This is the third article of a series on the boom in mail-order land buying.
By Robert A. Caro, Newsday Staff Correspondent
Naples, Fla.- The Florida version of the mail-order real estate boom is a case study in the hard sell.
Almost 400 separate subdivisions of Florida land are now being sold to American sunshine-seekers, and the sales take place under a beach umbrella of advertising that ranges from spreads in national magazines to booths in busy northern railroad terminals.
Some of the developments now being touted as future Edens would make an alligator sneer. But miracles have been worked with Florida swamps before, and neat, attractive booms now stand where sodden tree stumps once held sway. Port Charlotte, carved out of a 92,000-acre tract on Florida’s West Coast, now has 3,000 families living in low-cost, high-style houses whose lawns slope down to mooring, bulkheads-just as the ads said they would one day.
The scope of the promotional effort for the “new boom” is huge. One large corporation is known to have laid out $2,500,000 in a single year to sell lots in a single development.
The results match the investment. One developer got 17,000 inquiries from a single quarter-page ad in a national magazine. Last year Florida recorded $250,000,000 in sales of improved and unimproved land through installment credit purchases.
Promoters start putting the personal touch on potential customers as far away from Florida as Grand Central and Pennsylvania Stations in New York, where their agents set up booths. But the firm pitch really becomes the hard sell when a prospect gets within surf-casting distance of the site for sale.
A reporter, posing as a typical tourist in Miami for a winter vacation, called the sales headquarters of Golden Gate Estates, a 50-square-mile development near Naples owned by the Gulf American Land Corp. “Be our guest!” said the voice on the other end of the wire. ” A free drive to Naples, a free lunch, a free plane ride, really a day’s vacation…” The reporter had a hard time interrupting the sales pitch long enough to say, “I’ll go.”
At 7:30 the next morning, a car and a salesman were waiting in front of the hotel. Every minute of the 110- mile drive to Naples was crammed with sale talk about the “Estates” and probing questions designed to bring out the prospect’s financial status (“Boy, this car runs nice. What kind of car you got?”), his family’s financial status and his knowledge of the west coast of Florida. There were acres of talk about “getting in on the ground floor” and, caustic comments about wise guys…guys who don’t buy when they’re out there.” Anything wrong with that? “They say they’ve got to go back and get advice. What’s that mean? Land is land, right?” How about roads? “Sure, there are plenty of roads there.”
At Naples, the prospect was rushed to an airport. There, no fewer than seven four-seat planes were taking other prospects on an air tour of the “Estates.” The salesman piloting, the plane pointed out the luxurious homes of Naples plush “Gold Coast” and the balmy waters of the Gulf Stream-and even flew over one comer of a pale green, soggy-looking expanse of land that he designated as the “Estates.” “See that cleared portion over there?” the salesman shouted over the engine’s roar, banking the plane in the other direction.
“That’s the site that’s already been prepared for the city of North Golden Gate.”
After lunch-in Naples’ best restaurant-the prospect was taken to Golden Gate Estates sales headquarters. Inside was a lobby crammed with salesmen and prospective customers. (“On a busy day,” the salesman confided, “we’ll have 700 out here.”) the reporter was led into one of 33 “final sales” alcoves to talk with a “final salesman.” The introductory portion of the talk, which quoted Benjamin Franklin and Andrew Carnegie on the benefits of real estate in general, and a host of unnamed authorities on the great potential of the Naples area, lasted 57 minutes.
Then the sales talk got down to business. In walked a “final sales manager.” (“I talk to people frankly,” the sales manager said. “That’s why I called you in, sir,” the salesman said.) “Choice waterfront lots” were available. The land in question was about eight miles from the waterfront, but it, would eventually be on a proposed canal, which would be “guaranteed navigable” to the Gulf. “When can I live there?” the reporter asked. The sales manager chuckled in comradely fashion. “Three to five years-and I’m being conservative,” he said. “You’re always conservative, sir,” the salesman said, turning to his prospect. “D-Day is Feb.1. We’re breaking ground for the city. In a year, you can live there.”
At only one point was the reporter balked. That was when he asked to see the available property at close range. Every time he asked-and he asked many times,-the talk was switched to something else.
The reason became clear only when the reporter finally did get one salesman to drive him out to the property. It was inaccessible. The nearest road ended three miles away. As soon as the reporter stepped off the road, he sank into a steadily deepening bog. Although it was the dry season, about-two feet, of water covered the property. On some maps, “Golden Gate Estates” is known more prosaically as “Big Cypress Swamp.”
There were a few other points that further investigation seemed to render less certain than the salesman had indicated. For one thing, says Collier County Engineer W. Harmon Turner, no land in the area of “North Golden Gate” has been cleared. For another, Turner says, none of the “estates” will be navigable to the Gulf. And the only roads in the vast tract are two state roads that have been there for years. County officials, moreover, are a lot less certain than the glib sales manager about the inevitability of rapid development of the area, which is now an estate only for alligators and mosquitoes. Says A. C. Hancock, chairman of the Collier County Board of Supervisors: “Some of it I feel will never be good for homesites; it would just cost too much money to drain it properly.”
Many of the projects on land just as unlikely-looking as Golden Gates Estates have shown amazing development. Port Charlotte has more than 3,000 families including a hefty Long Island contingent.
