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America For Sale

Published:

Last Edited: March 22, 2008, 7:33 pm

I'm not in a creative writing mood, but I wanted to post this.  I was here on Thursday.  It was in the paper, on the radio and even on the local Fox news!  "Get 'em while they're hot."

http://www.news-press.com/apps/pbcs.dll/article?AID=/20080319/NEWS0101/80319060/1075 

The scene was chaotic.  A combination of investors and potential homeowners were lined up to get into this gated community.  By the time I got there around 40 of the 100+ homes on the "clearance rack" had been sold. 

When I was a kid my mother would take me to Filene's Basement in downtown Boston. Those were the days before malls or outlets, when you took the train into the city and walked for blocks to the major department stores.  At that time Filene's Basement was very unique and sold clearance items from their main store with an automatic weekly discount system. Anyway, the reason I mentioned this store is I remember some scenes in the 50s where women played tug-o-war with a bathrobe that was 75% off or undressed (no dressing rooms in the store) in public.  My very prudish & modest Mom would drop her jaw as we walked by women in their bras & panties trying on dresses.  (I wonder how many businessmen stopped by during their lunch hour? lol)

Okay - enough rambling.  Back on topic..a house isn't a pair of pants and I wonder how much buyer's remorse there will be after the mad rush is over. This pretty gated community is in the middle of nowhere, and over 100 houses and townhomes were sitting there empty.  Some had barrel tiled rooftops and professional landscaping.  A few of the homes priced $70K or more below the original builder's price had granite countertops and upgraded carpet & tile, even a jacuzzi tub.  So is it because of our failing economy, the mortgage crisis, or is there another reason this builder filed for bankruptcy and now the houses are selling for less than it probably cost to build them? One wealthy investor recently bought all the properties and hired a real estate company to move them in a few days.  They had lenders on site ready to run your credit and make the deal and the TV news said "it's like a buy one/get one sale."

Who the heck can shop for a house this way? What I had to do (after I finally found a place to park) was register at the sales office and pick up a current list of available houses and a map and then go on treasure hunt.  This can't be a brand new development since every address was recognized by my GPS, yet only 3 homes were occupied on the street where most of the houses I toured were listed, at least the ones in the lower price range.  They were very close together so (to me) they were detached villas, since the lawn care was included in the approximate $278/mo HOA fee.  Not a bad deal, since it included exterior pest control, basic cable and high speed internet, security, use of the community pool & clubhouse.  But will it always be $278/month?  What about the taxes when the homes are reassessed? Will they go up or down?  Who is going to manage the community?  Maybe I just have one of those 'Enquiring' minds. lol

Side note: Am I the only person who notices how rude people are these days?  One woman in a monster Cadillac tried passing me on the left driving down a small side street.  It didn't do any good, but I put down my window and told her to go...well, we'll skip that for now.

Did I make a big mistake by not grabbing whatever was left during this deal of a lifetime? Maybe so.  Guess I'll never know, but I tend to believe in the old saying "there's no free lunch" as someone commented on a local blog.  I found a home I liked and started to measure the rooms and take notes.  By the time I got back to the office to ask a few questions, it had been sold.  I drove & walked around the community for hours and found another home with similar features.  When I found someone to answer some questions, it was too late.  On the way out, I asked the broker to take my name in case one of the deals falls through and he tried to explain that it doesn't work that way.  I'm a little confused, and I've had some mortage training, but he told me it was on the spot financing so nothing is contingent.  Here's the latest report. 

http://www.news-press.com/apps/pbcs.dll/article?AID=/20080321/NEWS0101/80321019/1004/ACC

Why is this in the news as a story? Isn't this free advertising for the seller?  There are some homes for sale by residents for higher prices and I bet many of them will lose prospective buyers or even pending contracts because of all this media coverage. 

The reason I posted this is because it's frightening to see what's happening in this country.  I put more thought into choosing a lipstick than most of these buyers put into financing a house. 

By the way, if by some coincidence an LP member is one of the new homesowners, I wish you a lot of good luck and many years of happiness. 

 

Entry #137

Comments

1.
justxploringComment by justxploring - March 22, 2008, 7:43 pm
Isn't there a conflict of interest here? The broker who owns the agency that is marketing these homes and making all of the commissions writes a column for the Fort Myers news-press.
2.
LittleoldladyComment by Littleoldlady - March 22, 2008, 8:22 pm
I think it is that way everywhere but like you said, "there is no free lunch." Somewhere there are hidden costs and fees. Someone is going to have to pay the "Piper". this mortgage mess is almost more than I can stand. It was caused by nothing but greed. Greed on the parts of the lenders, the borrowers and the builders. Tell me, if I make only 45,000.00 per year, how in the world can I afford a 200,000.00 house. Or for that matter a house for 150,000.00? I don't see it and I really don't understand how people thought that the payments on their 200,000.00 home were going to stay at 800.00 per month. No way!! Americans used to be smarter and could figure things out but now I am not so sure. Oh for the good old days!!
3.
LuckyLillyComment by LuckyLilly - March 22, 2008, 8:37 pm
There could be alot of things wrong. They could have built on an old minefield. They could have been running out of money and took shortcuts and every one of them will tumble down during the first tropical storm.

