Probably the starting point for 90 percent of people working in this industry is the “work order”. You will most likely be working for a national or regional property preservation/REO company, and many of the larger companies will send out work orders to smaller foreclosure companies like yours in order to have the work completed on foreclosed homes. These work orders will often arrive by email and, at a minimum, will include the primary contractor’s name and contact information, the property’s address, and specific job instructions.
Things to Look Out for When You Receive a Work Order
It is not uncommon for a small company to receive four to six work orders at any one time. Most small companies will be so happy when they start receiving multiple work orders that often they will just dive straight into doing the work before reading the work orders carefully.
To protect yourself and your business, you should pay attention to the following key information:
Read the details: Remember, your company is about to spend time and resources getting this job done, so make sure you understand every detail. It will benefit both you and your client in the long run if you have a good understanding of the job.
Don’t assume: Dissect every work order carefully before you do anything. Read, re-read, and query every detail. Don’t assume that just because you have the work order, you have the work. Call the property preservation company to verify that they are indeed sending your company the work orders for completion. Develop a phone rapport with one specific person, such as the field services coordinator or vendor procurement manager, so that you can work out the details of the work order with a particular contact.
Typical wording: Work orders can be wordy and can contain lots of jargon and abbreviations. They can be confusing, too, so make sure you fully understand the work order before you begin. If there’s something you don’t understand, just ask! You don’t want to end up losing money on a job.
Much of the work order content is “boilerplate” content. This means it comprises standard pieces of text that are exactly the same in all work orders. As you go through the work order, use a highlighter pen to mark important words and phrases. You can then make a list of tools and materials you will need for the job.
Here is some sample verbiage from a work order:
RUSH ORDER: Complete initial yard maintenance if within allowable. Bid if over allowable and provide ample photos to obtain bid approval.
Notice the use of the word “allowable.” Allowable means “within a company’s pricing guidelines” or “based on the amount a company will pay you for the portion of the job outlined.”
If you see this word, it means the company has its own set of prices for each job. And you will only know what a company’s allowable expenditures are if you have their pricing guidelines to hand. Ask the property preservation company for their pricing table, bid chart, or pricing spreadsheet if it is not included in their vendor package or contract so you can see if will be possible for you to complete the job and make a profit.
Notice that the work order also states that the foreclosure cleanup company should bid if they believe the cost to complete the job would be over the allowable. This means that if their budget is too low for your company to perform the job and make a profit, you should simply place your own written bid on the job. In this case, you are not working this portion of the job, you are simply bidding on it.
Pricing: Note that when working with some clients or companies, you will be able to set your own prices. However, many property preservation companies will follow HUD’s pricing guidelines when defining their allowable fees and setting their own prices. And their prices will also depend on where they are in the chain of getting paid.
Remember, it’s OK to say no to a job. You may have to decline some work orders because there may not be any profit in them for you.
Attaching photos to bids: Many companies will ask you to include photos with the bids you make on certain parts of a work order. Use your judgment on this. In some scenarios, you may not want to include photos with the bid in case you then become the unpaid eyes for the property. But if there is extensive damage that you want to document, feel free to include any relevant photos with your bid.
Verbal agreements: It is not uncommon to notice further damage at the property for which you need approval to complete. You may have already established a good phone rapport with a contact at the property preservation company, and that person may verbally tell you to go ahead and do the work. Don’t. Get the new jobs approved in writing. If you don’t, you may have a hard time getting paid because the job wasn’t on the work order.
In summary: Remember, everything is negotiable in foreclosure cleanup. But keep in mind the following in relation to work orders:
- Make sure the work order is actually intended for your company
- Find out what the company’s allowable is
- You don’t have to agree to do every work order you receive
- You should read, re-read, and ask questions about the work order
- You should submit bids and get approval for them in writing to avoid problems that may arise with verbal contracts
Plot Your Route
After you’ve printed out your work order, it’s a good idea to map your route for the day. Bear in mind that online mapping software is not always accurate, so make sure you check the addresses on your computer with the addresses on your work order.
Some addresses can be tricky to find, and sometimes the street names may have changed. In the past, we have had to go to the county assessor’s website and do a parcel search or even call the local municipality in order to locate a house.
