You are allowed to see the property foreclosed by the banks and government agencies such as HUD (U.S. Department of Housing and Urban Development) and VA (U.S. Department of Veterans Affairs).

Get a professional estimate for the job to use as a yardstick.
Get more than one estimate. Invite professionals at different times. Talk to the first professional and ask questions. Prepare yourself for the second and third one.
Try to “standardize” the job if it is not already. Get estimates for the same job. Otherwise, you may have difficulty in comparing estimates fairly.

How can you get better deals from professionals?

Don’t think that you may get a better price by putting estimators into competition by inviting them at the same time. You can create the same effect by telling them that you are getting estimates from others as well.

Professionals (contractors or handymen) giving you estimates want to make sure that their time is not wasted. So, they may ask you whether you buy the fixer-upper foreclosure property to make sure that the work is imminent. They may be under the impression that you are planning to buy the fixerupper foreclosed home shortly and assign it to them.

Once you get into fixing up foreclosure homes, all professionals and your team will take you seriously since they will get assignments one way or another.

Critical choice: refurbish or replace components, equipment, and appliances of foreclosure home?

This choice requires estimating the remaining life of the equipment/appliance, refurbishing costs, the cost of replacing it (price of the new one plus installation costs), and disposal costs if any.

Pricing materials: This is easier than estimating the labor cost or the fee a professional would charge. Simply go to few home improvement or hardware stores to write down all the prices, so that you can compare on the basis of brand names, specifications, and warranty terms.

Also, find a mail order or a store catalogue to use for comparisons. Many professionals use Home Repair and Remodel Cost Guide by Marshall & Swift for online estimate of costs in fixing up a real estate property.

Three steps in estimating labor cost in repairing and remodeling foreclosure property

Make your own estimate.
Get an estimate from home improvement/hardware store professionals, contractors or handymen, and
Invite professionals to give you an estimate over the phone if you can describe clearly what you need (such painting a home by giving square footage and number of floors, replacing garage door, A/C unit, etc.).

Because you know the cost of the materials, figuring out the labor cost will be easy. Again, do the job yourself or with your team, if your savings will be significant or leave it to a professional if you feel that it is not feasible and profitable for you to do it.

Also, consider the cost savings if the professional is getting the materials at a lower cost. For instance, paint shops give discounts as customers exceed certain volumes (dollar amounts) on a quarterly or annual basis. However, you must fill out their application forms. This does not cost you a penny! Get valuable advice from their local representatives.

Assuming that you did your homework in reviewing Negotiation tips for buying home, Avoid serious common mistakes in buying foreclosures and in Four Common Mistakes in mortgage loans.

Fixing up a foreclosure home is a great opportunity for you to start a profitable real estate business. Once you start repairing one property, fixing other foreclosures will be a lot easier and less costly as you will discover new methods to lower your material and labor costs as your fixer-upper foreclosure business grows.

About the Author: John Anderson worked as real estate agent, Realtor® in Florida and Virginia and certified home inspector in California. He publishes foreclosure newsletters on bank and government owned foreclosures.

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