History Lesson 
Should You Buy This Land?
Our writer becomes a salesperson, then a buyer, as she tries to unearth the answer. Hint: The Brooklyn Bridge isn't such a bad buy.
MR. AND MRS. JONES ARE sitting around their dinner table listening to a land development company salesman.
The salesman has told them about the fine company he represents, and about the wonderful development his company has in the sunny Southwest. He wants to sell them a lot out there, a lot that will be worth—well, who knows just how high land values are going to go? His hand swoops up to emphasize that point.
The Joneses are not certain they are interested.
So the salesman draws them a map. In one corner he indicates a major city. And near it, some miles away, he draws his company's development.
"Now," he says, "how can you go wrong if the population of this city is going to grow by 600,000 people?" He draws in a dollar sign on the company's development.
"Or if the city's growth is restricted because of the mountains here, and the reservations here, and the river here?" He draws in another dollar sign.
"Or if there's a beautiful apartment complex here," Another dollar sign.
"And a country club." Another dollar sign.
"And a swimming pool." Another dollar sign.
"And hundreds of houses."
The dollar signs keep going in until the map is about to fill up.
"How many dollar signs am I going to have to draw here before I can convince you this is a worthwhile investment?" he asks.
Sounds persuasive, eh? Well, this is only a sample of what Texans all over the state are hearing these days. Before you sign on the dotted line, though, we suggest you read what happened to our writer when she took a look at one of the biggest land development companies around, both as a salesperson and as a customer.
"We appeal to the greed in people," a land salesman told me confidentially one day. "That's how we sell land."
We were sitting in his rather plush office in one of the mirror-glassed office towers that seem to have sprung up all over Dallas. He was about to appeal to the greed in me, too.
"How would you like to make $20,000 a year?" he asked me. It was his version of a job offer. "$20,000 is a lot of money, isn't it?" But, he implied, $20,000 was just a beginning. He, of course, made a lot more than that. "Why, $20,000 wouldn't keep me in gasoline for a year" he said.
I don't know how much of that guy's speech was a con job, but good land salesmen do make a lot of money. Each year, land salesmen persuade Americans to agree to part with about $5 billion. The land they buy is going to be some fantastic new recreational facility or a great place to retire or maybe it's just going to remain raw acreage for awhile. But chances are, no matter what the plans for that land, the buyer has been told that someday the land is going to make him a lot of money.
That's the greed angle, the desire to strike it rich, to make the quick buck, to get something for nothing. And so each week, all over Texas, people are practically inundated with appeals to their greed.
Sometimes the desire to make money gets so strong it causes land companies to be less than honest in their dealings. So many of them apparently succumb to such temptation that the Council of Better Business Bureaus, Inc., ranks land sales abuses near the top of its list of the most prevalent deceptive commercial practices.
One land development company expert divides land companies into three categories. One category has both integrity and money to do what it claims it will. The second type has integrity but is not as well financed: if sales go well, the development will be okay; but then again, it could go bankrupt. The third group is the plain old fly-by-nighters.
The problem with much of land sales these days is that a lot of land is good investment. Also, many people buying land buy it more for recreation than for profit. Some recreational land developers are spending several thousand dollars per acre adding water and sewage systems, streets, yacht and country clubs, marinas, riding stables, swimming pools and tennis courts. One developer near Austin claims to have spent $12 million on improvements to 2000 acres before they sold their first lot. Such land is often pitched to the customer as a place to have fun, which it may indeed be.
The problem is that it's hard to tell the good guys from the bad. Both of them tend to use the same kinds of sales techniques and both share a persistent problem: misrepresentation by salesmen fired up to sell land.
The American Land Developers Association, a trade group, estimates there are more than 10,000 firms belonging to what is known as the interstate, or installment, land industry. From time to time, I've run into a handful of those 10,000: an occasional dinner, a sales presentation in my living room, an ad on TV. However, off and on for almost a year now, I've had extensive contact with one of the larger in the field, the Horizon Corporation.
The advertisement appeared in a Sunday issue of The Dallas Morning News in the spring of 1972. The ad, which took up three-quarters of a page, was mostly type and white space. The headline read: "The land you buy is only as good as the company you buy it from."
