Who in their right mind would be in a business where the whole point is to buy what no one else wants? More than 250 franchisees across the country who believe ugly is beautiful to the bottom line, that's who.
They're the "Ug Buys Ugly Houses" people (formerly using the slogan, "We buy ugly houses"). And they're on track to buy more than 8,000 trashed-out, worn-out and falling-apart houses in the United States this year.
The Dallas-based company HomeVestors has eight franchises in the Denver metro area, plus two in Colorado Springs and one in Greeley.
It is "the only national company of this type," according to Terri Gallmeier, who owns a HomeVestors franchise based in Greenwood Village under the name AdTwo Inc. with partner Alan Schlessman.
Gallmeier is president of the HomeVestors Denver Ad Council, which coordinates the cooperative advertising and marketing for the local franchisors who work more as a team than competitors. Even the 1-800 number (1-800-44-Buyer) that sends homeowners to local franchises rotates who gets the business. The Ad Council also coordinates the franchisees' volunteer activities, such as with Habitat for Humanity.
Gallmeier, who owned several small businesses prior to buying a HomeVestors franchise three and one-half years ago, explained that the concept of buying "ugly houses" is far more than just buying something cheap and then waiting for the right buyer to come along.
"We see ourselves as problem-solvers because we buy houses that typically would not sell on the retail market or would be difficult to sell," she said.
For example, she said, a third of the houses that her company buys are inherited properties that, say, children have been left with after their parents die. The house is old, needs updating and perhaps major repairs. Often, she said, the children live out of state and don't want the hassle of dealing with the property or retaining a real estate agent, and having the typical market showings and open houses.
HomeVestors, Gallmeier said, offers a way out: The company buys the house, admittedly at a discounted price, and can close the deal within 10 days or so.
"There is probably no faster way to do it than with us," she said.
Other typical sellers, according to Gallmeier, are owners of "problem rentals" that have been trashed by tenants so badly that they need major cleanup and extensive repairs, and the landlord just wants to get out from under the problem.
That was the case for Marie Smith of Longmont who sold what she called "a really bad rental" to HomeVestors in September.
She inherited the house, she said, but it was in terrible condition. "I didn't want to have to deal with cleaning it up and fixing it up," Smith said. "I was ready to walk away from it."
The quick purchase by HomeVestors "was just wonderful," she said. "I would recommend them to anyone. They were very accommodating ... It was the nicest and best offer."
Other HomeVestors' investments include houses that have significant structural damage, such as needing a new roof or are suffering from a sinking or badly cracked foundation. "We've bought houses that have been in pretty major disrepair ... that have been sitting vacant for numerous years, with animals living in them, that haven't been cleaned in 30 years. Many of our houses are not livable," Gallmeier said. But, she said, "We don't buy a house that can't be turned into a beautiful property. That's the fun part of the business."
With financing obtained either through HomeVestors' national office or through banks and investment loans, a HomeVestors franchise -- or more accurately, real estate investor -- purchases the property and then begins a complete home makeover.
It begins with hauling off trash, debris, ruined carpet, worn-out appliances and all the other "ugly" parts of the house and yard. Then construction crews are brought in: Walls and floors are rebuilt, leaky roofs are repaired, kitchen cabinets are torn out and replaced, new appliances and carpet are installed -- whatever the house needs to be put on the retail market as a structurally sound and nice-looking home.
"We turn that house practically into a brand new house," Gallmeier said, adding with pride that not only does the effort pay off in direct ways but also is "good for the community" because it often turns a neighborhood eyesore into an asset.
HomeVestors lists its made-over houses with local Realtors; franchise owners don't sell them directly as a general rule, according to Gallmeier. The homes carry warranties and the backing of HomeVestors, which is a corporate sponsor of the ethics and lobbying organization called the National Association of Responsible Home Rebuilders and Investors' (NARHI) and touts its strong adherence to its code of ethics.
Gallmeier said her franchise, which has four employees and contracts out the fix-up work, generally has 12-15 houses it's working on at any time.
As for prices, Gallmeier said most of the "ugly houses" bought in this area would retail for under $250,000, with a typical HomeVestors purchase being around $150,000, although she noted that each case is different.
As anyone can attest, the "Ug Buys Ugly Houses" ads sporting the caveman Ug seem to be everywhere. In the Denver metro area, you can see them on some 240 billboards and at 125 or so bus shelters.
Ad expenses are shared among the eight Denver metro area franchisees for billboards, TV and newspaper advertising, transit shelters, bus benches, ads in telephone books and other outlets. "Collectively we can make a pretty big splash with our advertising," Gallmeier said.
HomeVestors has 252 franchises nationwide, according to Vickie Thomas of Thomas-Martin & Associates, a local public relations agency that represents HomeVestors in this area. She said the company declines to publicize the cost of franchises, but said the number of homes bought this year should exceed 8,000 nationally.
"We're moving into new markets every month," Gallmeier said. "It is a franchise that is growing and expanding rapidly."
