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November/December 2011

    November/December 2011

You Can Win by Losing a Little
on the Sale of Your Primary Home 

    Let’s say you are ready to relocate to a warmer climate from Livingston, NJ. (I picked Livingston, a “bedroom community” of Newark and New York City, because I grew up there, but you can substitute your own town.)  You have listed your primary home for sale at, say, $500,000.  But your real estate agent has brought you only a few potential buyers (no offers though), and she is urging you to lower the price by $25,000.  You resist, of course, because you know the house and all its charms, and it has to be worth even more than the $500,000 asking price.
    Don’t listen to your real estate agent, or your own instincts:  Drop the price by $50,000 or even more; you will sell it that much quicker and you will make up the difference within a few years of moving.  
   Here’s how:  The cost of living in most areas of the south is dramatically lower than in the north.  Add up everything you spend on an annual basis and you might be surprised to learn that figure can approach $75,000 or even $100,000 annually (considering all taxes, food costs, fuel costs, pharmaceuticals, etc.)  Now go to BestPlaces.net and use their cost of living comparison calculator.  Compare your hometown to one or two places you might consider moving to in the south.  You will find that you will save as much as 50% by moving.  That makes lowering the price on your home for a quicker sale that much more palatable.
    Using my hometown of Livingston as an example, here is how much my former friends and neighbors might save by accepting whatever the traffic will bear for their homes and heading south (each of the towns listed feature at least one viable golf community).  These examples (annual dollar savings in parentheses) assume cost of living expenses of $75,000 per year.  The source is the cost of living comparison calculator at Sperling’s BestPlaces.net.  If the numbers impress you, contact me and we
can go to work putting you in a new warm-weather home and on the
golf course in February.

Anniston, AL 52% ($39,000)
Panama City, FL 47% ($35,250)
W. Palm Beach, FL 39% ($29,250)
Savannah, GA 48% ($36,000)
Asheville, NC 39% ($29,250)
Chapel Hill, NC 26% ($19,500)
Wilmington, NC 38% ($28,500)
Greenville, SC 44% ($33,000)
Bluffton, SC 40% ($30,000)
Myrtle Beach, SC 42% ($31,500)
Knoxville, TN 52% ($39,000)
Austin, TX 41% ($30,750)
Crozet, VA 36% ($27,000)
Williamsburg, VA 20% ($15,000)


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-- Larry Gavrich, Editor

Too Rigged to Fail?   

    Only Franz Kafka, or the U.S. Congress, could draft the absurdly sounding ongoing story of Richmond, VA’s Dominion Club.  If you have visited our blog site, GolfCommunityReviews, you may know that HHHunt, the developer of The Dominion Club community and owner of the golf club under one of its subsidiary companies, took Dominion into Chapter 11 bankruptcy in order, according to many Dominion Club insiders, to avoid repaying promised deposits to hundreds of members ($1.7 million due to 100 members at the end of 2010 and more than $10 million in the next few years).

    “It’s an incestuous web of companies that Hunt has masterfully put together,” one member wrote me.  “The judge in this case chose to get as far away from this disaster as possible and as fast as he could.  In the end, Hunt walks away from $14.7 million in obligations for a paltry $300,000 or so.”
    Recently, 36 of the club’s 450 members voted against a bailout plan that would repay them pennies on the dollars they had invested in initiation deposits; and it would hand control of the club back to developer HHHunt, who pays its own subsidiary “rent” from member dues.  Fourteen of the naysayers refused to give up their rights to sue Hunt, according to the Richmond Times-Dispatch.  Hunt had warned that such an action might cause the developer to withhold approximately $3 million in funding for the reorganization plan, which begs the question why they couldn’t pay off the $1.7 million obligation.  
    Most of the club members have probably written off their deposits and have decided to vote for the devil they know.  The “debtor in possession” bankruptcy plan provides for Hunt to contribute a working capital loan to the club (in other words to itself) over the next five years, to reduce the monthly rent the Hunt-owned club pays (to itself) and, according to another local media outlet, BizSense, “to look to sell the club and distribute the proceeds to member/creditors within the next 12 years.”  To “look to sell the club?”  In this environment?  Who designed this plan, Hank Paulson and Tim Geithner?  As one disgruntled member wrote recently:  “[The] Bankruptcy Court and [judge] threw the Dominion Club under the golf cart.”