"Ten years ago a typical Horizon buyer paid a total cash price of just $395 for a lot. Today this same buyer would pay $1,100 for a comparable piece of Horizon land..."
Horizon's ad looked very sedate, very conservative, very institutional, and very expensive. There were no offers of steak dinners at some nearby hotel or restaurant, as Baca Grande had made. They didn't seem to want to pay me $15 to listen to their pitch as Rayburn Country had. Nor did they come bearing palm trees as gifts as had GAC Corporation when it was pushing its Florida properties.
I filled out the coupon anyway.
Then Horizon called to set up an appointment to give their sales presentation. They reached my husband, instead of me, and he, in a last, desperate effort to get rid of a persistent salesman, told the salesman that he wasn't interested in buying land and that his wife was writing a story.
The salesman came by my office to offer help with the story. The district manager knew he had come, he said, and Horizon would be glad to have me come by their offices to look at materials and ask questions.
Meanwhile, he would fill me in on the abuses of the land sales industry—the abuses of the other developers, that is. Horizon was different.
He told me the Mafia was involved in some Florida land. Also, he said, the Federal Government made another Florida developer give back $300,000 to some buyers in New England. He gave me the name of a local company that had been in trouble with the Securities Exchange Commission. And he said somebody in Dallas was "selling" Indian lease property. Those leases, he thought, could be invalidated at any time by the Bureau of Indian Affairs. He also thought a buyer could be sitting in his home one day and some Indian could come along and decide he liked it. And that would be that.
Horizon, he said, was as different from these other companies as night was from day. I filed away this claim for future reference.
My next contact with Horizon came at a two-day hearing on land sales abuses held in Houston last November by the Office of Interstate Land Sales Registration (OILSR), a federal agency under the Department of Housing and Urban Development. The Houston hearing was one of a series of public sessions throughout the nation designed "to find out what problems (land buyers) are having and to identify the fast-talking, silver-tongued sharpies who are causing those problems," according to George K. Bernstein, Interstate Land Sales Administrator.
More people turned out in Houston for the hearing than for any of OILSR's previous meetings. The complaints from the public were the standard ones: promises of quick investment returns that didn't materialize; unkept promises for reselling the buyer's property; land that flooded; misinformation about the growth potential of an area; and even one case where owners were promised "country living with city conveniences," but found that running water apparently wasn't one of those city conveniences. When water was finally put in, property owners received letters informing them the water was undrinkable, and that each family would be responsible for purifying its own water.
After the hearings, I talked with OILSR deputy director John McDowell. I told McDowell I wanted to narrow my investigation of land developers down to one company. "Who should I look at?" I asked.
"I can't tell you who to investigate," McDowell explained. "All I can tell you is who we get the most complaints on: GAC, General Development Corporation, Cavanagh, and Horizon. That's some of them."
(In fairness to Horizon, however, it should be noted that the Houston hearing only turned up one complaint against that company. A man who bought property in Rio Communities claimed the salesman had promised Horizon would resell his property for him when he was ready to sell. However, the company operates no resale office, he found out, and he could find no buyers for the property himself. OILSR estimates that 90 per cent of its Horizon complaints fall into this class.)
I had been so impressed by my previous contact with Horizon that I wanted to see for myself if Horizon really was different from other land companies.
The ad in the help-wanted section of the classifieds read:
SALESMEN ARE BORN
SURE THEY ARE, JUST LIKE the rest of us. Then they learn to sell through training and experience. Our salesmen come from many fields, but we have taught them how to earn more than they ever dreamed possible...
I had spotted it as a likely land salesman ad. One of the valuable lessons I had learned from the Horizon salesman months before was the way development companies use blind ads to advertise for employees. They don't like to use their names or the kind of business they're in because the industry has a black eye, the Horizon man had said. In addition to lacking a company name, the ads also tend to promise fantastic working conditions (my favorite begins: "Like to sleep late, play golf, eat a steak dinner every night?") and the prospect of lots of money.
"Horizon," the girl answered, when I dialed the number in the Salesmen-Are-Born ad.
Horizon's training class was to begin the next morning, so I suggested I attend the three-day session, and after it was over, Horizon and I could both evaluate whether or not we wished to be associated.
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