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Wednesday, 05 October 2011 13:11

WNC’s version of a wild west land grab: Lots sell at slashed prices in ‘The Ridges’

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The disembodied voice crackled through the walkie-talkie: “I’ve got someone who wants to buy two lots, cash deal.”

“Sell ‘em,” L.C. Jones urged, seemingly to himself, but his response included Michelle Masta, a passenger in the backseat of his big, eggshell-colored Ford King Ranch 4X4. The radio was tuned to the NASCAR station; the volume turned off. No one in the truck was interested in listening to races on this day, not with land to sell and money to make. Masta, dressed in French jeans and heels, serves as Jones’ right-hand woman on the development, The Ridges. The development is better known as Wildflower, the Macon County subdivision’s original name. The Ridges is made up of about 500 acres of Wildflower’s original 2,200; just fewer than 100 lots were being offered through this one-day extravaganza last Saturday (Oct. 1).

Masta, who lives most of the time in Atlanta, dreams one day of permanently moving to this region with her daughter and, perhaps, gardening organically and caretaking hives of honeybees. Masta won’t buy land in this high-elevation development for that future homestead, however. She’s got a piece of nice bottomland in mind, down in one of the valleys far below.

Jones was casually attired in Levi jeans and tennis shoes. The Cullowhee native doesn’t happily sport a suit and tie, not even at an event such as this. Jones doesn’t look or talk much like a land developer. In fact, the paving company owner comes across as a man who would be perfectly comfortable operating a backhoe.

On this project, however, Jones isn’t the backhoe operator — he’s the boss, along with a couple of investors out of Atlanta. The Ridges marks Jones’ second housing development in a year in Macon County. Other developers in Western North Carolina and across the nation have seen business grind to a halt because of the crippled housing market. Jones, owner of Black Bear Paving in Franklin, has instead discovered seemingly endless financial opportunities.  

The walkie-talkie crackled. Sam Pinner of Southland Marketing & Development, based in Knoxville, Tenn., was on the other end. Jones hired the former University of Tennessee football player turned time-share seller turned real-estate developer turned real-estate marketer to oversee the sales event.

Pinner has 60 to 65 sales reps spread across the 500 or so acres of The Ridges.

Jones and his investors recently purchased the development for a cool $1 million, an amount they anticipate recouping easily. BB&T was eager to get the property off its books after foreclosing on the former developer of Wildflower after that company failed to make payments. BB&T was owed $1.9 million on the property when the bank foreclosed.

“Just say, ‘Yes, that’s a deal,’” Pinner instructed the sales rep via the walkie-talkie. Like Jones, Pinner needed to hear nothing more than the word “cash” to welcome the buyer to a seat at the table.

Jones’ plan is to generate “life” into the subdivision by selling lots that were previously priced at highs of $100,000 to $300,000 for $14,000 to $30,000. Higher-priced lots were available, too, but even they weren’t priced anywhere near those heyday numbers of the real-estate boom, when scenes like the one that took place in The Ridges last weekend were commonplace.

Jones slashed the prices in The Ridges with one purpose in mind: to sell as many lots as possible, as quickly as possible. He and his investors anticipate developing more lots in the subdivision. They’ll sell those at higher prices, but the asking price on these is what the depressed market will bear, Jones said.

Jones believes he can command higher prices later if he can convince people that The Ridges is a viable, happening development with an on-site, caring developer. This is the first step in his many-stepped plan for The Ridges, and for other abandoned developments in WNC that he might take on. Jones is currently checking out another development in the Asheville area. He is a man who envisions dollar signs where others see vast money pits.

Jones and his investors can take their pick: the region’s landscape is littered with these tombstones of the once prosperous, or preposterous, WNC real-estate scene.

