Negotiating Contracts

When you have finally come to the conclusion that you are wanting to enter the property preservation business one of the most important activities you will participate in is the negotiation process.  Contrary to most belief, the pricing of many REO work order providers is negotiable.  The primary example is this:

The winterization that many of the REO outfits want to price at $30 – $40 generally pays out at $90 – $100. Depending how far down the proverbial totem pole they are directly reflects the percentage of loss passed along to you.

Next on your list, after pricing,  should be volume.  It would be an extremely unsound business model to agree to chase after $5 and $10 inspections spread out over your entire area of operations (AO).  While not always possible, we recommend that you agressively pursue bulk order models.  In a nutshell what we are talking about is:

Have a spreadsheet available which breaks down your zip code, counties and HUD Zone.  Put at the top of the list; perhaps in the header column, that you require 4 or more orders in any given AO to be issued which are of a basic inspection nature.

Software.  This is a new hussle that we just witnessed with a company called NFS.  PreserveSoft is one of a handful providers attempting to fill a niche in property preservation order processing today.   We were told that we needed to purchase a $50 dollar per month platform to receive their orders.  This is the epitome of insanity!  We also found out that the company had the ability to reopen our account, without our permission, which then began the billing process again!  Be extremely cautious about these types of arrangements!  In our situation NFS was a silent partner in a contract between us and PreserveSoft which violates the Uniform Commercial Code (UCC).

 

Part One of an Ongoing Series on Contracting

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