calculating how much time it's going to take to complete a job. The only way to figure costs like these out is to pull upon knowledge you already have.

For example -- take gas. To get a good idea of how much you're going to spend, calculate a certain number of miles per week. If you stay within a certain geographic area (say, 50 miles) then figure giving 1-2 estimates a week initially. At 100 miles per round trip, you can get an idea of how much gas you'll be using.

Once you do a foreclosure cleaning estimates, you'll get better and better and calculating costs -- and hence, raise your profits for each foreclosure clean up job you do.

May be reprinted with the following, in full: To learn everything you need to know about how to price foreclosure cleaning jobs, get the manual Pricing Guide for Foreclosure Cleaning & Real-Estate Service Businesses: How to Price Jobs for Profit at http://www.Start-a-foreclosure-cleanup-business.com

Foreclosure Cleaning Business - Why You Should Never Discuss Rates Or Prices Over the Phone

If you own a business cleaning foreclosures, or are thinking about starting one, one thing you should know going in is that you will get call after call from subcontractors and wanna-be business owners asking for guidance on how to price jobs and/or how much they can make in this business. They'll call asking questions and make comments like:

"I own a landscaping company and want to pitch my services to foreclosure cleanup companies. I just need a little guidance on how you go about pricing your services;"

OR

"I am thinking of going into the foreclosure trashout business. I wanted to know about how much I can expect to make on a house -- just a rough estimate is all I need, eg, for just doing the cleaning and trashout;"

OR

"I own a general contracting business and want to get into cleaning foreclosures. How do you decide what to charge for things like making repairs, painting, etc.?"

These are actual calls one foreclosure cleaning business owner says she receives on a daily basis.

Don't get sucked into answering these types of questions. It's not that you don't want to share trade secrets or anything, or that you don't want to be helpful to others. Rather, it's for the following very practical reasons.

Foreclosure Cleanup Business Owners: 3 Reasons NOT to Talk Rate/Pricing w/Others

Time: If you're actively running a foreclosure cleaning business, you probably won't have the time to answer these types of questions. As foreclosures are a hot topic in the news now, many are interested in starting this type of business. And you could be fielding 5, 10 or 15 calls a day like this - from all over the country - and beyond.

These calls can take anywhere from 10 or 15 minutes, on up to a half hour or more, which brings us to the next reason not to take these types of calls . . .

You're Not a Consultant: Many times, the callers will start out with one or two questions, but it rarely stops there. One question leads to the next, which leads to the next and on and on and on.

You're not a foreclosure cleaning business consultant, you're a foreclosure cleaning business owner. And if you start answering questions for every caller, it won't be the last call you'll get. Many will continue to call as they run into problems.

A lot of what needs to be learned in this business can only be learned by trial and error, as anyone in the business can tell you.

It's Impossible to Answer Correctly: Prices and job rates depend on so many variables - location, size of house, work to be done, contractors to be hired, turnaround time, equipment to be rented, etc. that it's practically impossible to answer correctly anyway. So, don't even try.

Cleaning foreclosures - like any other business - takes time and commitment. And those who are serious about it will take it upon themselves to learn what they need to know to succeed.

May be reprinted with the following, in full: Foreclosure cleanup businesses present a sizzling opportunity to make money in the current economic climate -- and beyond. Visit Start-a-Foreclosure-Cleanup-Business.com for 200 pages of info that tells you everything you need to know to start a business cleaning foreclosures. View the news video featuring the owner of a leading foreclosure company in Atlanta, GA on the site as well.