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.
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.
