…Given the trajectory of home prices over the past couple of years, there's a large contingent of buyers who are afraid that after they buy, home price(s) will continue to fall and they will lose their hard-earned investment in the home. These are folks who are still waiting for the bottom (although by some accounts, including that of the Case-Shiller Price Index, the bottom is here or has already passed, in many cities) -- from a Trulia.com article entitled “6 reasons Buyers aren't biting (and what Sellers can do to change that)!” 

 

        Chances are if you are reading this, you suffer from schizophrenia because you are both a seller and prospective buyer.  You want to move to that perfect golf community home but you hate the thought of selling your primary home for 25% less than you could have fetched for it four years ago.  And, as Trulia.com indicates, you are probably nervous about buying something that might depreciate in value over the coming years, given the political climate and all the foreclosures and other economic badness that could be on the horizon.

        Although our anxieties about the next year or two may be realized, I suggest we put aside those fears

and ride out the storm in style. To quote the mellow philosopher Bobby McFerrin, “Don’t worry, be happy.”  Here’s why.  If you sell your primary home tomorrow at its true market value -– which, of course, will be less than what it was worth four years ago -– you are going to turn around and buy your next home at a discount to its own value of four years ago.  Your pain as a seller will be your pleasure as a buyer.  And in the unlikely event that the house you buy drops further in value over the first few years you own it, there is an excellent chance the home you sold will drop as well.  Staying put on the theory that your primary home will eventually rise in value is a fool’s errand; the next home you buy will have risen in value as well, maybe at a higher rate.

        You can do a couple of things to make yourself feel better (and protect yourself) on the buy side (besides deciding to rent for the rest of your life or live out of a Winnebago).  Negotiate the best possible price you can, but don’t abuse the seller (remember how it feels as a seller yourself when you have to parry ridiculously low offers).  If you find a re-sale home in a golf community that you like, go low with your offer but not so low that a counter offer will seem useless to the seller.  On the other hand, if you are negotiating directly with a developer, go as low as you want.  Most developers have developed thick skin and many are desperate enough that they just might surprise you with a reasonable counter offer. 

        The Trulia article suggests that, “Buyers can set themselves up to gain over time, even if they lose equity in the very near term, by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.”

        The best trick, though, is to put yourself in the mindset that lifestyle is the most important consideration for you at this point in your life, and to get over the fear of falling prices.  If the market is not yet at its true bottom, you may lose incrementally more in the sell than the buy transaction.  But what you lose in your net worth will be more than compensated by what you gain in lifestyle (golfing as often as you like, for example).  So…..

                                          In your life expect some trouble,

                                          But when you worry

                                          You make it double.

                                          Don't worry, be happy

Homesites in Powell's Point, NC's Kilmarlic Estates, close by the excellent Kilmarlic Golf Club, have dropped in price from around $200,000 at peak to around $70,000 today.  They are currently bank owned.   

Photo coutesy of Kilmarlic Golf Club.

        Think of the Greenbrier Resort in White Sulphur Springs, WV, and the word “classic” comes to mind.  According to an article by Bradley Klein at GolfWeek, relations between the resort’s owner and the architect who helped get the Old White golf course ready for the PGA event earlier this year have turned into a classic legal battle.  A separate landscaping firm is also suing the Greenbrier for non-payment.

        The lawsuits by architect Lester George, who oversaw the restoration of the entire Old White

course between 2000 and 2006, and Aspen Corp., which provided the landscaping above the resort’s new underground casino, pits the two vendors against a larger-than-life West Virginia businessman, Jim Justice, who purchased the bankrupt resort in 2009 and poured millions of dollars into its renovation.  The capper to the resort’s comeback this summer was the Greenbrier Classic, won by Stuart Appleby with a now legendary 59 in the closing round.

        According to Klein and other reports, Justice claims the recent work done by George and Aspen was “completely sub-par” and that Justice and his staff had to take the jobs over to ensure the course and landscaping was ready by the time of the Classic.  (Aspen was a subcontractor for a firm that built the resort’s new underground casino and itself had a lien against the resort that was cleared up recently.)  The attorney who is handling both the George and Aspen suits has responded that his clients’ work was “excellent” and delivered on time.  He added that the architect and landscaper “worked under constant pressure and change orders directed by Mr. Justice, who was told that such change orders would result in extra expenses that he would be billed for.”  Justice, the attorney said, agreed to pay for the changes.

        Aspen is claiming that Justice owes it $1.275 million for the landscaping work; George claims he is owed $199,885 for his redesign of the 16^th hole on the Old White golf course; for a book he was commissioned to write about Old White; for design of the landscaping plan for the golf course; for a logo design; and to perform other work, including the landscaping designs for the tournament entrance and bus drop off.

        In a speech delivered to a Charleston, WV, Rotary Club on Monday, Justice called the lawsuits “a typical deep-pockets thing,” according to the Charleston Daily Mail.  But he also admitted that the resort’s accounting department had had trouble keeping up with bill payments and, in some cases, may have paid twice on the same invoices.

        "When you've got 17,400 on your master vendors' list, you're going to have disputes," Justice told the Rotarians, admitting that invoices in the accounting department were “piled to the ceiling.”  The Daily Mail did not indicate if Justice's attorney was in attendance when he made the admissions, but perhaps he should have been.

        Justice is something of a folk hero among the locals for having saved the Greenbrier and created hundreds of jobs in the economically strapped mountains.  He may be looking elsewhere, though, for a few good accounting people.  At the Rotary Club, Justice admitted he had to fire some employees in the accounts payable department.  Should the plaintiffs' cases reach court, Justice may get to face those former employees again as witnesses for the prosecution.

Lester George designed the wild and wonderful Ballyhack Golf Club in Roanoke, VA (above).  He is suing the Greenbrier Resort for non-payment of work he did on the Old White course prior to the Greenbrier Classic.