Saturday, May 4, 2013

New Vista, a Clone of GDC, Florida Land Scams


If you missed last week’s column, in November 2003, my wife and I traveled from NH to Port Charlotte to see land that was for sale by the New Vista Company, and meet the management team to learn how to sell Florida land.

As we drove around North Port and South Gulf Cove, the marketing manager pointed out lots that were apparently available for sale and gave selling prices of the land. All the prices seemed so cheap—at the time I was selling lots in NH for from $100,000 to $3 million. The lots—and some were nice waterfront lots—were selling in the $25-$35,000 range.

We had been there since Friday, but on Sunday morning we were sequestered in a room at the hotel. We watched a presentation and met with the principals and the marketing guy, and we sat through a sales pitch program, the idea being that we would be more successful if we knew the company line.

I had bought a newspaper the evening before during one of the very few moments we had to ourselves, and I had read the classifieds when we got back to the room Saturday night—so I knew that the land New Vista was offering could be bought for much less than they were asking. And so I asked that very question during the meeting. “What’s the difference,” I asked, “between the land New Vista has for sale and all these lots for sale in the paper?”

I soon found out that was not the right question to ask. “This program may not be for everyone, Mr. Hahn, and it might not be right for you. It’s a program for agents who want to make money, who will offer these lots to people regardless of their economic situation—because we handle the financing. And our agents will sleep well knowing that they have helped other Americas achieve the American dream of owning land they can retire to.”

I began to see the other people in the room moving away from me, and I could see I was going to be the person they would point to and say, “He doesn’t get it.”

This was a three-hour meeting, but it seemed like a full day. Finally the meeting broke and it was time for lunch. I thought I had become a “persona non grata”, that is an unwelcome visitor—but surprisingly the marketing guy joined me for lunch and said he thought I made some good points, that the lots were expensive, but they needed to get the higher price to cover the costs of bringing people down to Florida to see the land, that he himself had bought a couple of lots, and expected to build a home on one of them and sell the other when he was ready. He was a good guy, and I could see the sales costs were significant, but I didn't agree to sign up. And so I was worried that we would need a cab to the airport—since we had not signed up to sell the lots—but they were good enough to take us back—as originally promised and that afternoon we flew back to NH.

Back in my office the next day—and with Google—I looked up the principals of New Vista and found they had sold more than thousands of vacant lots in mostly rural areas of Florida to buyers from such places as the Caribbean, Switzerland and France. The properties were sold at prices far exceeding their assessed value. The mostly standard, quarter-acre properties in North Port, Charlotte County and elsewhere ranged from $18,000 to $72,000 -- though the taxable value averaged about $3,000 per lot. In Citrus County, lots valued at roughly the same price were sold by the company for $30,000

Twenty years ago, the principals,  Ehrling and Reizen were accused of fleecing more than 10,000 homebuyers in North Port and Port Charlotte while employed by the former General Development Corp. At a 1993 trial, Ehrling was convicted of 39 counts, including mail fraud and conspiracy, while Reizen was convicted of a single count of conspiracy. The pair served two years in prison, but their convictions were overturned on appeal in 1996. The 11th U.S. Circuit Court of Appeals ruled buyers were free at any time to check out other Florida home prices, and were therefore not defrauded by the GDC executives.

New Vista seeks out customers who are unfamiliar with Florida real es tate. Using tactics perfected at GDC, it depicts undeveloped areas of inland Florida to buyers as sandy resort destinations via sales seminars, brochures and guided tours of the Sunshine State. New Vista has sold 1,556 lots in Charlotte County, more than 2,100 in Sarasota County, 824 in Citrus County and another 290 in Marion County, among other counties around the state. Since the depths of the Florida housing crash in 2009, New Vista has sold 458 vacant lots in North Port alone, collecting $16.45 million, or an average of $35,917 per lot, according to court data.

The company finances many of its deals, a move that further boosts profits and allows New Vista to sidestep the appraisal process required for most traditional real estate loans. About one-third of New Vista customers eventually lose their properties to foreclosure after falling behind on monthly payments, and New Vista simply takes the lots back and resells them.

Although they are still in business today, their sales style at New Vista still mimics that which was employed at GDC. Today Ehrling and Reizen are occasionally in the news, but are not charged with any crimes.
So how did this event cause me and my wife to ultimately move here? We liked what we saw on that November weekend, even though we didn’t like New Vista program or the people who were affiliated with them.  So we came back the following March and after a whirlwind tour of the area, with bona fide Realtors, we found a home in Englewood—simple as that.

Dane Hahn is a real estate professional serving Charlotte and Sarasota County.  You can reach him at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com.

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