Richmond - 16 October, 2005 -

Anyone seen Ug? Surely, you have. He's the funny-looking guy -- a la Fred Flintstone -- on yellow billboards that have sprouted up around town in the past year. "Ug buys ugly houses," the billboards say. "We buy pretty ones, too," said H. Wesley Donovan, one of three franchise owners of the "Ugly Houses" business in the Richmond area. Sometimes a purchase is not so much about an ugly house as it is an ugly situation, Donovan said. Ugs, like Donovan, work fast. They can close a sale in 10 days -- or less, if needed. Most real estate sales close in 45 to 60 days, although they can be done in 30 days. A quick sale might be needed to settle a divorce or relieve financial distress, Donovan said. As a franchisee, he doesn't get into the reasons. He just makes offers. Ugs will buy just about anything. But they buy at a discount to what the market could bear. Franchisees buy at a 20 to 35 percent discount of what the home is worth. That does not include the repair costs to get a house ready to put back on the market. Some homeowners don't have the money, inclination or time to put into a house to get it ready to sell. Others don't want strangers tromping through their domains and peeking in their cupboards. "My wife saw the billboard and called, and they made me a reasonable offer," said Tim Bailey, former owner of a fixer-upper at 710 Wilmer Ave. in Henrico County. Bailey had worked on and off on the Dutch colonial for five years. He also got married in that period and moved to a nicer neighborhood. Donovan bought the house for about $68,000. He hired contractors to gut the downstairs, add a bedroom and renovate the kitchen and a bath. The two-story house is back on the market for $139,000. Donovan has another offer on a fire-damaged house. He also bought and resold a cream-puff home on 3 acres in the Varina area. Top houses bring top dollar, he said. Ugly ones at least get offers -- most of the time. "We can make an offer 95 percent of the time," Donovan said. Sometimes a loan is upside down, where the owner has too little equity in the house to accept a discounted offer. . . . Dial the toll-free number on the billboard for "Ug buys ugly houses" and the caller is directed to one of the franchise owners who operate in the region served by the 804 area code. The first billboard popped up in September 2004 with the first franchise here. The first radio ads are scheduled to air this month. The franchisees operate under the HomeVestors brand name, like the billboards say, for marketing and business-lead purposes. But each runs its own business. Donovan owns PSP Investment Group. Rhett Clarkson, the first franchise owner in the Richmond area, and partner Woody Livesay own Specialty Homes. Eric Fales owns Innovative Asset Solutions. All are part of HomeVestors of America Inc., a multimillion-dollar business that made Entrepreneur magazine's list last year of the top 500 U.S. franchise operations. HomeVestors has grown to 252 franchises in 29 states, from 40 franchisees in 2000. It franchises one office for every 200,000 to 250,000 people. The Richmond area is fully franchised. Each franchise owner pays a $46,000 startup fee, a $495 monthly fee and a $775 property purchase transaction fee, regardless of the price, plus a $175 marketing fee for each house. The franchisee turnover rate is 6 percent, a company spokeswoman said. Fales, a franchisee since April, has spent as little as $7,000 for a house and as much as $170,000. A waist-high weed grows ramrod straight in the middle of the front steps of a dilapidated house on the perimeter of Church Hill. Fales has a signed contract on the house, but the sale has not closed. A visitor would need to step sideways on the narrow top step and test for weak spots before venturing on the porch. Trashed, the house may be too far gone to turn into treasure. In another house, a Times-Dispatch newspaper was open on the counter as if someone were reading it. It was from 1992 and thick with dust. "The biggest shock to me was how some people live," Livesay said. He said he has been in some houses where you couldn't walk without stepping on stuff. None of his purchases has yielded valuables, such as cash or vintage instruments, as some HomeVestors franchisees have reportedly lucked into. The backyard of a not-so-dreamy house in Chesterfield County was littered with junk cars, campers, boats and two rusty oil tanks. The owner agreed to haul the vehicles but left 40 to 50 tires. "We'll pay to get rid of the tires," Livesay said. The house needs $20,000 worth of work, he said. He and his business partner could turn it into rental property, fix it for a retail sale or clean up the trash and sell it wholesale to an investor. Either way, this ugly house is theirs to fix and flip.

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