Tuesday, August 26, 2008

Home owner blues

Once again I was on the road traveling (this time in Philadelphia) when George called last week with the news that Loreto Bay management is looking to stimulate home sales by dramatically discounting properties and offering an array of costly incentives to prospective buyers.

After learning that such drastic measures are being taken to jump start sales, George (who is a very successful Realtor here in Albuquerque with extensive marketing experience) called LB and spoke with Scott Montell, legal counsel for Loreto Bay, regarding the new pricing policy.

According to Mr. Montell, sales have been very sluggish over the past year and the company is looking to turn those lagging sales around with “screaming" deals which include free membership in the planned beach club, free home furnishings, free condominium regime fees for two years and NO closing costs. We understand the need for incentives and even welcome them because more home sales are good for everyone. Given the current state of the real estate market, we don't even object to properties being discounted by a bit. But we do have a problem with our properties being drastically discounted. The new prices on estuary lots are a good example of this 'slash and burn' discounting.

These drastic measures beg the question: "Is something amiss in Loreto Bay?" And is that really the impression marketing should present to prospective buyers?

It’s important to remember that sales and marketing have been on the back burner for the past year, in part due to the ownership transition, but mainly because the focus has been on a push to catch up with construction of existing sales and development amenities. The marketing during this time has been lackluster at best.

As an example, George and I introduced a prospective buyer (a good friend of ours) to the sales department this past spring during a visit to Loreto Bay and they never followed-up from Loreto Bay or Scottsdale. And this friend was seriously interested in buying. We were embarrassed and he was turned off.

We just don't understand why it's necessary to deeply depreciate properties before there has been a coordinated and aggressive marketing campaign. The proposed strategy means those hoping to resell will be hard pressed to recoup their investment for possibly years, while having to compete with LB’s new construction pricing and incentives. We as homeowners are being asked to accept that our properties may be worth a lot less than we paid for them, at least for the immediate future. We also worry that present owners will be picking up the tab for new owners who will not be paying the monthly homeowner association fees (or condominium regime fees) for two years, as well as beach club fees.

At the very least, LB should be helping present owners acquire financing so they do not lose their homes. Recent posts on the official homeowner site show that many home buyers are getting little or no help from LB in acquiring financing. In addition, some home buyers are facing up to $40,000 in closing costs and mortgage fees. All of us gave large down payments back when the credit markets were not so tight and equity in our homes was higher. Now when construction is starting, financing seems more difficult to obtain and LB is still charging late penalties. Come on LB, show a little loyalty!

We all want LB to succeed. After all, we are Loreto Bay’s best marketing agents. Ideally, we hope management rethinks so aggressively devaluing properties in Loreto Bay as that can only hurt those of us who bought in good faith, persevered through the many down times and remain committed to the original vision of Loreto Bay.

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