Gather Your Materials and Tools
Even if you routinely carry most of the tools you need with you, plus plenty of locks, carriage bolts, antifreeze, and other common materials, always check the work order before you leave. This will save you time and money.
Sometimes work orders will ask you to perform extra work if you find it is needed when you arrive. This can be anything from boarding a window, tarping or parching a roof, or replacing a lock. The work order may instruct you to do these jobs without a bid if you can do them for the allowable. Some banks tell you to do the work even if you can’t do it for the allowable; they want you to do the work first and then invoice for it.
If you see this kind of clause in any of your work orders for the day, you can get ahead by collecting up any tools and materials you might need for these potential jobs before you leave. This will prevent you from having to make more than one trip.
Get It Right First Time
The worst words you can read in a work order are: “Return to the property and finish the work at your own expense.” You might as well just throw your hard-earned cash away. And this is what will happen if you don’t complete the work that you have been asked to do in the first place. Not only that, if you want to receive more work from the client, you don’t have a choice. Be aware that you are ultimately liable, so fulfilling the work order correctly will protect you from financial loss.
The Main Types of Work Orders You Will Be Performing
Each company’s work orders vary in how they prescribe the work to be carried out, and there may be distinctions that are unique to your individual clients. However, work orders do have many things in common. Take the time to read through the information provided on each type of work order below. We have included some very important warnings that will save you time, effort, and money.
- Initial Secure
- Final Condition
- Provide Access
- Second Bid
- Grass Recut
- REO Property Initial Services
Initial Secure Work Order
An Initial Secure Work Order is the first job you will have at a recently vacated house. It is your job to find out and report on the initial condition of the property and, where possible, secure the property. Some banks will give you an allowable amount to do this, but others may ask you to do the work and submit an invoice later on. Others may ask you to simply change a lock or post a notice and then make a bid for everything else.
NOTE 1: Read the work order carefully! Only do the work that you have the authority to carry out. If you do work that is not authorized, it is likely the bank will not pay you for it.
NOTE 2: Bid After The Fact. Some clients prefer you to go ahead and do the work and invoice them later. This is called to Bid After The Fact (BATF). This is a great opportunity for you to make the Initial Secure Work Order even more profitable, but just make sure your report and photos can justify the amount you are invoicing. If your client thinks your invoice is too high, they will ask for additional justification. It can be very helpful to use a cost estimating tool in this situation.
A Warning for an Initial Secure Work Order
Before you commence any work on an Initial Secure Work Order, you need to be sure that:
- You’re at the right property
- The property is vacant
Do not depend exclusively on your GPS to find a property; these are not always accurate. Always take a close-up photo of the house address and one of the front of the property. This goes for every work order, not just an Initial Secure. If the house address is not obvious but you’re sure you’re at the right property, take photos of the addresses on either side. When there is no number on the property, search for it on mailboxes, posted notices, or mail inside the house. Remember the liability issue, and cover yourself with photographic evidence.
The Scope of an Initial Secure Work Order
Property securing for an Initial Secure Work Order may include:
- Changing or re-keying the locks on an exterior door. Be sure to note which door to re-key (click here for details on how to perform a lock change)
- Winterizing the property (click here for details on how to perform a winterization)
- Boarding a broken window or any other accessible opening (bid or BATF)
- Removing hazardous materials (bid)
- Performing an initial grass cut (take between four and eight before-and-after photos of exactly the same areas)
- Turning off the water if there is a plumbing leak (this will prevent further damage, which you can then bid to repair)
- Tarping a leaking roof (bid or BATF)
- Moving exterior personal property to a secure location on the property (bid)
- Removing all interior and exterior debris. On your initial visit to the property, you will need to provide separate bids for interior and exterior debris, not including personal or hazardous debris
- Pumping water from a flooded basement or crawlspace (bid or BATF)
- Posting a vacancy notice. Don’t forget this, or you may have to return at your own expense at a later date
The Initial Secure Work Order may not include specific instructions to do all these things, but you will definitely want to report on them and provide bids. As well as generating income, this will protect you from liability for existing damages. Take photos, make bids, or provide estimates for all damages.