That said, at those prices I'd sure think seriously about buying one. Especially if they come with a new home warranty and if there's a cap on the % those HOA fees can rise each year.

It is free advertising, but I think it's a big story too. Just a microcosm of what's happening all over the country except in Boise ID. LOL
4.
Rick GComment by Rick G - March 22, 2008, 8:38 pm
Nancy, yes, it may appear to be a conflict of interest, but the column they write is probably informative as to local market prices, sales, etc.

That's the only source I have of what value the local property market is at. In my immediate neighborhood property values have dropped by as much as 20%.

5.
Rick GComment by Rick G - March 22, 2008, 8:41 pm
that was a 20% drop in the last year.
6.
TenajComment by Tenaj - March 22, 2008, 8:41 pm
But some people will argue that it's not Greed and that we are just stupid people and need to learn economics 101 and as for the gas crisis it's supply and demand. That I don't get. It's enough of everything to go around many times over. I really do wish I could understand that mentality.
7.
time*treatComment by time*treat - March 22, 2008, 9:16 pm
There will be plenty more deals "of a lifetime" during your lifetime. I wouldn't worry.
8.
Comment by pacattack05 - March 22, 2008, 9:30 pm
A friend told me about a house in the Cape selling for around 30 grand. I wouldn't live in the cape if you paid me.
9.
justxploringComment by justxploring - March 22, 2008, 11:26 pm
Thanks everyone for your comments.

Pac - that's one thing you and I agreed on, but every time I pay rent I am paying someone else's mortgage. It's just that for years people ask me all the time "why are you wasting your money on rent?" So I'm trying to change my attitude. Pac, I don't even like Fort Myers but unless I win the lottery soon, Barefoot Beach is still way out of my reach. :-) Actually it's very close and I can walk there, but I can only wave to the multi-millionaires who live there and then I have to go home!

BTW I have the MLS for the Cape and there are lots of small homes in the $120 to $150K range, but I haven't seen any for $30K. I was only interested because this is a gated community and all the outside maintenance & landscaping was taken care of by the HOA. I won't live in a condo or townhouse with common interior walls again. I figured it would be instant equity too. I never thought I'd say this before I moved to FL, but I now like deed restrictions and some rules. I also think the "mob effect" prompted me to go there to look. That's why I said some people might have second thoughts later.

Rick, I understand what you mean, but there are lots of homes in that area on the market. I'm not sure if it's the #1 city in foreclosures nationwide, but it's definitely in the top 10. This article really isn't talking about average home prices at all since it was a bankruptcy sale. There are other homes in the same development that are on the market for much more.

Lilly, no minefields, but I do think about sinkholes since Tampa, which is further north, has had plenty of trouble with them. The Cape also gets hit with more tornadoes and hurricane damage. We've been very lucky here since there have been direct hits to the south and north. That particular builder has a pretty good reputation. I think the homes were just overpriced to begin with. Regarding storms, FL has had strict building codes since Charley in 2004. The new law became effective for builders in 2005. Asking about the HOA cap is a good idea, but there just wasn't any time. I'm not sure who manages the HOA now and if the man who bought the 110 homes only bought the property or took over the management. It was a madhouse. I was more interested in the property taxes and if they would be assessed on the selling price or the previous appraisal. I couldn't get a definitive answer, just that they are based on the average selling price. I also got 2 different stories about the homestead law. I wanted to call the county tax office and an attorney but there just wasn't any time. Once you wrote a check, it was yours. If you didn't, someone else cut you off at the pass.

Tenaj, yes it's greed. I've been a victim of greed too. However, I've also talked directly to people who can't afford stuff like brand new furniture or a new car and they don't care. They want it all and want it now. Still, I agree that lenders have an obligation to explain everything to buyers when they are getting a mortgage.

LittleOld Lady, you do make a good point, but I'm on both sides of the fence here. I mean, some people really didn't do the math and stop to realize that an interest only loan or a 3% ARM would change one day and all they cared about was "can I buy this today?" But if you read the article Tenaj blogged, you'll see another way of looking at it. I've mentioned this before, but for a short time I worked for one of the Lending Tree lenders. This particular place wrote car loans for people who were turned down by everyone else and I was supposed to call the hundreds of people who applied online (thousands and thousands to be more accurate) and say with a straight face "Congratulations. You've been approved for a 48 month loan for up to $12,000 at a rate of only $24.99%. " (It was harder than it sounds.) Some people were buying used cars for $10,000 and paying another $5,000 in interest! So all that company was doing was giving them a bigger shovel to dig deeper into their hole. Guess who who owned the bank? Ford!   I lasted a month because I tried very hard to help the people. Everyone thought I was just stupid and didn't get it. What I didn't get was the bad attitude of the loan officers toward people in debt. When they got off the phone they'd often say "what a moron."

