Real Estate Supply

Joe has been buying big ads in the Wall Street Journal, Womens mags, etc. for the first time in many years in an attempt to revive the market.

I would think that they're buying these ads (and I'm glad they are) not to revive the market, but to build the market since this area is unknown to many non-southern markets. I think that much of the market plan was in place before the hurricanes and current market changes. I would think that JOE has both a short (e.g., respond to hurricanes and market changes) and long-term plan and the marketing is as much (perhaps more) of the long-term plan. Short-term changes in market condition shouldn't have a big effect on a company's strategy (unless, of course, the company is already in trouble and I don't have that sense with JOE at this time).

I have two questions. If I were to buy a lot with a short build out time, say 6 months, I am guaranteeing myself to pay penalties since no one can build that quickly, right? Second question...what are the typical $$ penalties for not building "on time"?

I have two questions. If I were to buy a lot with a short build out time, say 6 months, I am guaranteeing myself to pay penalties since no one can build that quickly, right? Second question...what are the typical $$ penalties for not building "on time"?

I think we are somewhat misusing the term buildout time on this board. We are really talking about construction start times.

I don't think that there is a "typical" penalty for not beginning construction by the start time. It will vary from one development to the other. I believe The Village of Blue Mtn has a penalty of $1,000 per month for not commencing before the start date.

I think we are somewhat misusing the term buildout time on this board. We are really talking about construction start times.

I don't think that there is a "typical" penalty for not beginning construction by the start time. It will vary from one development to the other. I believe The Village of Blue Mtn has a penalty of $1,000 per month for not commencing before the start date.

Thanks! I have learned on this forum that buildout time means commencement of construction, but I have also read that it takes time to get plans drawn up and approved. I'm wondering how much leeway developers would give to the new buyer.

Thanks! I have learned on this forum that buildout time means commencement of construction, but I have also read that it takes time to get plans drawn up and approved. I'm wondering how much leeway developers would give to the new buyer.

Some developers may be willing to negotiate, yet others may ask you work that out with the seller. i.e. - not my problem. Some sellers with fast approaching start times, already have the house plans drawn and are including the plans in the sale.

Our contract with Watercolor stated fines of $1000 per month or they could buy the lot back from you at the purchase price if you did not begin construction by the contract date. Supposedly Watercolor is also allowing people to buy extra time in order to delay the construction commencement date.

Our contract with Watercolor stated fines of $1000 per month or they could buy the lot back from you at the purchase price if you did not begin construction by the contract date. Supposedly Watercolor is also allowing people to buy extra time in order to delay the construction commencement date.

You might think that with the slow market, leeway would be granted, but there are contracts signed. I don't know how you could change the deal after the fact and remain fair to everyone.

You might think that with the slow market, leeway would be granted, but there are contracts signed. I don't know how you could change the deal after the fact and remain fair to everyone.

I think JOE may look to folks "buying time" as a revenue generator for the company--or allow more free-time "if" owners are willing to contract JOE-certified builders & architects for their projects. That smiling, friendly "George Baily-type" JOE representative that sold lots several months ago can very well transform into "Mr Potter" overnight.

I'm expecting JOE's 4Q to come out on the downside and they'll be on the hunt for revenue-generating business as real estate hits a--shall we say--soft patch, going into the year. (Prediction: I have a feeling that JOE may announce a bump up in the dividend [or some other piece of news] before the Feb 8th 4Q release to create a price bump to beef up the CEO's "monthly $1.X million stock sale" and to cushion the not-so-good quarterly news coming down the pipe--or not. )

Our contract with Watercolor stated fines of $1000 per month or they could buy the lot back from you at the purchase price if you did not begin construction by the contract date. Supposedly Watercolor is also allowing people to buy extra time in order to delay the construction commencement date.