It is important to always protect yourself. If you suspect there’s mold but are not completely sure, take photos of the area in question and submit a bid like this:
It appears that there is mold growing in the kitchen (4′ x 12′)
Then name the possible cause:
This may be because of moisture in the air, mortgager neglect, a leaky pipe, ground water, a roof leak, a broken downspout, clogged gutters etc.
Final Condition (Conveyance Condition) Work Order
Conveyance means that the property is ready for resale.
A Final Condition Work Order, or a Conveyance Condition Work Order, is a specialized work order that requires a slightly different approach. The aim of this work order is to do the work and submit bids in order to bring the property into conveyance condition.
HUD & FHA: What Do They Mean?
HUD stands for Housing and Urban Development, and it is the federal government department under which the FHA (Federal Housing Administration) operates. When an FHA-insured mortgage is in default, the property is conveyed to HUD and then put on the market by HUD.
When properties that are insured by an FHA loan are in default or foreclosure, they will be conveyed back to HUD before they are put up for sale. Before this can happen, there are specific conditions that need to be fulfilled. Only when all of this has been completed will the property be in conveyance condition.
HUD sets a date for conveyance and, close to the time, will issue a Final Condition Work Order. Read through the Final Condition Work Order carefully. It will instruct you to do work and provide bids to bring the property into conveyance condition. All the items on the work order must be completed for this to happen.
If the work cannot be completed for the allowable, then HUD will ask for a minimum of two bids to be submitted by two different contractors. They will approve the lowest bid. It is important, therefore, to submit descriptive and competitive bids with clear and comprehensive photos.
When Is a Property in Conveyance Condition?
In order to be transferred to HUD, a property must meet certain standards. The following list details the usual requirements, but this may vary depending on the property and circumstances:
- Property is unoccupied
- Personal property removed
- Outbuildings secured with property locks
- Windows boarded if required. This could be because they are broken or to prevent damage
- Roof damage reported and/or corrected
- Property has been winterized
- Utilities turned on, if required
- Pools, hot tubs and/or spas secured
- Grass has been cut within two weeks of declaring conveyance (during the grass-cut season). This varies from state to state
- Hazardous materials removed from property
- Exterior debris and health hazards removed from property
- Interior debris and health hazards removed from property
- Property is free from any damages other than those created by roof damage, mortgagee neglect, fire, or natural disaster
- There is no outstanding work (such as locks still needing to be changed and property still needing to be secured)
The only exception to the above is if HUD has been advised of an outstanding issue and has agreed to accept the property as is.
Whenever you submit a Final Condition Work Order you must be able to answer this question: “Is this property in conveyance condition?” If the answer is no, you must supply photos and bids for the work that is still needed to bring it into conveyance condition.
Remember, though, if you have a bid approved to remove, for example, all exterior debris, you cannot submit a similar bid on a later work order if you didn’t spot the issue in the first place. You will be required to do this work at your own expense. Obviously, this does not include debris that has been newly deposited at the property.
The bottom line: Every time you get a Final Condition Work Order, make sure you provide bids for everything that is needed to bring the property into conveyance condition. One contractor will get their bid to complete this work approved. Hopefully, this will be you!
Provide Access Work Order
Sometimes a work order will ask you to simply provide access to a property for a third party. For example, you may be asked to unlock the door for a realtor, a broker, an insurance adjuster, a property inspector, or the mortgage holder. This work is easy, so you will only be paid a minimum trip fee.
Your client will have changed the locks for the mortgage company, but people might contact the mortgagee to gain access to the property. This could be so that the homeowner can retrieve their personal belongings, or it could be so that an insurance adjuster or property inspector can take photos.
You Might Be Asked to Provide a Key
Occasionally, the client might ask you to meet the homeowner or broker at the property to let them in. For this reason, you should keep a supply of extra keys to hand.
The Provide Access Work Order will give you the details of the person whom you will be providing access to. It is your responsibility to call the party and make an appointment to meet them at the property. If you can’t make contact by phone, leave a message if possible and be sure to document the times and dates of the phone calls you make. As a general guide, you should try to make contact at least three times over a period of two to three days.
Providing Evidence of Your Work
As always, you need to take and submit photos in order to receive payment for your work. Take all the property condition photos you would normally take for any other work order and, if at all possible, try to get a photo of the person at the property door or inside the house. Explain that you need a photo to prove that you complied with your client’s request. Your work will be complete once all required photos are taken and you’ve locked up the house.