The selling in The Ridges started just after 9 a.m. The first lot sold in two minutes. Eight lots had sold in 10 minutes, nine lots in 12 minutes, 12 lots in 20 minutes, 21 lots in an hour. Thirty-one lots were sold by 11 a.m. A prior advertising blitz targeting Florida, Georgia, Alabama and other states paid off. Jones was having a very good day; indeed, by day’s end he’d unloaded 43 lots — 18 of them cash payments.

 

Truth will out

Wildflower was conceived and launched during the height of the housing boom. Riding the crest of the towering Cowee mountain range on the Macon-Jackson county lines, the development boasts truly spectacular views from its vantage point of more than 3,600 feet.

Turkeys and whitetail deer are everyday sightings, red-tailed hawks soar over the ridges to survey the valleys below. There are walking trails, a fancy clubhouse with a pool and small fitness center, water and sewer already in place at the house sites. There are even some lots with foundations on them, abandoned unfinished as previous owners’ dreams crumbled in the face of financial realities.

The previous developer, Ultima Carolina in Atlanta, sold more than 160 lots in Wildflower before the company went belly up. The largely out-of-state buyers were primarily looking to “flip” the properties they bought, selling for  higher prices than they paid.

Wildflower’s promising beginning foundered on an out-of-control, plummeting market and a hastily designed, poorly executed development — at least in parts of Wildflower. How much, exactly, of the development is ill-built sparks heated debate in Macon County.

The very name Wildflower, for those weary of WNC’s historic abusive cycles of land speculation at the expense of public safety and environmental stewardship, has served in recent years as the region’s worst-case, best-known example. What’s unarguable is that a few years ago there was a landslide in Wildflower. It was about one-half acre in size. Today that landslide serves as an illustrative example of what happens when roads are cut in defiance of a mountain’s grain.

The culprit road was built during dry weather. Then wetter weather came, those snows and cold rains that distinguish winters in these southern mountains. Freezing and thawing, freezing and thawing, with temperatures climbing from single-digit numbers into the 60s and 70s, only to drop back to single digits, over and over again.

So-called “wet” springs soon bubbled where the road overlaid. The springs most likely triggered that massive flow of mud and debris. The landslide raised fears — some say the inevitability — that a developer who could build one road like that might well have cut all of Wildflower’s many roads with a similar lack of respect for the mountains. If that’s true, anybody building here, and those living below, are at risk.

Macon County knows those dangers better than most mountain communities. In September 2004, a naturally occurring landslide originating in the Fishhawk mountains buried a small residential community below. Five people died in Peeks Creek, a tragedy of such proportions that state legislators, in response, funded a project to map these mountains, once and for all, for landslide potential.

Republican legislators, taking control of the state Senate and House last November for the first time in more than a century, have eliminated funding for more maps, with only Macon, Henderson, Buncombe and Watauga completed. North Carolina leaders were responding to real estate agents, builders, surveyors and laborers who called foul, plus a state that was facing huge economic shortfalls. Working men and women said the landslide hazard maps, coupled with the recession, hindered their abilities to make livings, unnecessarily scaring people out of buying real estate here.

Wildflower, however, was mapped for its landslide risk before the state halted the project. Red, the universal signal for stop/danger, colors the steep mountain ranges where Wildflower was built and The Ridges has since emerged.

Map opponents say state geologists greatly exaggerated the dangers of building in areas such as this.

Only time, as it’s said, will tell.

 

Toxic brew

Add over-inflated land prices, under-funded buyers and loosely regulated loaning institutions to the development’s problems. These semi-natural and manmade elements combined into a toxic brew, and Wildflower, literally and metaphorically, wilted and died.

More than half those who bought the original lots in Wildflower went into foreclosure. Some because of an inability to make payments on their lots; others who found themselves upside down on a mortgage, owing more than the lot was worth and opting to let banks take over.

A local financial institution, Macon Bank, filed two civil suits claiming that it had been duped into making questionable loans in excess of $3.5 million to people buying some of those lots.

