The continuing increase in foreclosed properties in the US may be bad news for lenders but it has also spawned a whole new industry in terms of cleaning them up.
Banks and other lenders who either can’t sell or want to hold onto properties until the real estate recovery begins are increasingly employing companies to keep them in good condition.
Across the country a veritable army of entrepreneurs are cutting grass, taking away rubbish, carrying out essential repairs and cleaning properties inside and out.
They are particularly in demand in Florida, Arizona and California, three of the worst hit states in terms of foreclosures.
Scott O’Berry whose Property Shield business in that operates in Michigan said that he gets up to a dozen calls a day. ‘Vacant foreclosed properties can attract vandals, squatters, thieves and animals so it is better to look after them as they will be worth more in the long term. Unkept properties also drag down the value of other real estate in the neighbourhood,’ said O’Berry who now employs 45 people.
But there are signs that the banks and other lenders may not be willing to keep paying out. Property Shield charges $3,500 for full maintenance per property. Matt Johnson, who owns Tri-County Property Preservation in Lansing, said he has had to cut prices to stay competitive as demand is dropping off.
‘Now we’re starting to see a downturn as banks are working with homeowners more,’ he explained. But many companies are confident that business will still be good for many years to come. Manny del Valle, owner of Florida based Foreclosure Cleanup, said that her business is kept busy just dealing with things like mould which can quickly take hold on properties in the state.
With foreclosure figures continuing to rise and new mortgage delinquencies on the increase as well, there seems no end to the upward spiral. One thing the lenders cannot guard against, however, is owners that remove valuable fixtures and fittings before leaving the property. It has become quite extreme in some cases. One million dollar lake front home in Florida had its marble kitchen tops, gold plated bathroom fittings and even the palm trees in the garden removed.