Eviction Work Order
Receiving your first Eviction Work Order can be both exciting and intimidating. It’s exciting because you will most likely be carrying out this work order alongside the police. It can be intimidating because you’ll have to complete your work, such as changing the locks, with the police watching you. Most people tend to move out before the police arrive, but we have performed evictions with as many as eight armed police officers present. Luckily, no shots have ever been fired!
What Is the Scope of an Eviction Work Order?
Eviction work orders can be a little confusing. You may receive as many as four work orders at once for the same property. No matter how many work orders you receive, these are the typical jobs required:
- Pre-eviction inspection. You will need to go to the property within the 72 hours leading up to the scheduled eviction to ascertain if the property has been vacated or not. If it has, you should perform an initial secure and call the police to cancel the eviction.
- Eviction. Inform the police that you will be at the property at the scheduled time to provide access.
- Remove personal items. When you arrive at the eviction property, you should have a truck and/or trailer and crew there ready to remove all personal property to a pre-arranged storage facility or even just to the street in front of the house.
- Initial secure. You will need to perform this after the eviction and removal of personals.
Don’t be afraid to ask the police to remain at the property while you complete your work (lock changes, winterization, etc.) if you feel you are in any danger from the evicted residents.
Even if the residents tell you they don’t want anything that they’ve left on the property, DO NOT dispose of any personal items until you have a signed statement from the residents themselves.
Regardless of the circumstances of the eviction, always remember to complete all of the tasks necessary for an Initial Secure or a Final Condition Work Order.
Resecure Work Order
A Resecure Work Order can be fairly simple to complete, as it basically means you just have to check all the doors and windows of the property to make sure they are locked. So what is the point of a Resecure Work Order?
When a property is vacant, neighbors generally watch out for it as they don’t want vandalism or vagrancy in their neighborhood. If they see any activity and suspect the property is not secure, they will report it.
The Scope of a Resecure Work Order
So, your client has received a report from either a named or unnamed source that the property is unsecure. Your job is to get to the property as soon as possible and resecure it.
This will involve checking all the doors and windows to make sure they are locked. If they are not, and cannot be secured with the existing locks, you will have the opportunity to make some money. If you cannot secure the property with the existing locks, you may be asked to either bid to secure it or simply go ahead and secure it there and then, submitting an invoice for your work afterwards (BATF).
Second Bid Work Order
Most mortgage companies require a second bid for any property preservation or REO job over a specified amount. So, if you are the first to bid on a job, your client will probably send your bid (without the price) to another specialist to bid on as well. The one with the lowest bid will then get the job.
If you are the second contractor asked to provide an estimate, the work order you receive will already have the items, quantities, and measurements of the jobs on which they want you to bid. They are after two identical bids to present to the bank, so you should provide a bid using the same descriptions.
Adding To or Changing the Description
What should you do if you think your second bid should differ from the one you received from your client? Suppose you have come up with a different measurement for the length of the grass, the amount of debris to be removed, or the size of the patch of mold?
As long as you are bidding to do the same work, you can change the measurements if you need to. Just make sure that your bid includes the same work as the first one. For example, we received a request for a second bid for debris removal. The house was originally measured as 110 cubic yards. We measured it at 80 cubic yards, but still bid to remove the debris. Our bid was approved.
Making Other Bids
Remember that every work order presents you with the opportunity to make bids on any other work you think needs to be done for the mortgage company. Of course, visiting properties and putting in bids takes time and costs money but, in the long run, getting those bids approved is how you will make money.
Grass Recut Work Order
Grass Recut Work Orders provide the property preservation specialist with a good six months’ work. You could easily have between 50 and 100 properties where you’re cutting the grass twice a month. This soon adds up.
Remember that with Grass Recut Work Orders, you’re not going to get paid a lot per job, so you need to complete the job quickly and move on to the next one. Schedule your recuts so that they are cost effective to complete. The rate at which the grass grows varies from season to season, so bear this in mind when scheduling in jobs. You may have to spend longer on grass recut in the spring than you do in late summer, for example.
How Much Work Should You Do?
