The Truth About “We Buy Houses” Companies
You’ve probably seen the advertisements on TV or following you online. You may have even seen the yellow signs at stoplights around Denver. I’m talking about those “We Buy Houses” companies. There are some ads with a caveman that say they buy ugly houses and other ads that include a lot of cash. It sounds great, they offer to buy the ugliest houses around and they throw cash your way and close quickly.
Knowing a lot of those companies and making offers to buy similar properties over the years, I’ve learned a few things. First and foremost, those companies don’t care about the homeowners they’re buying from. Just look at their advertising…do you notice anything about the homeowners? Many homeowners who need to sell quickly are facing difficult life events like a job loss, or a tenant who trashed their investment property, and many other things like divorce, or inherited property and the probate process. These “We Buy Houses” companies don’t care about the homeowner and their problem. They are trained salespeople who prey on homeowners in tough situations and convince them to sell their property for less than they really want.
How do I know?
How do I know all of this? Like I said, I have seen them out in the Denver area buying houses. I’ve sat at kitchen tables with homeowners right after one of these We Buy Houses companies has made an offer. One of the things I find out very quickly is that its not about the money to these homeowners. Yes, they want to sell their house for the most they possibly can but in reality, they want someone who cares about them. They want help out of a difficult situation and they want someone who will be there for them even after they sell their house.
Many of these homeowners ask me, “what do I do after I sell my house?” Allow me to share one recent example because it highlights everything I’m saying in one 30 minute meeting with a homeowner.
Facing Foreclosure and Divorce
This homeowner was facing foreclosure, she lost her job due to a layoff and her husband was out of work because he needed a major surgery. They couldn’t pay the bills and on top of that, they were having relationship troubles and they were getting a divorce.
Can you imagine losing your house and your significant other at the same time? Talk about a brutal life season to be in the middle of! On top of that, she was receiving dozens of letters every single day offering to buy her house. Every single one of them was plastered with “we buy houses” or “we buy ugly houses”. She called a few, they came to her house and gave her an offer on the house and it was a take it or leave it number. Everything was falling apart and she felt terrible because it was all reduced to just a number.
She called me after coming across our Facebook page and we had a good conversation about what she wanted to do after moving on. She explained her entire situation and I heard everything she needed to get off her chest. When I offered to purchase the house, I included three things. Moving services at no cost, pay her closing costs, and to pay her mortgage next payment before we closed. I even included a recommendation for a great divorce attorney because they hadn’t started that process yet.
I cared about the homeowner, not the bottom line number.
The Ugly Truth About “We Buy Ugly Houses”
One final example I want to share with you is the “We Buy Ugly Houses” business model. I’m talking about the “Homevestors” franchise. Yes, there are people out there who buy a franchise in order to invest in real estate.
This specific business model is troubling to me because I feel like our family business has a different touch than most. Our family has the ability to work with other families in difficult situations and that means a lot to me. Basically, it’s the difference between buying a hamburger from McDonald’s and buying a hamburger from a local drive-in. McDonald’s doesn’t care about you, they care about the money. Your local drive-in probably knows you by name and lives in your town.
How They Work
Here’s how the “We Buy Ugly Houses” franchise model works. All these real estate investors buy into the franchise and they have to pay royalties on every house they buy. Do you think their offers are going to be a little lower to compensate for those royalties? Yes. The most troubling part is a group of investors pool their money every month to pay for marketing. Let’s say 10 franchisees put up $10,000 per month each. Hey, those big yellow billboards on the side of I-25 aren’t cheap! When a homeowner calls the number or visits their website, the homeowner is randomly assigned to a franchisee who paid marketing money that month. So in this example, each one of them gets 1 of every 10 leads.
How lame is the customer service if it’s a completely random assignment?
Why they don’t care
These franchisees don’t care about the person on the other end who needs serious help in a tough situation, they care about getting the most leads so they can convert the most deals. After all, no one pays $10,000 per month if they don’t make any money.
So, the truth about those “We Buy Houses” companies is that they just don’t care about the homeowners. It takes a personal touch to help homeowners. The profits are secondary to our family and our motto is – people first, profits second. Yes, we are in business and businesses need to make money to stay alive. However, that doesn’t have to come at the expense of a homeowner in a tough situation.
If you’re looking into one of these “We Buy Houses” companies, I encourage you to also look for a “Real Estate Solutions” company like Shamrock Homes. One that understands you’re a person, not a number and not the profit on the bottom line.