When the new-home market ground to a halt in Genoa City, Wis., builders and developers left many homes unfinished and the banks with a slew of incomplete foreclosed properties on their hands.
Remodeler David Bessenhofer, president of Jasco Construction Services, saw an opportunity: minimize damage and maintain the house until the bank can sell the property and provide banks with an estimate for completing the home, enabling the bank to “go in as a more intelligent seller,” he says.
In some cases, Bessenhofer also contacts the real estate agent listing the property so that he or she can provide potential buyers with the remodeler’s estimate for completion. To increase his chances of actually meeting the home buyer, Bessenhofer takes the estate agent to lunch and offers to consult with the potential buyer because, he says, “If I can get in front of a homeowner, I can sell myself and my company.” He points out that his advantage over other contractors is that “we already know the inner workings [of the house].” But, he adds, he wants to “create buzz” about the home, too, to get people excited about it.
Banks have even referred Jasco Construction Services to non-foreclosure clients who need remodeling advice.
Contractors who work on foreclosed properties must be prepared for the long process and the permitting issues involved. “A lot of times, it’s hurry up and wait,” Bessenhofer says. Some municipalities require a new building permit when the developer’s original permit expires; others treat the work as a remodeling project.
Bessenhofer’s role with the bankers is to educate them about the costs associated with an abandoned home. For example, he says, “They want to leave the heat off in the winter. But if the pipes burst, it could cost them $20,000 to fix the damage. I explain the cost savings of having someone prepare the house for winter or to keep the air conditioning running in the summer.”
When the banks sells the house, about 60% of the new owners hire Jasco Construction Services to finish the home.
Because bank budgets and allowances are tight, Bessenhofer completes only the minimum of work necessary to maintain the house, such as installing/maintaining sump pumps and HVAC systems and cleaning mold caused by basement or roof leaks. “No one is living in the house so the work moves a lot faster,” he says, “and we can keep overhead down because we’re not buying protective products.”
—Nina Patel, senior editor, REMODELING.