Build-out extensions

[Little Fish]

All:

I spent the past two weeks on vacation at WaterSound. The weather was spectacular and the trip, refreshing. All this despite the fact that the black flies were biting and the red tide washed in for two days.

The owners had their annual HOA meeting on Saturday and I had the opportunity to speak with several owners plus a sales rep in the WS office. The extentions are a contentious issue as owners who had the means to build on time are dissatisfied with Joe's decision to change the rules one more time to benefit the speculators who never intended to build.

Two different Lot owners in WS explained to me since Joe had already set the precedent of extending the buildouts, they had no option but to continue down that path. If Joe hadn't extended once again, they might face lawsuits from lot owners. It looks like they got what they wanted, at least temporarilly.

A sales rep in WS explained to me that Joe had begun taking lots back at losses to owners. Joe structured a way for owners to take paper losses on the lots, while affording the owners an opportunity to 1031 into their Joe Built, Joe Guaranteed homes in Crescent Keel. This was a way for owners to flip their non-income producing properties into homes that could be rented. I wonder if we will see sales in West Beach due to more of these "deals".

Does anyone have info on whether or not the option to convert into a Joe home was offered to all lot owners approaching the build out dates?

Also, the sales folks are spinning "increased sales" at WS. They claim sales are almost as robust as they were two years ago. Could it be that they are able to say this given the repurchase of the lots and simultaneous sales of Crescent Keel cottages? HUMMM

Love to hear more on this issue from those in the know.

Little Fish

 

[Rambunkscious]

I would also like to know if anybody has heard if RiverCamps will extend its buildout deadline again?

 

[dmarie]

:I'll preface my comments by saying "with all due respect".,.,.,.,.,.,

Joe is probably the worst offender of market glut that there ever was. Greed, poor marketing strategy (develop everything overnight), and disappointing expectations!

The initial hype with "winning the lottery" was such a scam and they sucked in many suspecting and unsuspecting slobs! The suspecting ones were greed driven to buy several lots with the hopes of flipping them and making their tidy little profits. Joe surely doesn't want them back - can't afford to buy them back. They're in the market to sell, not buy. So what do they do? Try to look like GOOD GUYS by granting extensions and then reminding folks that they could be buying these properties back from them at a loss, but no. They look like heroes.

And in response to their report of "robust sales," sure they're robust; at 50 cents on the dollar why shouldn't they be?! Try talking to some of those sellers and see if they're nearly as giddy as the sales agents.

 

[fisher]

All:


A sales rep in WS explained to me that Joe had begun taking lots back at losses to owners. Joe structured a way for owners to take paper losses on the lots, while affording the owners an opportunity to 1031 into their Joe Built, Joe Guaranteed homes in Crescent Keel. This was a way for owners to flip their non-income producing properties into homes that could be rented. I wonder if we will see sales in West Beach due to more of these "deals".


Little Fish

No wonder all those little cottages have been flying off the shelves over the last few weeks--albeit at very reduced prices.

 

[fisher]

All:


Also, the sales folks are spinning "increased sales" at WS. They claim sales are almost as robust as they were two years ago. Could it be that they are able to say this given the repurchase of the lots and simultaneous sales of Crescent Keel cottages? HUMMM


Little Fish

The Walton County website lists 5 closings in Watersound in August and Sept of 2007 and 23 closings in Aug and Sept of 2005. Looks like they are stretching the truth just a tad don't you think.

 

[Santiago]

My take on the buildouts. Long before anyone really cared about buildouts, JOE would occasionally offer them when it benifited their cause. I know of situations where they would offer one to facilitate a lot sale when the proposed buyer had no way of getting plans completed and approved within the time frame left on the original buildout. And no, I am not speculating, I know of this for a fact. I could list lot numbers and names but am not going to do that. I was actually many months past my build out date and was never notified that it was even an issue. My understanding from other developers that have to deal with this issue is that universal and consistent enforcement is critical when dealing with buildout requirements. JOE has been anything but in dealing with theirs. I think that they know this and have no intention of trying to get anything done. I think that they will eventually take the stance that they have no reason to fight the battle(all lots sold) and will turn the issue over to the HOA. In this case, do they even have a legal right to pursue the matter since the memorandum of agreement is between the purchaser and the developer. It could get interesting but probably not for another couple of years.

 

[Little Fish]

"The Walton County website lists 5 closings in Watersound in August and Sept of 2007 and 23 closings in Aug and Sept of 2005. Looks like they are stretching the truth just a tad don't you think."

Fisher:

I agree with your comment above. The sales folks are doing their best to stress positives, while ignoring the overwhelming evidence that many owners in WS are nearing their pain threshold.

For example; some of these owners who purchased lots with 3 yr. interest only loans with balloon payments will have the loans come up for review by the banks. Banks will reappraise the properties and in some cases the appraised values will decline. Once this happens, owners will be forced to raise additional collateral to support the new loans. I perceive this will cause additional problems for cash strapped owners. (Obviously, not all lot owners are in this position, but my gut tells me there will be some.)

Additionally, I spoke with one owner who paid less that $500K for his lot near the beach. The vacant lot beside his has been flipped several times with the last owner paying roughly $1.5MM. Personally, I cannot see that owner making a profit anytime soon. I can only assume that either he paid cash and can wait it out for years to come, or the interest will be killing him in short order.

The sales rep I spoke with explained to me that the owners in WS are all wealthy; therefore, I will not see any distress sales. Oh really? If that is the Joe perspective, they are deluded.

I believe WS is the most beautiful development along 30-A and would like to become an owner when prices come back down to earth. When, and if I buy, I would be an end user, not an investor. End users are what Joe needs in this development. IMO, they should not have extended the buildouts as the market corrects all excesses. The extensions simply prolong the pain and prohibit the market from returning to normality.

Of course, this is all just my opinion, and is subject to revision from time to time. In the meantime, I'll be watching prices.

Little Fish

 

[fisher]

No wonder all those little cottages have been flying off the shelves over the last few weeks--albeit at very reduced prices.

At least, four of the crescent keel homes that were "sold" by Joe over the last few months were actually flips where they took back a lot from the owner in exchange for a house in crescent keel (and cash???). Fun with numbers by Joe.

 

[gardening1970]

While I was on vacation last week, I very casually browsed a reasonably priced lot in Rivercamps - a resale being offered by a builder. JOE is not the seller. The build-out date noted on the MLS listing expires in 18 months, which is too soon for me to be seriously considering this lot, but now I am curious of how this build out extension process works in general.

What is JOE's recourse if an owner fails to commence construction by the set build out date? In the case of this particular lot, it would seem that JOE would have little interest in extending the date since it is not the seller. Any of you real estate scholars have information on how this process typically works? Are there fines for failing to meet the deadline, or does the property revert to JOE somehow?

Thanks guys!

 

[seagrovegirl]

The build out period requirement and penalties vary depending on community. Get a copy of the neighborhood documents. The listing agent or seller have a copy. You may be charged a small fee for them, since they can be about an inch thick.