It’s painful enough when a home doesn’t sell for months, or years, but what if nobody will even come to see the place? That has become a problem for an increasing number of condominiums, cooperatives and homeowners associations, where a checkered past is keeping potential buyers away.
“We faced a double challenge–we had gone through an unfortunate period and we were also off the beaten track, so people couldn’t see how well we were coming along,” says Bruce Greenberg, 48-year-old president of the board at the Le Havre co-op in New York City’s Queens borough.
A well-publicized sponsor default had cast a pall over this 1,021-unit community, but “we overcame our problems and now have a beautiful place to live. The challenge was to turn that around, and we were somewhat stymied.”
For the homeowners at Casitas Village, a 280-unit in Carpinteria, Calif., an hour’s drive north of Los Angeles, the problem was overcrowding. Many of the complex’s 800-square-foot, two-bedroom apartments were jammed with as many as 25 seasonal workers from nearby farms–and the homeowners association board had a hard time keeping it a secret.
“It was wearing out the grass; the trash and the parking lots were overflowing,” says Robert Ooley, 36, the board vice president and longtime resident. “We had developed a bad reputation that was killing sales.”
Yet there may be a happy ending for these communities. With a little creativity and a handful of money, they are overcoming their sundry stigmas and giving home sales a boost.
Turnaround stories generally require a two-pronged assault: First, tackle the problem, then spread the good word.
For Le Havre, step one was to undo all of the former sponsor’s ill-doing. The sponsor, a real-estate corporation that had converted the property from a rental to co-op ownership in 1984, defaulted on its mortgage and monthly maintenance charge payments in 1990, leaving the co-op to pay for a $16 million underlying mortgage and a daunting number of serious repairs.
The top item on the board’s checklist was refinancing the underlying mortgage–not an easy task in the wake of a sponsor default, because most banks were hesitant to make a loan.
Next, the board addressed the leaky roofs and faulty boilers in all 32 buildings, and finally turned to beautification, replanting gardens and tree beds on what Greenberg describes as “27 acres of park-like property, right on the water. People say it’s beautiful when they see it.”
The problem was that people weren’t seeing it, which led the board to kick off the second phase of its plan: a $50,000 public-relations blitz, paid for by the residents.
“Visibility is the No. 1 factor in working with a complex such as Le Havre,” says Hal Marcus of Marcus Communications, who has been helping the board publicize special events, such as a five-kilometer run.
The efforts have started to pay off.
“Local Realtors, who had been relying on information about us that was four years old, are suddenly willing to take a second look,” says Greenberg. “We went from no sales two years ago to one or two sales per month today, and prices are creeping up.”
Three-bedroom units now sell for more than $110,000, where before “you couldn’t give them away,” he says.
At Casitas Village, the board first changed the bylaws to limit occupancy to two people per bedroom, plus one extra occupant.
“That meant five per unit, not 25,” says Ooley. “We had to be tough about it.”
It was no minor undertaking: Changing the bylaws cost the community $40,000 in legal and court fees, he says. The initial efforts managed to decrease the population by 15 percent, and the board expects occupancy to drop another 10 percent over the next two years.
Casitas Village also hired a public-relations firm, which placed several upbeat newspaper articles and radio spots about the community. And Ooley, a computer enthusiast, created a Web site for the complex.
Not only did such efforts help to improve the community’s image, bringing back the local brokers and prospective buyers, but the positive spin also averted some bad press.
“Out of the blue, we had a drive-by shooting on one of our streets,” says Ooley. “It was a complete fluke, something that’s never happened before. We haven’t had any violent crime. We were lucky because the media, in reporting the incident, didn’t mention Casitas Village. I attribute that to the positive nature of the releases we had generated.”
While good press can overcome a host of ills, those thinking of buying into turnaround communities shouldn’t be blinded by the song and dance.
According to Kathleen Luzick, vice president of the National Cooperative Bank, which lends to co-ops and condos, there are several major points that every buyer should check.
First, if the past problem was a construction defect, such as the faulty fire-retardant-treated plywood found at many planned communities built in the late 1970s through mid-1980s, make sure the problem has been removed.
Also, if the property has a low reserve fund–money that is supposed to be set aside for future emergencies and improvements–steer clear. Make sure monthly common charges or maintenance fees aren’t artificially low.
“This means that owners are trying to entice buyers, but they’re not taking care of business,” says Luzick.
According to some experts, however, a community that promotes itself is generally a good investment.
“It shows that the people who live there are proactive and creative, and they care about their property,” argues Robert Diamond, president of the Community Associations Institute. “That’s something you certainly don’t find everywhere.”