It's funny that you mentioned that. Our contract does mention the buyback option but makes no mention of the $1000 per month penalty. In fact, "a friend" was recently offered the option of paying $2500 per month for a period of 12 months to delay his buildout. Apparently, this option has been accepted by 15 or so property owners who had no intention of building. The problem with this as I see it is that in the past, JOE has not enforced their buildout requirements and has not imposed any penalties. I can attest to this firsthand as I have been significantly late in starting 2 homes and did not receive any notification of this fact from JOE. Needless to say, I did not pay any penalties. I think that the problem lies in something that my attorney friends call precedent. In other words, I ain't gonna pay if everyone else didn't pay. I have been involved in several developments from their(JOE's) side and my attorney has always told me that uniform enforcement is critical when dealing with issue. To sum this up, Shelly may be correct in calling this a revenue generator. Kurt, I assume you know the identity of everyone on this board. If that is so and my identity gets divulged to "the man", it may cost you your firstborn. Just kidding but I would appreciate extreme discretion.

As a follow up to the prior post, Rosemary Beach has always enforced their start dates and penalized the owner 1% of the original purchase price. I have been on the receiving end of these penalties and willingly paid them because i knew going in that I would have to. Again precedent is key.

Kurt, I assume you know the identity of everyone on this board. If that is so and my identity gets divulged to "the man", it may cost you your firstborn. Just kidding but I would appreciate extreme discretion.

Too late Santiago. I don't know you personally, but I think I know OF you. Too many clues including your old SoWal neighborhood (I have friends who live there) and the gender of your children (I think our children have friends in common). Don't forget that we live in a small town ;-) .

I think JOE may look to folks "buying time" as a revenue generator for the company--or allow more free-time "if" owners are willing to contract JOE-certified builders & architects for their projects. That smiling, friendly "George Baily-type" JOE representative that sold lots several months ago can very well transform into "Mr Potter" overnight.

I'm expecting JOE's 4Q to come out on the downside and they'll be on the hunt for revenue-generating business as real estate hits a--shall we say--soft patch, going into the year. (Prediction: I have a feeling that JOE may announce a bump up in the dividend [or some other piece of news] before the Feb 8th 4Q release to create a price bump to beef up the CEO's "monthly $1.X million stock sale" and to cushion the not-so-good quarterly news coming down the pipe--or not. )

I agree with you that Joe is going to be coming up against some rough quarterly comps over the next several quarters. This might result is Joe lowering prices on lots just like other investors are doing right now in order to pump up revenues and profits. The penalties they will be charging will not benefit their bottom line as I believe the penalties go the the Homeowners Associations rather than the developer -- but I am not 100% sure of this.

I was quoted the same by Watercolor, $2500 per month purchased in 6 month increments. The maximum time you could purchase was 1 year. The only reason I inquired was after noticing the start dates of some resale lots had been extended by 1 year.

I agree with you that Joe is going to be coming up against some rough quarterly comps over the next several quarters. This might result is Joe lowering prices on lots just like other investors are doing right now in order to pump up revenues and profits. The penalties they will be charging will not benefit their bottom line as I believe the penalties go the the Homeowners Associations rather than the developer -- but I am not 100% sure of this.

I think you are correct about the HOA receiving the penalty income. I totally forgot about that.

Too late Santiago. I don't know you personally, but I think I know OF you. Too many clues including your old SoWal neighborhood (I have friends who live there) and the gender of your children (I think our children have friends in common). Don't forget that we live in a small town ;-) .

I will deny anything that might cause JOE to rear his angry head.

Why didn't you just say that in the first place? It took you a long way round to state a reasonable point that most everyone here would agree with. No reason to post examples that you don't have all the details for.

Many lots on the market have build out times left that make it impossible to buy now and meet requirements. I was told the one in WS you mentioned is one of them. So what does that make it worth? I don't know but you can't use it to prove your point.

I understand market value. I'm not implying that most properties were not sold for market value. You pointed out specific selling prices and you can't be certain they were at market value unless you have full knowledge of the transaction.

