Interstate land salesmen, thriving on the American Public's passion for mountains, sunshine and open spaces, make the buying of land almost as easy as purchasing pair of pants.
But a recently concluded study of the interstate land-sales industry found that you don't always get what you see. In fact, you don't even have to see what you're getting, as some developers offer to sell property over the telephone for a minimum down payment.
In 1972, a former Air Force officer who lives in Philadelphia brough a piece of land near EI Paso, Tex., sight unseen. He said the developer promised that in 10 years it would be worth 10 times the original investment of $12,500. Today, he says that the land "is worth absolutely nothing because I can't sell it. The market is saturated."
A women who lives in Indianapolis told this story: "In 1975, we purchased and took pictures of our lot in Lake Havasu, Ariz. I paid taxes and last April visited Lake Havasu. I was astonished at the change in my land. A gully or wash now edges one side, and the general public has made a deep path across the land. Either the elements or the people have removed a lot of sand and the lot is low. I couldn't believe my eyes. I'm heartsick, especially after learning my taxes are as high as lots with homes on them. I now am a widow and can't afford to see my taxes rise while the value of the land goes down."
During the past tow years, the Department of Housing and Urban Developement has received more than 4,400 written complaints against interstate land sellers. The federal agency has suspended 2,340 developers since 1972.
Patricia Worthy, HUD's interstate land-sales administrator, blames part of the problem on "brilliant and imaginative" salesmanship and part on the gullibility of investors seeking their fortune and happiness in Sun Belt dirt.
The interstate land sales industry generally is defined as companies engaged in selling subdivision lots that may be partially improved or wholly undeveloped but where responsibility for construction of housing or other imprements generally rests with the buyer.
HUD says that more than 6,000 individual projects are registered with the agency, representing all states but North Dakota and Rhode Island. The bulk of the resort and retirement developments are concentrated in Florida, Arizona, Colorado, New Mexico and California.
Jean Halloran, of INFORM -- a nonprofit research group that has investigated interstate land sales -- said the industry has carved about 40 million acres into lots. That mass -- equal to 2 percent of continental U.S. land -- could house up to 60 million people. Yet by all estimates, the industry is loosely regulated and "rife with consumer abuse... riddled with problems of deception and fraud," Halloran said.
She said that despite attention from the government in recent years, the land sales fraud continues and that a new cast of characters has entered the scene.
"We have a second generation of developers starting projects in the Poconos, south (New) Jersey, the Ozarks, Carolinas, Delaware and Maryland shore," she said.
HUD's Chris Peterson said many of the newcomers are former salesmen who've found enough financial backing to launch their own enterprises.
"They know all the tricks," he warned. "I only hope buyers beware."
"Land salesmen prey on urbanites. Colorado natives tend to laugh off the more outlandish promotions," said the state's assistant attorney general, William Finger. "Midwesterners and Easterners don't realize that some of our land is virtually worthless. Still, they dream about owning a piece of the Rockies."
After inquiring about both areas, this reporter was given free air transportation, wined and dined and inundated with promotional brochures. I also received unsolicited books, deed applications and sales guarantees in the mail. There were numerous instances of high-pressure sales tactics, especially over the telephone.
The two developments visited -- South Park Ranches and Pueblo West -- are less than 150 miles apart.
South Park Ranches is an 18,000-acre, bankrupt development in the picturesque but poverty-stricken area of Park County. It is located south west of the Pike National Forest, about 100 miles southwest of Denver. The original developer, South Park Land & Livestock Co., poured millions of dollars into the project in the early 1970s. But like so many other developers, the companny was crippled by the energy crisis as a capital shortage and conservation concerns left many investors on the sidelines. In 1975, the company filed for bankruptcy.
My dealings with South Park began after I replied late last summer to an enticing newspaper advertisement. After calling a toll-free number, I received the first in a continuing series of sales pitches from a sales group appointed by the receiver for the Bankruptcy Court in Low Angeles.
During the course of our three-month telephone contact, I was told that:
South Park likely would become a thriving vacation community.
The project would be sold out by October. Later, I was told Nov. 15; finally, "by the end of the year." But as of mid-January, lots were still available.
A choice tract of land already had been reserved in my name. Although the usual $8,895 purchase price was for five acres, my lot covered 6.2 "prime acres," including road frontage area.
It isn't necessary to inspect "your land" because any South Park buyer can obtain a refund or exchange with six months of the initial purchase.
For a $200 application and title insurance fee, I could waive the down payment temporarily.
Eventually, I would owe a $500 down payment and then pay $112 a month for 118 months.
"At that price you can't go wrong. I even bought a parcel myself," the salesman said. "I've been in the land game a long time. Believe me, you won't get hurt."
After visiting South Park last fall, we uncovered a different story about the extent of the development. Only one family lived on the desolate ranch, and the nearest town -- Hartsel, about five miles away -- was virtually deserted. The South Park sales office was closed, with the nearest other office 60 miles away in Colorado Springs. The property had no water or sewer or telephone lines. Other than dirt roads, you'd be starting from scratch.
Doris Haag, a Hartsel resident, said that "about twice a week in the summer, people stop in town asking where their property is. I can't believe anybody would buy land without first inspecting it. The court wants to unload this land quickly. Heavy advertising and telephone sales seem to work."
Next stop: Pueblo West, a project founded by an oil company conglomerate that entered the real estate market in the 1960s. The development covers 47.5 square miles -- 30,000 acres -- of barren grazing land that is six miles northwest of the City of Pueblo (population: 120,000).
McCulloch Oil Corp. hoped to transform the desert wasteland into a booming, but planned, community of 59,000 by the year 2020. But, like many developers, McCulloch's lofty plans were thrown for a loop by the energy crisis and economic recession.
Salesmen, whose very survival depended on commissions, began luring buyers with phony pitches. Sales promises were made about the cost and availability of utilities, recreation, water and schools. Some buyers were promised preferential employment with companies that salesmen said would locate in the development's industrial park.
The situation hit rock bottom in February, 1977, when McCulloch pleaded guilty to 19 counts of land-sales fraud and agreed to invest $16 million in Pueblo West public improvements. It was said to the largest consumer dammage settlement in Colorado history.
With that tarnished record, McCulloch sold the project to Pratt Properties. However, McCulloch owns a majority of Pratt stock and someday may regain management control.
Pueblo West, with a current population of about 3,600, is trying hard to regain respectability.