Imitation Is Not Flattery to HomeVestors' Boss
Chances are you've seen the HomeVestors' slogan, and so have more and more copycats, said CEO David Hicks.
HomeVestors, the “We Buy Ugly Houses” franchise, is warning consumers about imitators who are not in the system but target house sellers with copycat slogans. “It regularly comes up but it’s gotten worse and worse,” said David Hicks, CEO of the Dallas-based franchise.
“We’ve been in business since 1996 but we’ve really grown in the last 10 years significantly,” he said, with 165 franchisees in 2009 and just over 1,100 today. “As we get bigger,” and spend more on advertising, “we have more and more people trying to act like they’re us.” HomeVestors put out a press release last week to warn about the scams.
Hicks says the imitators might ask for money from consumers in advance of the sale, for example, and say they’ll split the proceeds with the seller upon closing, or change the price offered two weeks before close, both things HomeVestors does not do.
HomeVestors franchisees purchase “ugly” houses in their local market that are generally rehabbed, then sold or held as investment properties. Operators use a proprietary app that helps them estimate the price to offer, taking into account the size of the house, comparable home sales, repair needs and the local market.
“It gives them a recommended number that they ought to be buying it al. That helps our franchises be consistent.”
Copycats are tough to combat, Hicks said. “We spend a lot of time from the legal aspect of it. We have over 22 trademarks on ‘ugly houses’" and related lines “but people don’t seem to understand that.”
“We have to combat that in two ways. One is with the cease and desist” letters, “but second we have to combat it with the consumer. The reality is we have a lot of systems and standards our franchises must adhere to. Obviously somebody that tries to look like us doesn’t have the same ethics we do.”
Hicks won’t reveal average profits HomeVestors franchisees make on their home sales, in part because each home varies widely, in part because he doesn’t want to tip his hand. But he said the business is a far cry from HGTV reality shows like “Love it or List it” or “Flip or Flop.”
“It’s not a get-rich-quick business. You don’t buy one house and make a lot of money on it. You need to buy a lot of houses and the reality is it’s a lot of work to do what we do,” he said. “The franchisees we have, they enjoy helping people. We say we improve neighborhoods one house at a time.”