Every Successful Job Begins with a Work Order
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 Work Orders/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 Property Preservation Work Orders
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 Property Preservation Work Orders:
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 Property Preservation Work Orders, 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 it will be possible for you to complete the job and make a profit.
Notice that the Property Preservation Work Orders 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 Property Preservation Work Orders 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 patching 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.
When Is a Property Preservation Work Orders 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!