HomeVestors of America CEO David Hicks stepped down after a series of investigative reports painted his firm as a parasite exploiting the vulnerable. iStock photo
Let’s just say I was surprised but not particularly shocked when I read of David Hicks’ pending departure as chief executive of HomeVestors of America.
If the company name doesn’t ring a bell, then this probably will: Hicks runs the “We Buy Ugly Houses” outfit whose signs have become ubiquitous in middle-and-working class neighborhoods across the country.
Sadly, taking advantage of other people’s misery and mistakes can be a highly profitable business. But it is a line of work that comes with certain reputational risks.
And those reputational risks came home for the hard-charging Hicks in a series of stories by ProPublica, the nonprofit investigative news site, that took a hard look at HomeVestors business practices.
Taking over the helm of the company in 2017, Hicks expanded HomeVestors across the country, boosting the number of franchises by more than five-fold, to almost 1,150.
But there was a dark side to that explosive growth, one that ProPublica cast a spotlight on.
The increasingly must-read news site, which broke the story on Clarence Thomas’ cozy relationship with conservative billionaire Harlan Crow, turned its considerable reporting powers loose on HomeVestors and turned up some disturbing facts.
HomeVestors has pitched itself as providing a crucial service, helping people sell otherwise unmarketable homes.
But according to ProPublica, the Dallas-based franchisor targeted “people in vulnerable situations” through its advertising campaigns. In fact, HomeVestors taught franchise owners how to “find the pain” of a homeowner in order to buy houses for rock-bottom prices,” according to ProPublica.
Left Some Sellers Homeless
Some HomeVestors franchisees were found to have sought out “elderly homeowners who did not understand the contracts they signed.”
And it gets worse.
Some of HomeVestors erstwhile clients “were in such dire financial situations that they became homeless after selling to a HomeVestors franchise,” according to ProPublica.
For its part, HomeVestors has pushed back, arguing that the company has a 96 percent customer satisfaction rate and that it does not tolerate – and works to eliminate – predatory behavior on part of franchise owners.
Still, Hicks’ own words have reinforced the impression that HomeVestors is a shark on the prowl. On a podcast back in 2020 that ProPublica unearthed during its reporting, he touted the money to be made on houses that are so foul-smelling that flippers have to take a shower after walking through them.
“That cat piss smell, you know what that smell is?” he said, chuckling. “That’s money.”
For my part, I interviewed Hicks for a column that ran in Banker & Tradesman back in April 2020.
And the impression I came away with about HomeVestors business practices wasn’t particularly favorable.
Sales Figures Belie Defense
My interest was sparked after a note from “Chris,” apparently a HomeVestors franchise owner, offering to look over my century-old Natick fixer-upper. But he also helpfully made clear he was interested in looking at all the other homes in my neighborhood as well, so spread the word.
When I got Hicks on the phone, it was at the height of pandemic restrictions and HomeVestors had decided go virtual in its consultations to “ease seller worries during this unprecedented time,” which, I noted sarcastically, was quite considerate.
Scott Van Voorhis
Hicks argued that his business is not about driving hard bargains and flipping homes but rather helping people out of “ugly situations.” The homes his franchise owners buy are typically run–down and in need of extensive work before they can be put on the market.
“These are homes that Realtors don’t like to sell,” Hicks said. “They smell like cats – they are not marketable.”
But the sales numbers he provided offered a different picture, with HomeVestors, on average, scooping up homes for $250,000, about half the median price at that time in the Boston area.
“The reality is people need to move,” Hicks said. “We help them. We tell them their options.”
In announcing his retirement, Hicks said he had been thinking of it for a while, but that “recent press” coverage had taken a “personal toll on me,” ProPublica reported.
Hicks then served up the usual line about wanting to “spend more time focusing on my family and my health.”
File under: Cry Me a River.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
