Sale-leasebacks are a rather obscure real estate transaction in which a property is sold and then leased back to the original owner. Usually found in commercial real estate, the transaction has become more prevalent in residential real estate in recent years. EasyKnock is one of the leading companies in this growing industry.
EasyKnock markets its service as a way for homeowners to unlock the full equity of their homes and presents buying the home back from the corporation as an achievable goal. Since the transaction is technically a sale and not a loan, homeowners who agree to a sale-leaseback do not have the protections that they may once have had as homeowners with mortgage loans.
Caitlin Thompson, Roy W. Howard Fellow and National Public Radio (NPR) investigative journalist, won this year’s Outstanding Young Journalist category of the Barlett & Steele Awards for her investigation, “’Sale-leasebacks’ offer to help homeowners needing cash. Some lose thousands.”
Thompson shared the ins and outs of her investigation with The Reynolds Center.
Why sale-leasebacks?
Prior to her current fellowship at NPR, Thompson interned at the Atlanta Journal-Constitution (AJC). There, she learned about sale-leasebacks. She got a tip from a legal aid attorney who was perplexed by a case in which a man received an eviction letter for a house he had owned.
“I started looking into it, and I realized that this guy was not alone,” Thompson said. “Then it became clear looking into this company that there were a bunch of lawsuits in Texas.”
While the story was not a fit for the AJC at the time, Thompson pitched it as her first story at NPR, receiving support to dig into it further.
Thompson closely followed the money in this investigation through publicly available lawsuit documents against EasyKnock. However, she didn’t initially realize she was conducting a business investigation. “I didn’t necessarily approach the story like it was a business story. I approached this story like It was a story about a type of real estate transaction and about a company, and I didn’t really put two and two together until later on.”
Businesses impact our day-to-day lives and, in some cases, even our livelihoods. This was the case for the two primary human sources of the investigation, Lester Shreffler and Shawn Davis.
Choosing sources
Thompson learned about many of her human sources through lawsuits against EasyKnock. “There were so many people that I spoke to … and … talking to them was really formative for me because it helped me understand the gravity of what people were going through who were in these situations.”
Thompson portrays Shreffler as a responsible, hardworking person who happened to fall into financial hardship when he was laid off from his job during the pandemic. He was struggling to pay his mortgage and, in an attempt to salvage his home ownership, sold his house to EasyKnock with the aim of purchasing it back once he was in a more stable position.
However, Shreffler fell behind on rent payments to EasyKnock, which ended up being higher than his mortgage payment, and was unable to buy back his home. Thompson said she decided to highlight Shreffler’s case in the story because “he exemplified a bunch of the issues that we saw arising in some other cases, so he was a really good example for the major issues that we saw and how some people were receiving significantly less of their equity through this deal than they thought they would, according to the court documents we reviewed.”
Davis was a different case. He had to stop working due to a serious medical condition and could no longer afford his mortgage. Not only did he “[receive] an eviction notice, but he also then owed the company some money after they sold his home,” Thompson said. “He was a really interesting example … not only did he not benefit from this deal in the way that he thought he would, but he also says he ended up in a far worse position at the end of it, according to the documents we reviewed from his lawsuit.”
Thompson wanted to understand the larger scope of customers’ experiences with the company beyond those who were pursuing legal action. “Finding people who’d been impacted who were not suing was a really important thing to me,” Thompson said. “I wanted to know if this was just isolated to the people who were suing or if this was a bigger issue.”
Connecting with this type of source helped her confirm that many more EasyKnock customers had similar experiences to Shreffler and Davis. Their stories were harder to dive into since Thompson couldn’t access as much information about their cases as she could from the ones that involved lawsuits.
Thompson was committed to understanding all perspectives in the story. For example, Thompson interviewed two experts offered by EasyKnock, even though they had financial ties to the company, to ensure she had a well-rounded understanding of all parties involved.
“I really do believe in this tenet of journalism that we shouldn’t go in with a prescribed idea of what the story is. We should be talking to people on all different sides of things to understand where there’s some complexity,” Thompson added.
Contract complexities
As with any in-depth, investigative piece, there were barriers and complications. For Thompson, the biggest hurdle to surpass was understanding EasyKnock’s contracts with customers.
“It was such a nightmare trying to make sense of these transactions. I had several lawyers who were helping me understand [them],” Thompson said.
Thompson added that these lawyers “have spent decades in this space of real estate law and housing law, and both of them were like, ‘I have spent my whole career in this, and I barely understand these documents. These are really complicated contracts.’” EasyKnock says its terms are clear.
For Thompson, receiving this feedback from legal experts was confirmation that, while EasyKnock did “try to make it clear what homeowners are getting into and that this is a sale of their property,” many customers did not fully understand what they were signing up for.
