In dozens of golf communities in the southern U.S. today, couples eager to stake out their dream of a home on the course are walking through the doors of on-site sales offices and, in some cases, into a fairy tale world of hype, half truths and non-disclosure. By the time they are done, their dream could become a nightmare.
Most developers and their staffs are professional, honest and straightforward. But there are too many exceptions, especially under the pressures of survival in the current climate, to take the process lightly. Consider the 400 folks who plopped down up to $400,000 each for a large square of dirt at Grey Rock, a community near Lake Lure, NC, where
Trust is a fragile thing. Most of us want to believe that when a person looks us in the eye and says black is black and white is white, they actually are. But in our post-Madoff world, and with hundreds of thousands of dollars of our net worth at risk, it is best to follow the advice of the humorist Finley Peter Dunne: "Trust everybody, but cut the cards."
So here is my advice on how to cut the cards when working with a developer's sales office:
1. Do all possible research about a community before you visit, including investigating the developer's track record. Search the Internet by the community's name, and add the word "blog" to the search terms: This may surface comments from local online forums, like City-Data.com, which can provide comments by residents and others about a developer's performance. Understand, though, that some local groups who oppose all land development may have an axe or two to grind and exaggerate claims.
2. If all promised amenities are not built or at least under construction, consider doing an about face and leaving the office. There are too many other communities that have delivered on their promises. At minimum, determine if the funds to complete the amenities are in escrow, safe from the clutches of the developer. Check (or have an independent real estate agent check) to see if any mechanics liens have been filed against the developer; that will tell you if he has paid his contractors and other providers.
3. Ask about the availability of re-sale properties in the community. If the salesperson says there are none, and the development is more than, say, a nanosecond old, he is probably not telling you the truth. Some developers pressure their salespeople to steer couples away from the often-less-expensive re-sales. They may even threaten the salespersons' jobs if they mention the re-sales to customers.
4. If the sales representative acts like he is selling you an $18,000 Dodge rather than a $300,000 piece of property, encouraging you to make a quick decision because "these prices won't last long," stand up and politely tell him you were thinking more along the lines of a Cadillac or Lexus and leave. If he calls your potential purchase a "great investment," leave faster.
5. To play it totally safe, find a responsible, experienced and qualified local real estate agent to represent you (see yesterday's post about "buyers' agents"). Indicate to your agent that you are interested in a few communities in the area; this will avoid the potential that the agent, like the developer, will play to your interests and tell you what you want to hear about that one community. The agent, who earns a commission regardless of the community you buy into, will show you all properties with equal enthusiasm if you keep your options are open, even if you have a preference for one community.
6. If you want someone to cross-examine and qualify a local agent for you, contact me. I know many responsible professionals in the southern U.S., and where I don't have an established contact, I know what questions to ask. I will do all the research necessary to line-up the best possible agent for you.
7. Finally, ask tough questions...even of me. And after you do all you can to prepare, follow the words of Dr. Benjamin Spock who, after all, indirectly raised many of us Baby Boomers: "Trust yourself. You know more than you think you do."
If you have dealt with a developer's real estate office, for better or ill, I encourage you to share your comments here. Your fellow readers and I will be grateful.