Playing Close to the Fest:  Moveable feasts build
sales traffic at Brunswick Forest

    Those on the fence about purchasing a golf community home are often worried about the financial stability of the communities they are considering.  But Lord Baltimore, the asset-rich developer of Brunswick Forest, has the deep pockets to market a successful community by feeding its potential residents very well.
      To even out the peaks and valleys of sales traffic, the nearly five-year old sprawling community just outside Wilmington, NC, spreads six promotional events across the calendar in the traditionally slow sales months of April, July, August, October and November.  The 2011 events, which have attracted between 20 and 60 couples each, have included a Food & Wine Festival, a summer series of three concerts, and a Fall Festival that comprised Oktoberfest (when else, in October) and a celebration of Carolina barbecue (Rib Fest) in November.
     The price is certainly right for the events.  The Food & Wine Festival in April, for example, included three nights of lodging, a round of golf on the community’s fine Cape Fear National course, membership privileges at the Wellness & Fitness Center, and a roster of food and wine events –- all for just $249 per couple.
     According to Brunswick Forest Marketing Coordinator Brandy Marshall, the real estate office makes all lodging and other arrangements for couples signing up for one of the festivals, but it is understood each couple will take a tour of the community with a real estate agent assigned to them.  Not only do the events give first-time visitors an excuse to make an initial excursion to the community, but the events also engage repeat visitors.
     “About 10 to 11 percent of our first-time visitors eventually purchase a property,” says Brandy Marshall, “but those who return buy at a 30 percent rate.”  That return on investment pays for a fair amount of ribs and beer.

    So far this year, Brunswick Forest has sold more than 150 properties, an impressive achievement in the current economy.  Home prices in the community start in the $200s.
     For those who have shown an interest in the community, Brunswick Forest has begun to bring the party to them –- three parties to be exact -- in Washington, D.C., New Jersey and Long Island, NY.  According to an invitation I received for its Long Island event in December, Lord Baltimore Properties will “introduce ourselves personally” at a series of three “private receptions” that will include “cocktails and fine dining.”  Fine marketing, too.


Challenge Takes on a Challenge

    Balsam Mountain Preserve, the Waynesville, NC, 4,400-acre mountaintop golf community that successfully maneuvered through the financial problems of its original developer, has been sold by the investor who rescued it.  Investment firm TriLynn held most of the debt ($22 million) on the community when it defaulted in 2009.  Developers Chaffin & Light originally built the community before the economy caused that well-regarded firm to pull out and retreat to its other holdings, which include Chechessee Creek Club in the Low Country of South Carolina.  By moving quickly to foreclose and deciding to manage the community itself, TriLynn was able to tout Balsam Mountain’s “no-debt” status to a nervous market.  Now, TriLynn has announced it has sold the community and golf course to the Texas-based Challenge Golf Group, which owns and manages more than a dozen golf clubs and communities, including Grand Harbor in Greenwood, SC.  Two of the principals of Challenge have owned property at Balsam Mountain since 2008.

    Mountain view home sites at Balsam start at just under $200,000, and homes run from just under $1 million.  For those who want a mere taste of elegant mountain living without the champagne price tag, Balsam Mountain Preserve offers a Boarding House Residence program in its mountain cabins that includes two-weeks per season (eight total per year, plus additional weeks when available at no charge).  Prices begin at $150,000.
    For my observations of the breathtaking (literally, at 4,800 feet, and figuratively, given the views) Arnold Palmer golf course at Balsam Mountain, click here.  Note in the article, posted on September 23, 2008, that I touted the apparent financial stability of Chaffin & Light, but added they would only succeed “…as long as the net wealth of those in their target markets does not erode any more.”  I posted that article just one week after the collapse of Lehman Brothers, and some months before the consequent collapse of Chaffin & Light at Balsam Mountain.  We have seen plenty of erosion since then, but Balsam Mountain Preserve and their new owners are confident the tides have swung the other way.  If you would like an introduction to Balsam Mountain Preserve, please contact me.


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