The previous (Summer 2015) article in this space alerted you to common mistakes people make when buying or building in a golf community. This time, the LINKS Real Estate Panel was asked to focus on one particular problem area: money. According to our panel, many potential buyers think that moving to their personal piece of paradise will make money issues go away so they can live a low-cost life of perpetual golf with no unexpected expenditures.
Sorry, but it doesn’t work like that. The panel pointed out numerous buyers’ misconceptions about the price of golf-home ownership, beginning with a misunderstanding of different regional markets.
“The old mindset of Northerners heading South is that they can buy or build a lot more home for the money,” said a representative of a major property in South Carolina who requested anonymity. “That doesn’t always ring true. Per-square-foot building costs can be $200 to $400, a high cost that buyers from elsewhere don’t expect in the ‘cheaper’ South.”
According to other panelists, the same is true for almost every part of the country. There are bargains to be had, but prices are high just about everywhere, having rebounded from post-recession lows.
Buyers looking to build their dream houses need to be realistic. “People spend more on building than they said they wanted to spend,” notes Tom Jackson, owner of Gateway Realty in South Carolina. “They begin adding to the home to make it bigger or nicer, and soon are spending far more than what they told me is in their budgets.”
“We advise engaging a builder as well as an architect in advance of the design stage to keep construction costs in line with expectations,” says Tommy Elsberry, president of Frederica Realty on St. Simon’s Island, Georgia. “Too many times, homes are designed without the builder’s input on the associated costs.”
When it came to unanticipated costs, many of our panelists brought up dues, assessments, and other charges, advising buyers to ask lots of questions about these regular, and not so regular, fees. “A new member should always anticipate a minimum 3-5% increase in membership dues each year,” says John Jorritsma, Director of Sales and Marketing at Ibis Golf and Country Club in West Palm Beach, Fla. “As for assessments, does the club have any future projects on the horizon? Does the irrigation system need to be updated? How about re-grassing the fairways or renovating the bunkers? Ask!”
A few other money matters to consider:
- “In Florida, you typically can not finance an equity golf membership,” explains Jorritsma. “So the buyer has to anticipate the added cost of paying for equity.”
- “The biggest surprise is the planning, permitting, and building costs for a new home,” says the general manager of a club in the West. “Codes in this community have become onerous.”
- “In some regions of the country, communities have self-sufficient water systems that treat and provide water for both consumable and non-consumable uses,” says Mark Bruce of The Concessions Real Estate Company in Bradenton, Florida. “Buyers need to know if the water rights are controlled by the developer, golf course, or community association.”
- Bruce also suggests asking about roads. “Are they public or private? Privately funded roads and infrastructure allow a developer to retain a higher level of privacy for the community but also put the burden of long-term maintenance and upkeep on the community association.”
Finally, it isn’t only new buyers who should be concerned about money. “Some old members get stuck,” says Tim Bakels, COO of Colleton River Plantation in South Carolina. “Their home value is not what it used to be and their dues are much higher than 15 years ago when they bought their home.”
Paradise, yes, but at a price.