EasyKnock is guarded about the number of properties it owns, which added a layer of complexity to Thompson’s reporting. By analyzing county property records, she created a database of EasyKnock’s properties in Texas’ 10 largest counties. This enabled her to fact-check the company’s claims about home sales, repurchases, and evictions.
“The two main questions I had were, how often are people buying their houses back? And, how often are people receiving an eviction notice?” Thompson said. “And the only way I could do that was to look at all of the properties that EasyKnock had purchased in a certain area and compile all of that information.”
Thompson went into the investigation hoping to nationalize it; however, it became clear to her early on that expanding it to all states would not be feasible.
“Property records in most states are held at a county level … Texas has over 200 counties and all of them hold their property records individually,” Thompson explained. “I had to go to the individual county clerk’s office or the individual tax assessor and either download the CSV file or go through their search and just manually copy properties over.”
Some counties listed properties by their parcel number instead of by their address, complicating the data-gathering further. Despite the extensive and tedious work, Thompson enjoyed the challenge.
“I was able to show, look – what we’re talking about with these specific people – they’re not alone. For some people, it works out. But the problems we found were more pervasive,” Thompson said.
First, do no harm
Thompson’s primary sources experienced financial and emotional hardships that were amplified by their negative experience with EasyKnock. She was thoughtful in her interviewing approach to ensure she wasn’t causing further harm while reporting on their stories.
“The first thing that I did was I let them know that they can pause the conversation at any point, that they don’t have to talk to me if they don’t want to. Nobody owes journalists their story,” Thompson said. “But that I appreciate their openness and helping me tell this story.”
Like Associated Press reporting duo Margie Mason and Robin McDowell, Thompson prioritizes frequent check-ins with her sources about how they feel contributing to an investigation that will be shared with a very large audience.
“Before we publish, I stop and have a conversation about how they’re feeling about being in the public eye,” Thompson said. When sources talk to a reporter one-on-one, it can be easier for them to open up and share their story. However, they may not realize until later that they don’t feel as comfortable being vulnerable with thousands or even millions of people.
Because of this disconnect, Thompson believes it’s her responsibility as a reporter to “[help] people be as media literate as possible before they’re impacted by being in the public eye.”
Thompson added that Shreffler and Davis “were incredibly passionate about making sure that this got out there. But [she] did want them to pause and reflect on what it would mean for them, too.”
No surprises
Thompson was sure to navigate her reporting with full transparency for all sides. “I always go through the story with the people in it. That’s true for experts. It’s true for people like Lester [Shreffler] and Shawn [Davis], and it’s true for the company. I don’t want anybody to be surprised, and I want to make sure I have everything right,” Thompson said.
She placed importance on getting not only the facts right but also the context of what her sources said. While she didn’t share the entire story with her sources before going live, Thompson ran their quotes by them to make sure she was accurately representing them and what they told her.
Regarding EasyKnock, Thompson said, “I had a full conversation with the CEO. I went back to them with no-surprise letters … so that they knew exactly what was in the story and they could provide me with other numbers, other information to make sure that what I had was right.”
Beyond upholding journalistic ethical standards of transparency, having clear and honest communication with EasyKnock was imperative to protecting herself and NPR from lawsuits.
The impact
The reporting has already had a tangible impact. The Michigan attorney general is investigating EasyKnock, and their preliminary findings reflect Thompson’s reporting. Lawmakers in several states and cities are considering introducing local laws based on the investigation’s revelations. Aside from the systemic impact, Thompson also pointed to the human impact of the story.
“Lester said something to me that broke my heart … like, ‘I would tell people about the situation that I was in, and nobody would really understand,’” Thompson recalled. “I think it took an NPR reporter flying out across the country to sit down with him for several hours and have a conversation about what he’d been through for him to feel like he had been heard and for him to feel like telling a story was going to have an impact.”
Advice to fellow young journalists
“Sources lead me to stories a lot of the time,” Thompson said. She encouraged early-career journalists to invest time and energy in building their networks. More connections lead to more ideas, more knowledge, more contacts, and more stories.
“I’m one of those reporters who always picks up the phone and always wants to talk to people,” she added, emphasizing the value of being well-sourced.
Thompson also recommended thinking outside the box when sourcing documents, especially from private companies. “Don’t think of private companies as impenetrable. Think about the creative ways that you can get documents about their finances,” Thompson said, such as public lawsuit filings.
“I looked at everything that had been submitted in the lawsuits and that gave me, frankly, probably more information than I would find from some public filings that would be available for a public company,” she added.
Beyond networking and getting privileged documents, Thompson also advised “being present when you’re talking to people in your interviews. Show that you care.”
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Read Thompson’s follow-up story to the investigation.
For more insights on doing investigative business reporting, check out “Chapter 15: Real Estate” and “Chapter 18: Companies” of The Reynolds Center’s Business Beat Basics: A Guide to Covering All Things Business.
