Homevestors’ We Buy Ugly Houses

Published: July 28, 2016 at 12:51 am Updated: October 10, 2016 at 3:48 am
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Logo for Homevestor's We Buy Ugly Houses Brand

We Buy Ugly Houses provides quick solutions for homeowners who simply don’t have the time or the money transform their properties into the kinds of showcase homes that attract top-dollar in the open real estate market. Founded in 1996 by Ken D’Angelo and headquartered in Dallas, Texas, We Buy Ugly Houses is actually the marketing slogan of a company called HomeVestors, which is owned by Franchise Brands, LLC.

Dallas, TX

Franchise owners in this nationwide real estate marketing business buy ‘fixer-upper’ homes in ‘as-is’ condition, paying about 60-70% of the ‘after repair value’ (ARV) of the property less the estimated costs of any major repairs that are needed.

In most cases, franchise owners will ‘flip’ the property by completing the required repairs, and then selling it for full retail price. Depending on the location and current market conditions, the purchasers may also opt to improve the home and then keep it as a rental property.

What’s important to understand is that as a franchise-based company, Homevestors doesn’t actually purchase distressed, ‘ugly’ homes – their individual franchise owners do. Like most franchises, Homevestors sells their franchise for a flat fee that ranges from about $15,000 for an associate franchise (geared towards part-time or work-from-home investors), up to $50,000 for a full franchise (targeted at full-time, high-volume home buyers), plus ongoing fees, in exchange for a 5 year agreement.

According to HomeVestors, the first-year costs can range from $135,000 to $220,000. For the past decade, HomeVestors of America Inc. has consistently been ranked among the top-500 franchises in America by Entrepreneur magazine, earning spot 91 in 2016.

During the term of the franchise agreement, individual franchise owners are provided with 5 days of start-up training from Homevestors, a tier-based mentoring program, market-specific lead generation, and the right to use the Homevestors/We Buy Ugly Houses – including images of the smiling company mascot, UG (a.k.a. UG LEE UGLY) the caveman.

Homevestors also provides franchisees with access to in-house funding, giving their investors access to the cash they need to buy distressed properties. Although some Homevestors franchisees have previous experience in the residential real estate market, they are not required to hold a state real estate license in order to buy and sell homes. As a result, the level of experience each franchise owner has, and the subsequent experiences of their clients, can vary widely.

The Process

When a prospective home seller contacts Homevestors to inquire about selling their ‘ugly’ home for cash, that seller information is provided to the local We Buy Ugly Houses franchisee. A representative from the local franchise will call the client, arrange to tour the property, and provide a no-obligation cash offer which usually includes all the closing costs associated with the sale.

If the buyer accepts, the deal can usually close within about a week, providing the distressed homeowner with a quick cash solution for their situation.

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