Foreclosure flurry is giving birth to new business of site cleanups
FORT EDWARD — Several men wordlessly carry furniture, broken computers and boxes of garbage from a large blue house on a quiet upstate street on a brisk autumn morning. Rusting bikes and an old grill lay discarded in the overgrown backyard, which is spotted with empty beer cans and crushed milk cartons. The mood is oddly serene as the men unload the remnants of what was once someone’s home.
Todd Drake, manager of Empire Real Estate Management in Latham, is overseeing yet another eviction. The home’s former owner has long gone, leaving just debris and an old phone number in his stead. After a county sheriff’s deputy checks to make sure no one is inside, crews head in to change the locks and clean out the refuse — also known as a “trash-out.” Drake is stoic as he watches his crew.
“These evictions are the last resort,” he explained. “I’m not here to judge that — the circumstances or the lifestyle.”
The nation’s housing bust and economic downfalls have greatly increased the number of homes being foreclosed and taken by banks. The bank typically hires a real estate agent to resell it, but someone has to come in and clean up after the last residents. That’s led to a boom in a new type of start-up business — cleaning up foreclosures, also known as “real-estate owned” or REOs.
Web sites aimed at wannabe entrepreneurs — like www.explorestartups.com — frequently suggest starting up a foreclosure cleanup business as moneymaker. Entrepreneur Magazine even picked a foreclosure cleanup business called Cyprexx for its 2008 “Hot 100 Fastest Growing Businesses” list. Real estate firms have also taken on this side of the business, handling eviction lockout and property management services such as repairs and cleaning out the houses. Sometimes the firms contract another service to do the messy work, but others, like Drake’s firm, do it all. “It’s just becoming a way of life. It’s sad. We try not to have too many opinions out on the field to be honest,” said Linda Hall of All REO Preservation in Riverside, Calif.
On the street where Drake’s crew was cleaning up, neighbors said they weren’t too worried about whether the foreclosure would hurt their home values.
“I think they just got into trouble financially,” said William Trackey, who lives across the street. He said there was a man, his girlfriend and a couple of children living there.
“It’s a nice neighborhood and I’ve lived here for a long time,” said Trackey, who says foreclosures are a rarity in this neighborhood of primarily owner-occupied homes. “You don’t often even see many homes for sale on the street.”
According to the Mortgage Bankers Association, more than 4 million homeowners were at least one month behind on their loans at the end of June, and almost 500,000 had started the foreclosure process. An estimated 2.8 million U. S. households will face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage’s value by the end of next year, predicts Moody’s Economy.com.
When a deal can’t be negotiated, an eviction may have to be obtained from the courts.
It’s not as common for the occupant to stay full-term after the foreclosure, but it does happen, Drake said. In one case, his crew found the resident still inside, armed and refusing to leave. Fortunately, he said, police were able to safely resolve that situation. Companies like Drake’s usually try the “cash-for- keys strategy” first: A homeowner facing foreclosure is offered a small sum, usually between $1,000 and $3,000, in exchange for a clean, quick departure and handing over the keys.
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