How in the world can you say those lots I pointed out were not sold at fair market value. Especially when other lots next door or very nearby sold at similar prices--I only noted the HIGHEST price paid for a lot in the general vicinity of the lots for sale. Do you believe that someone put a gun to the buyers head and said buy this property or else? Did all these buyers that paid huge prices also have guns to their heads? Why do you go so far out of your way to try to poke holes in the examples if you agree that the market is way down?

The examples noted are reasonable examples of falling prices. Many were on the market at low prices well before build out times were within 6 or 8 months. There was ample time for the lots to sell at prices well below market highs and they have not sold.

If you want to argue that prices haven't fallen 50% across the board, I agree. But, you are stretching the limits of reality to say all the examples are not in any way comparable. In terms of construction start dates, as noted above, developers are offering grace to lot owners for a fee. It might cost up to $30k to extend for a year, but if you can get a lot at 50% below the market high, and that is a great deal, you should jump on it and pay the $30k. Then, in the case of the Windrose lot for sale, you only have $515k invested in Watersound next to a lot with a basis of over $900k. Your argument about construction start dates doesn't hold water if you can buy grace. If the market hasn't fallen 30%, 40% or 50% , then the thousands of buyers should jump on these low priced lots and only have to pay a small portion of the discounted price to buy another year of grace. They still end up with a lot at a HUGE discount to market highs and still have a year and a half or more to start construction.

In fact, "a friend" was recently offered the option of paying $2500 per month for a period of 12 months to delay his buildout. Apparently, this option has been accepted by 15 or so property owners who had no intention of building.

30 G's per year?.....Ouch!! For an "investor" that is some margin squeezer!! And just what is the HOA going to do with the "extra" $450,000 per year pray tell?

30 G's per year?.....Ouch!! For an "investor" that is some margin squeezer!! And just what is the HOA going to do with the "extra" $450,000 per year pray tell?

They can buy the fancy mulch.

They can buy the fancy mulch.

Help fix the dunes and beach.

Someone posted that their contract with St Joe reads that there is no buy back clause. If not, why would anyone want to pay $2500 per month to set back the start date (with a max of one yr) , rather than $1000 per month penalty to move it back indefinitely?

Someone posted that their contract with St Joe reads that there is no buy back clause. If not, why would anyone want to pay $2500 per month to set back the start date (with a max of one yr) , rather than $1000 per month penalty to move it back indefinitely?

That is a good question and certainly backs up my assessment that there is no uniform enforcement of the build out requirements.

That is a good question and certainly backs up my assessment that there is no uniform enforcement of the build out requirements.

The developers/HOA may find themselves staring down the barrel of lawsuit when the folks who bought-in and went "arse-over-teacups" to build their residence (i.e., following the rules) and who specifically purchased in that complex "knowing" they weren't going to be surrounded by empty lots owned by "speculators." (Wasn't that one of the the purposes of having "build-out clauses" in the first place?)

The developers/HOA may find themselves staring down the barrel of lawsuit when the folks who bought-in and went "arse-over-teacups" to build their residence (i.e., following the rules) and who specifically purchased in that complex "knowing" they weren't going to be surrounded by empty lots owned by "speculators." (Wasn't that one of the the purposes of having "build-out clauses" in the first place?)

I heard this at the HOA meeting at WC last October. I would be upset as well if I had followed the rules and my neighbors did not. So, maybe the "justice" comes when they have to sell at a loss or pay the penalties.

I heard this at the HOA meeting at WC last October. I would be upset as well if I had followed the rules and my neighbors did not. So, maybe the "justice" comes when they have to sell at a loss or pay the penalties.

I agree, I am ready for my neighbor to build his house and get it over with. On the other side, if you bought a lot nearing the buildout deadline and are trying to get plans approved asap, you don't want to pay a penalty if everyone else hasn't paid them.

Sounds liike WaterColor is just waiting for a lawsuit. Can you imagine a black person buying in WaterColor and having to pay if he does not start on or before the construction start date, when even just one white person does not have to pay? Seems to me, WC should have planned better for this mess.