Time*treat - yup, that's what I said as I was driving away. I'm ready to leave FL anyway. (she writes for the millionth time) I was only figuring that moving 50 miles instead of 800 would be a lot less work.
10.
justxploringComment by justxploring - March 22, 2008, 11:35 pm
Long post - but I wanted to answer everyone. :-)
11.
JAP69Comment by JAP69 - March 23, 2008, 2:58 pm
The only thing a recession does for the most part is wipe out the marginal buisnesses. The shoestring operators. Also the lenders who gambled on marginal creditors.
Obviously the builder of these homes could not carry the financial load of a downturn and went bellyup.
Generally a builder will have a 15 to 30 percent markup.
12.
justxploringComment by justxploring - March 23, 2008, 3:48 pm
I just went into the various web sites for realtors who sell in this area. There are some private homes build at the same time for sale in this development in various price ranges. If I just go by the model and square footage (upgrades can cost a lot) there really isn't a huge difference. Yes, some of the homes that are being sold for $169,000 (asking price by realtor) were on the closeout list for $148-$150K but that's not such a huge difference. I guess it is to some people. There were a few homes in the $135K range but those went first. You can buy one privately for $15K-$20K more and those prices are always negotiable. If I were madly in love with a home and a community, then I guess rushing to a special sale and saving $20,000 would be great. But there are many lovely homes in Cape Coral available, just not in a gated community. A lot of people (like me) feel the way Pac does. However, there are lots of gorgeous harbourside & golf course communities too priced way over a million, even in today's market. Depends on the location & the view, gulf access, etc. However, since the city is huge it has a long way to go before most of it is developed so much of it looks like a wasteland to me. It's the 2nd largest city in FL (over 115 sq miles) but there's only about 150K people living there. Jacksonville, for example, is the largest city in FL and has a pop of around 1.3M.

I was in retail for a long time and I know if you put a big sign "clearance" on something, people come running. I tried to stay away from those places. One store would change the price tag and then mark it down on a sale tag.   There were just too many unanswered questions that, had I been aware of this "clearance" a couple of days earlier. I would have been able to research. As I wrote, by the time I arrived it was like when McDonald's was offering free fries (except on a pricier scale)
13.
Comment by pacattack05 - March 23, 2008, 6:37 pm
I have a firend ( yes I have friends...lol ) who moved to North West cape, and I gotta tell you, it's way out there in the middle of nowhere. He also drives for a taxi company and most of the rides originate in Naples. Imagine having to pick someone up in Naples at 6 or 7 in the morning . He'd have to leave his house an hour and a half early or even 2 hours to just get to Naples during rush hour. I'm sure he's saving some money to live out there, but how much is he spending in gas? Especially when driving an 8 cylinder Lincoln town car...lol
14.
justxploringComment by justxploring - March 23, 2008, 7:01 pm
That crossed my mind Pac. This development was in the NE Cape off Pine Island RD but I'd still have to drive through N. Ft Myers to get to I-75. It was a long drive. Also, I was attacked by swarms of mosquitoes just standing outside the house. I don't know what the $120,000 houses look like, but there are lots of listings in both Lehigh and Cape Coral in the low $100s. Since there are houses also listed for $8 million, I guess it depends on the area! :-)    The $8 million homes must be huge and directly on the river. The place I looked at said "on lake" but in FL they dig a hole and pee in it and call it a lake. People from Michigan must find it very amusing.
15.
Comment by pacattack05 - March 23, 2008, 7:39 pm
LOL Justx...About the pee in the lake...lol

Pine Island Road? No freakin way. I go to Burnt Store Marina, and Pineland Marina a lot. Talk about way out. But I know where you're talking about and it's not as far as the Pineland Marina, yet still out there. And you'd also save 2 bucks in tolls, because ever since they had that "pay the tolls one way", people have been cramming to use the free bridge on 75 going over the Caloosahatchee.

I want a house off a fifth in Naples, right at the beach....lol I hear they're going for 128 grand these days. :)
16.
justxploringComment by justxploring - March 23, 2008, 9:05 pm
http://www.swfhomes.com/Olde-Naples-Community.asp#propsforsale

You mean these? You forgot to add a couple of zeros. $12,800,000
17.
time*treatComment by time*treat - March 23, 2008, 9:13 pm
... of course you realize MCD's fries never rot, right? ;-)
18.
JAP69Comment by JAP69 - March 23, 2008, 9:46 pm
Yep
Up in new england way we call those holes in the ground with water in them frog ponds.
19.
Comment by pacattack05 - March 23, 2008, 9:46 pm
DEJA VU !
I mean it. This was a very strong one to boot. I love them. Always waiting to see what happens next.

Multi-dimensions are abound.
20.
Comment by pacattack05 - March 23, 2008, 10:15 pm
I love MC fries, it's just that they don't like me....lol
21.
Comment by pacattack05 - March 23, 2008, 10:24 pm
Yes Justx....I meant to add some extra 0s....

I meant 128 trillion....

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