Macon Bank sued Beverly-Hanks Mortgage Services of Asheville and two of its brokers for, among other allegations, financial wrongdoing, defying bank instructions and setting up an interest cash-back scheme for borrowers. Additionally, the bank sued the lawyer handling property closings at Wildflower, the lawyer’s title guaranty company and five property owners. The lawsuits are wending through Macon County’s court system.

Allan Burkett and Sandra Wilkinson of Newnan, Ga., aren’t aware of The Ridges’ past history; it’s not clear they’d care if they were. They had just agreed to buy lot 142 for $19,900. Wilkinson sported a medallion on her neck that indicated they’d made the purchase.

The pair’s sales rep, Dusten Tipton of Knoxville, Tenn., had whisked them back into the clubhouse where the deals were being finalized. Burkett and Wilkinson seemed weary, a bit overwhelmed by the engineered giddy atmosphere of the sales event. Burkett was wearing a poorly fitted winter coat he’d bought locally the night before, shocked into the purchase by a sudden drop in temperatures from the 80s to the 40s as the first cold-front of autumn moved through the region.

After plunking the requisite 20 percent down that closed the lot deal, Burkett and Wilkinson were fed barbecue sandwiches and handed endless cups of sweet iced tea. They were told they could take a helicopter ride to view their new property. Wilkinson got to keep the medallion, a prize to take home as a reminder of the couple’s mountain dream.

“This is just like going to the county fair for the first time,” Wilkinson said.

“It’s exhilarating,” Burkett added.

An informal survey of the people buying the lots — most, if not all, were from Southeast states other than North Carolina — seemed to prove a point that Jones and Masta were eager to make. The days of “flipping” properties seem gone. The buyers are predominantly people who want to build houses in Macon County and live in the area either on a seasonal basis or after retirement.

At Diamond Falls Estates, the other development in Macon County under Jones and Masta’s management, 64 lots closed out of 80 being marketed on a one-day sales event last year.

“We already have 12 new houses being built now,” Masta said of Diamond Falls. “And that’s creating jobs in the area for local builders and contractors. Those weren’t speculator people who wanted to flip it in two months. Those were real people wanting to build real houses.”

It also shows that there is still a demand for mountain real estate when the price is right — a price that is far lower than days gone by.

Wilkinson and Burkett hope to build in a year or two. They bought for the view, to get a site ready-made with an existing foundation, and because they felt they’d gotten a great deal — a once-in-a-lifetime opportunity, a not-to-be-missed chance to own a little piece of WNC.

 

Real estate experts react to Macon sale

The one-day land rush on cheap lots in The Ridges might be a sign of the times: not a real estate turn around per se, but an eagerness by banks to off-load foreclosed property, even if it means taking a loss.

“I think this is the beginning of a new trend,” said Bob Holt, real estate instructor for Southwestern Community College in Franklin and Sylva. “I think the banks are deciding, ‘I would rather take less and be done with it than hang on another year or two or three or four. To get rid of these they are going to get rid of them at rock bottom prices.’”

People buying the failed developments can in turn sell lots so cheaply that prospective lot buyers — who have otherwise proved elusive in the mountains lately — come knocking once more, witnessed by the droves of buyers lured by the fire sale at The Ridges in Macon County last weekend.

“I think we probably will see more of the fire sales,” Holt said. “I think we have waited and waited and waited and waited, and some people are saying it has got to have bottomed out now so it is going to turn around.”

Holt doesn’t think it has, however.

Some banks are attempting to sell the lots themselves, making a foray into the real estate business rather than off-load the property to a middle man. In Cashiers this spring, the bank that had foreclosed on one development orchestrated a one-day fire sale of lots. At Balsam Mountain Preserve, the lender who foreclosed on the property has stepped in as the property manager attempting to see the development through.

Peggy Patterson, who has sold real estate in Macon County for four decades, doesn’t see a return of the market at this juncture.

“I don’t think it is rebounding at all,” Patterson said. “If anything, it seems a little worse.”

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