But even the most advanced of those developments have some king-sized question marks hanging over them. Probably the biggest question concerns the reluctance of industry to move into the new “cities.” Retired, Long Islanders who moved to Port Charlotte said that most aspects of their new life pleased them, but, that they wished there were some kind of job, even part-time work, to supplement their limited retirement income. Younger families are frankly worried about what their children will do when it comes time for them to go to work.
Another factor that some experts believe spells trouble is the lopsided ratio of lots sold to homes built. In Port Charlotte there are now 3,000 homes, but surrounding them are more than 70,000 sold but vacant lots, which now cost about $1,000 each. If there were to be a recession, and a large number of lot-owners suddenly tried to sell their lots, they might find the value considerably less on the open market. University of Miami economist Reinhold Wolff says: “There has to be a relationship between completed lots and houses sold. If we continue to complete many times more lots than houses, this can eventually lead only to a land crash.”
The experts agree that there is only one foolproof method by which the average investor can avoid getting gypped when he’s buying land: go and look at the land.
“You should never buy land sight unseen,” says John R. Hoffman, vice president of the National Better Business Bureau. A spokesman for the Miami-Dade County (Fla.) Chamber of Commerce puts it more graphically if less elegantly: “If you buy unseen, you have rocks in your head. Only fly-by-nights object to your…wading in their swamps.”
If you had ignored such advice and merely had written to the Mojave County (Ariz.) Chamber of Commerce about land being sold by “Lake Mead Rancheros,” you would have received a letter saying: “The land …has great potential as a recreational area. The climate is lovely…” (The description might startle some Arizona officials who regard Lake Mead Rancheros as one of the most unpromising of all the desert subdivisions in the county.)
The letter, which was mailed in response to a recent inquiry, was signed by Miss Betty Windle of Kingman, the secretary of the Chamber of Commerce. Miss Windle is also listed as the resident agent of the developer in a form filed by them with the Better Business Bureau of Southern Nevada. Miss Windle says: “I never was their resident agent.” She says that she merely handled mail for the firm and was paid for doing it.
Fraud Statutes Limited
Anyone who looks to the law for protection from land fraud will find that he’d be better off looking at the land instead. Federal mail-fraud laws weren’t devised to deal with the subtle lie-by-omission that characterizes much of the land-boom promotion. And state statutes are often myopic, dealing with part of the problem but not with enough of it to protect the buyer.
Federal statutes covering advertising and mail-order contracts deal mainly with outright fraud. Herbert E. Wenig, chief of the Investment Frauds Unit of California, says: “Often it is contended that under such statutes, there must be a showing of affirmative misrepresentation of a fact.” Wenig notes that it is not what is said in real estate advertising that deceives the reader, but what is left unsaid. One man from Wausau, Wisc., paid $300 of an $1,800 total price on four two-acre lots in Florida. A sales letter described the lots as ‘”just a 35-minute,drive from Everglades City.” The trouble, as the Wausau man found out, was that there was no road. But there was also no outright fraud.
Some state officials believe that the only solution is a broadening of federal statutes. But the Justice Department, disagrees. Deputy United States Attorney General Tully Kossach concedes that “the problem is very real” and that it involves “an awful lot of money.” He feels, however that passing new laws “is a state problem.”
The picture as far as state laws are concerned is blurred. Some state law deal strictly with the problem; others hardly touch it; no two coincide. Attempts to get uniformity among the laws of various states have foundered on two basic difficulties. One is that these states, the southern and southwestern states in which the land involved is situated, are anxious for development and tend to look more favorably on speculative promotions than do the “investor states,” where the people who buy the land live. The other difficulty is that no single state is able to get an over-all picture of the problem. New York, for example, sees the ads of Arizona developers, but all too often doesn’t see the land that has been advertised. Arizona sees the land-but not the ads.
In addition, many states do not believe that there is a pressing need for more stringent legislation because they have not yet received a large number of complaints from disenchanted residents. Marshall Mayer, deputy California attorney general, says: “This thing is like a time bomb. It won’t go off until the buyers either see the land themselves or try to live there.” Since most of the land-buying is on installment plans running eight or nine years, and since many people are buying in anticipation of retirement still in the future, the time bomb may not go off for years.
California is one state that has moved quickly against the phony promoters. It now has before its legislature a bill that many observers feel is the cure for phony real estate advertising. That bill would make it a felony to sell to a California resident lots in any development -in any state-that have not been inspected and given a permit by California. The bill would empower the state to arrest a representative in California of any firm selling unapproved property. Since most mail-order firms need local salesmen to wrap up the sales, Mayer believes that such a law would curb misleading advertising.
New York’s laws seem a lot better in theory than in practice. They provide that developers who want to advertise in this state must first register with the state. The ads cannot be published until a state inspector looks at the land and certifies that it conforms to the descriptions in the ad.
But the laws have been ignored with impunity. One developer touting Everglades swamp acreage without the required approval was ordered on Sept. 20, 1961, to stop the advertising. The order was ignored. A year later, the state attorney general’s office sent the firm another letter citing the order. The firm was still advertising last month. And, presumably, the ads were still bringing in the suckers- people with dreams of retirement packaged in the bright colors of a huckster’s illusion.
A fine, recent series in Newsday by Robert A. Caro, exposed the land-shark practices of slick salesmen who sell desert land to the aging as prime retirement property. A special Senate committee has opened an investigation into these “Misery Acres” that take dollars from people who cannot afford it. The Arizona real estate commissioner has described the situation as “a national scandal.” The Senate, upon completion of its hearings should take strong action. There is nothing lower than to defraud and disillusion the elderly.