Those who have been doing this kind of work for a long time have told us that you need to average about twenty minutes for each recut. If possible, use a mulching mower, and keep your blades sharp and your engine well serviced. This will lead to a fast and high-quality job. The amount of work you do will also depend on the neighborhood. In an upscale neighborhood, you’ll need to pay more attention to trimming and sweeping than you might do in a rural area.
Grass Recut Photos
All clients are different when it comes to recut photos. Requirements can vary from two before-and-after photos to as many as 40.
With recut photos, it is important to remember to take your before-and-after photos in exactly the same spot and from the same angle. You can make this easier for yourself by including a landmark such as a fence or driveway.
REO Property Initial Services Work Order
REO properties are bank-owned properties that need to be prepared for resale. When a foreclosed property becomes bank owned, your client will probably issue an Initial Services Work Order.
This work order will probably pay you a flat fee to do all the work, it may give you an allowable, or it may break the job down and pay you for each part separately. Each client does things a little differently, so make sure you read the work order carefully.
It is not unusual for REO properties to have been vacant for up to two or three years. They will need to be cleaned up and prepared for the market. This work order represents the minimum that must be done before the property can be put up for sale.
What Do Initial Services Specifically Entail?
An Initial Services Work Order for an REO property may include any or all of the following, depending on the client:
- Trashout (removal of ALL interior and exterior debris and hazards)
- Sales clean and monthly sales clean including the cleaning of bathrooms and appliances; vacuuming carpets; mopping floors; wiping down counters, cupboards, walls, ceilings, fans, and fixtures; and cleaning interior window sills
- Broom clean of the entire property including the sweeping of carpeted areas
- Securing the property
- Securing swimming pool gates
- Draining and dismantling of above-ground pools
- Boarding or re-glazing broken windows
- Removal of tacks and nails from walls
- Removal of automobiles
- Replacing inoperable sump pumps
- Cleaning of all in-ground pools
- Tarping roofs that leak
- Snow removal, if needed
- Trimming shrubs
- Yard maintenance including weeding, and the trimming of trees and shrubs
- Installing light bulbs inside and out as needed
- HVAC unit check
- Installing smoke detectors and CO detectors, according to local regulations
Working with an REO Broker
When REO properties have reached this stage in the foreclosure process, the mortgage company teams up with local real estate brokers that specialize in selling bank-owned properties. Typically, then, your work order will also include the name of the broker along with their contact information.
It’s always best to contact the broker as soon as you can to find out everything there is to know about the property. The broker will be able to tell you how much debris there is and what items they think need special attention. This is especially helpful if you need to travel a significant distance to the property.
Going Beyond Cleaning
The Initial Services Work Order might also ask you for bids on specific items such as:
- Interior and exterior painting
- Drywall damage repair
- Replacing flooring
- Replacing carpeting
- Repairing or replacing broken and missing gutters or downspouts
- Repairing or replacing broken or missing interior millwork
- Repairing roof leaks
- Replacing missing plumbing or wiring
- General repairs
This is why it can be helpful to talk to the broker first because if he tells you that something needs to be done to make the house marketable, you can reference this discussion in the wording of your bid.
Providing a Property Condition Report for the Mortgage Company
Almost every time you receive a work order, you will need to provide a property condition report (PCR) to the mortgage company. The bank will request photographic evidence of the condition of the property along with a written report of certain essentials. Collating the necessary information and taking the required photos is essential, but it does not have to be a time-consuming process.
An Initial Secure Work Order is performed when you first enter the property on the bank’s behalf. Every time you visit the property after that, they will want you to apprise them of its condition again and alert them if there is something that needs their attention.
You Are the Mortgage Company’s Eyes
Banks hire national field asset managers, or companies, to take care of their properties for them. The mortgage company does not send its own people to inspect the property once it is vacant. YOU are the one they are depending on to tell them what condition it is in. It is your photos that provide this evidence and your report that informs them of the condition of the property. This is why it is so important that you submit an accurate and comprehensive PCR every time you visit the property.
The Things a Property Condition Report Should Include
A PCR should include at least the following:
- Condition report
- Damage report
When you visit a foreclosed property, there is much you need to know, learn, and do. You need to become an expert so you can spot everything that may be of concern to the mortgage company, report it to them, and provide solutions to fix whatever needs to be fixed.
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