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SCOTT BARANCIKSpeculators hover, but few owners of damaged homes are selling. Bids for undamaged homes, meanwhile, are up.
PUNTA GORDA - A Red Cross helicopter couldn't have swooped in here much faster than real estate speculators did last month.
Twenty-four hours after Hurricane Charley nearly flattened this coastal city of 14,300, signs offering cash for damaged homes had sprouted on roadsides and telephone poles. Similar pitches began appearing in local newspaper ads.
Ersatz Donald Trumps from as far away as London, Beverly Hills, New York and Chicago inundated local real estate agents with phone calls, seeking to buy, rehab and resell as many as 80 homes apiece. It's a free market phenomenon that occurred after Hurricane Andrew, too, a kind of spasm in the real estate industry that offends some, excites others and puts traditional real estate agents in a tough spot.
Two days after the storm, 17 speculators braved the broken glass, garbage and heat inside the Prudential Village Realty Place office in downtown Punta Gorda in search of desperate sellers.
"It's the American way," Prudential CEO James Crumbaugh III said. "They're looking to buy low and sell high."
So far, homeowners aren't cooperating. Some say they want to see how much insurance money they'll get before deciding whether to rebuild or flee. Others may have been dissuaded by local real estate agents, some of whom are waging an intense campaign against out-of-town vultures bearing fat bankrolls.
The few owners who say they are ready to sell tend to own mobile or wood-frame homes that are landlocked, not the waterfront, concrete-block estates most investors are seeking.
But speculators persist, lured by the promise of easy money or beachfront bargains.
Alan Waserstein is an old hand. After Hurricane Andrew ravaged south Florida in 1992, the Miami Lakes developer bought and sold more than 60 damaged homes and added roughly a dozen commercial buildings to his portfolio, he said. He and his family-owned company, Jerika Properties Inc., would like to do the same in Charlotte County, so long as they can clear a minimum profit of 25 percent to 33 percent. They are banking on finding homeowners who are underinsured and can't afford to rebuild.
Ken Scarpetti, an Auburn, N.H., real estate broker, said he is aiming for owners who would rather sell now than deal with the hassle of rebuilding. "Reputable individuals w/references ready to purchase your hurricane damaged saltwaterfront home," said his ad in the Charlotte Sun.
Fred Paine of Superior, Wisc., has a somewhat humbler goal: to buy a waterfront home for his grandparents, and make a bundle selling it after the local market rejuvenates.
The profit potential is substantial, drawing amateurs who in better times might have invested in the stock market. Consider the offer that Robert Milligan, owner of Shells Realty, received on an investment home he owns in Punta Gorda:
A speculator offered $200,000 cash for the storm-damaged home if Milligan would sign over the insurance check, or $50,000 if Milligan kept the check for himself. Milligan declined.
As it turned out, the home had to be demolished, and Milligan's insurer gave him $200,000 to cover the structure. If Milligan had taken the $200,000 cash offer, the speculator would have gotten the lot for free. If Milligan had taken the $50,000 cash offer, the speculator would have gotten the lot for a mere $50,000.
One of the more interesting matchups in Punta Gorda is between real estate agent and speculator. In newspaper columns, radio ads, home visits and casual conversation, real estate agents have tried to educate homeowners about safe selling - and assail the scoundrels who seek to prey on them.
"I think any professional real estate licensee would have some very strong words for the type of people that are trying to (speculate)," said Nancy McClary, president-elect of the Punta Gorda-Port Charlotte-North Port Association of Realtors and a broker associate at Caldwell Banker Morris Realty. "They're taking advantage of a very, very emotional situation."
"I call them "whores,"' Prudential agent Sue Lackey said. Lackey said she takes great pleasure in ripping down the illegal "cash for damaged homes" signs, few of which remain on city streets.
Lackey's boss, Dottie Johnson, said real estate agents have much to offer the homeowner, including free market analyses, which provide a realistic idea of what a given home might be worth; widespread advertising; and wise counsel.
George McKinney, a retired pool contractor and Johnson's neighbor, was in Cincinnati with his cancer-stricken wife during Hurricane Charley when another neighbor called to say he'd better come home soon.
The front doors to his Port Charlotte house were swinging open, the windows blown out, the roof destroyed, the interior flooded and strewn with broken ashtrays and pottery.
When Johnson stopped by later to check on him, McKinney was splayed on his bed, atop a blanket of broken glass, with hundreds of mosquito bites. His mailbox contained offers from three speculators.
"He'd given up on life," said Johnson, whose family took him in for the night.
By last week, McKinney was a new man: his home was under repair. He had an insurance check in hand. "I'm not gonna sell," he said.
Because real estate agents work on commission, they have an incentive to discourage speculation that would slash sales prices.
But at the same time, agents are professional middlemen who earn nothing when a speculator deals directly with a homeowner. As a result, some real estate agents are searching for homes on behalf of the very speculators their profession disdains.
Paulette Butcher, broker/manager of a Century 21 Award Associates office in Port Charlotte, said a Miami real estate broker called the day her office reopened and asked for help finding and buying 80 damaged homes.
Milligan, the Shells Realty owner, is seeking 25 waterfront homes for a Sarasota investor willing to spend up to $20-million. "I believe one of my agents has been going door-to-door," he said.
Crumbaugh, the Prudential CEO, said 30 to 40 of his 150 agents are seeking properties for speculators, including a Beverly Hills doctor who wants to buy 40 to 50 homes.
Still, it's not easy. Lisa Anthony of Wagner Realty in Bradenton, had second thoughts about searching Charlotte County for bargains.
Shortly after Charley struck, Anthony said, she and partner Sandy Greiner drove to Punta Gorda to look for bargain properties on behalf of a British speculator and two local ones. Though they saw potential opportunities - such as a destroyed mobile home park that might have suited the Brit's plan to find a condo site - Anthony said the devastation was too much for her.
"We just kind of shied away from it," she said. "I don't think (a bargain is) going to be found unless they're desperate. And that's what we didn't want. I don't think we could live with ourselves."
Many speculators said they expect a rush of homeowners to sell when they get their insurance payments. Allstate agent Jim Black of Punta Gorda said the majority of his customers should get their checks within 30 to 60 days.
But local real estate agents said the wholesale selloff may never come. With most homes getting new roofs and many being rebuilt according to tougher building codes, the local housing stock will be better than before. Crumbaugh predicted home values would rise 30 percent by August 2005.
Homes that were for sale before the hurricane and escaped unscathed are now drawing bids that are 10 percent to 15 percent higher.
"It's going to be a whole new area down there," Wagner Realty's Anthony said.
- Times researcher Carolyn Edds and staff writer Judy Stark contributed to this report. Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.