The carpet was filthy, and the walls needed paint. The backyard was a mass of dead grass. And that was before vandals threw a rock through a back window, climbed inside and wrecked the kitchen cabinets.
That happened two days before the close of escrow.
For banks, this is what making home loans has come to. Such scenes of destruction are commonplace. Lenders have dealt with the chaotic wake of an estimated 20,000 or more foreclosures in the Sacramento region over the past 18 months. Many of the homes are marred by the personal trauma, neglect and vandalism that came with foreclosure.
But there is a plus to this abundance of damage. It's proving a mini-boom for a niche sector of the construction trade known as "repo contractors."
"Most of my work is coming from banks right now," said Don Shannon, owner of Vacant-Only Painting and American River Flooring in North Highland.
No one knows exactly how much lenders – or buyers of bank-owned homes – are spending to restore them. But it is thought to be in the millions of dollars locally.
"Contractors that are hooked up into the system are buried with work," said John Kukis, who has 10 employees and owns Kukis Home Repair in Sacramento.
Kukis and others are painting bank-owned houses and putting in new carpets. They are fixing plumbing and patching holes in the walls. They're installing heating and air-conditioning units. Kukis said the average job when a bank decides to spiff up a house to sell it is about $9,000. Cleanups run from $200 to $350.
It's not just contractors reaping the benefits of a housing market meltdown. Appliance dealers are replacing gutted kitchen equipment. Loan specialists are tailoring government-backed financing for repair work.
Unlicensed contractors are taking advantage, too, say those with licenses. Altogether, say those involved, the foreclosure crisis represents a relatively rare opportunity in a business climate that's otherwise taking its lumps.
"My feeling is, make the money while it lasts," said Kukis, who rehabs 15 to 20 repo houses a month for banks.
He said it is just like the 1990s housing slump, when he established relationships with real estate agents and banks that are hiring him now.
Yet, it's not the easiest money.
Sometimes, contractors run into squatters living in vacant homes. On a recent bidding expedition in south Sacramento, Kukis was careful to call out "hello" when entering every house where he was scheduled to work.
Working on such a large number of bank-owned homes also means traveling to view the houses to make the bids. As gas prices rise, that can add up.
Shannon and others say banks often seem more interested in getting estimates than in doing the repair work. Like any seller, a bank wants to spend just enough to sell the place more quickly, they say.
Contractors believe that banks sometimes have another purpose in mind when they seek a bid on repair work. They say the information about the condition of a house and the cost of repairing it can be used as a negotiating tool with buyers.
"We've proposed about $2.4 million worth of renovation since the first of this year and only $195,000 was accepted," said Daryl Whiteside, president of a new Sacramento firm, Northwoods Home Ready Services.
Banks say they seek multiple bids. A Wells Fargo spokesman, for example, says the bank requires two or three bids and relies on local listing agents to manage the process.
Kukis said he wins about 10 percent of the jobs for which he submits bids. But in a financial climate in which remodeling jobs have thinned and consumers hold their money close, it's work.
"You have to take what you can get," Shannon said.
Repo contractors get their bank work through relationships with real estate agents. Shannon has one with Sacramento agent Bruce Slaton, who said he "gave $75,000 in work out last month convincing (bank) clients to repair."
His list also includes a contractor, a pool repairman, a termite specialist and Tim Hawkins, service manager at Valley Oak Appliance in Elk Grove.
Call The Bee's Jim Wasserman, (916) 321-1102. Read his Home Front blog at www.sacbee.com/blogs.
