At The Conservatory at Hammock Beach in Palm Coast, FL, the Ginn Resort firm once offered lots in the $300s to $500s range. Last week, one of those lots, with a view of the lake, sold at a tax deed sale for a little over $15,000. It had been 100% financed by a bank mortgage the owners could not repay (or chose not to). Since the bank declined to bid on its own property, the property went to tax sale. The Conservatory features a well-regarded Tom Watson golf course that is up and running, and the facilities of the adjacent Hammock Beach Resort -- not apparently in any immediate risk of solvency issues -- are available to Conservatory owners.
Last week, I received an email from Tennessee National, a sleek golf community near Knoxville, TN, that was developed by Greg
In both cases, buyers looking to build eventually in a top community with a well-regarded golf course can purchase the lot with what amounts to a little more than pin money. But behind the bargains there are stories; there are always stories. In the case of The Conservatory, you have a bankruptcy of the Ginn organization, zero new construction of homes, an iconic clubhouse that is closed, dozens of properties in foreclosure, and property owners who have just stopped paying the homeowner associations dues. And reports are that the golf course has closed a few days a week to save money.
At Tennessee National, the story behind the bargain prices is simpler but, in some ways more damaging to future returns, according to local sources and news articles. Sludge that was dredged from the nearby Watts Barr Lake, which was polluted by runoff after heavy rains in the area, was dumped in a local landfill that is close to the properties being offered at a bargain. The lake, some say, is temporarily "dead" (dead fish, etc.) and a landfill always savages property prices in a nearby neighborhood.
More and more, "bargains" like these in otherwise high-end communities are coming on the market, and the temptation is to think the prices are a consequence of a bad economy only. They are not. The economy only pours fuel on the fire. Words to the wise: Do your homework before you ever even consider one of these type "bargains," and when you are satisfied the reward might be worth the risk, engage a buyer's agent to represent your interests. They won't charge you a fee but they could save you money and heartaches.
