Friday, January 11, 2008 , Updated 11:26 a.m., January 14, 2008
UPDATED x2: HGTV Dream Home in Tyler on the block Saturday
The prize doesn't do you much good when you can't pay the taxes and it's a buyer's market. UPDATE: The house sold for $1.325 million, while the contents (and some things from elsewhere) sold at really high prices.
TYLER (Scroll down for update on the actual sale.)
Every year, April avidly follows and repeatedly enters the HGTV Dream Home competition. They build a ridiculously amazing house, furnish it, throw in a car and some extra prizes and give the whole thing away.
The sad truth, though, is that seven of the nine winners have had to sell the house because they couldn't afford the tax burden. HGTV always builds these monstrosities in restricted communities that have all kinds of covenants that prevent the winners from using them for commercial purposes like Bed & Breakfasts -- eliminating any hope of holding on to the prize.
See the original tour
Perhaps the saddest example yet goes on the auction block in Tyler this weekend. The Tyler home, given away in 2005, was by far the biggest and nicest one yet. The Chicago family who won moved to Tyler and tried to make a go of it. But the $600k / year in property taxes and upkeep has become too much, so they went to an auctioneer to avoid foreclosure.
By my math, since the house is expected to sell for about a third of retail, this family's going to come out behind anyway. Nice prize. I imagine HGTV makes out like a bandit on the sponsorships on this deal, excites thousands of entrants, and then this happens year in and out.
We're probably going to go check out the house and auction tomorrow. But I'm no longer so eager to see us win such a prize.
UPDATE: We went to the auction Saturday, where there were roughly 500 people about. (The Tyler Telegraph says 1,200, but I don't buy it.) Three of them were there to bid on the house; about half were there to bid on the contents; and the rest seemed just generally curious. There were crews from several local (to Tyler) TV stations as well as a reporter and photog from the AP. Don Cruz, the homeowner, was there too.
With one notable exception, things were really well organized -- there was a bank of porta-potties; a concession with barbecue and drinks; and a quickly moving line to tour the house.
The only problem was that the auction folks were really strict about your path through the home, but only after you'd gone a direction from which they mandated no return. We checked out the ground level and then, seeing a long line to go upstairs, went to check out the downstairs/pool/boathouse area. Only when we tried to go back upstairs were we told that once down you couldn't go back up. And with short time until the beginning of the auction, we were S.O.L. on checking out the upstairs.
In person, the house was less impressive than it had been on TV. It was not nearly as private as it had looked, with tiny vacation cabins within 50 yards of the front door and a restaurant and clubhouse for the surrounding development as a next-door neighbor. The materials and decor inside weren't anything spectial. And, who really needs seven bedrooms and a separate boathouse? That said, the view was remarkable.
The home itself was the first thing to be auctioned. Wesley Beard, the auctioneer, was a flamboyant pro of the highest order while still keeping things down home. (He came off like our own Mark-Brian Sonna playing an East Texas Auctioneer.) He started out with a long, bid-building speech, from which one could glean:
- Despite rumors that had been going around in the community, the family did have full title to sell the house and the fact that the city still owned the land and leased it back meant nothing, as that's SOP for all Lake Tyler property. There was a Title agent on site and the owners were paying for title insurance.
- The house is on the tax rolls for $1.8 million
- Bids would require 10% down and would have until January 28 to close, without mutual extension by both parties.
- Contrary to reports that the property taxes and fees are onerous, the annual property tax is $25,000 and the land lease is $700 per year. (We figure the problem was likely a mortgage taken out to pay the income taxes and operating expenses on the seven-air-conditioner monstrosity.
- Tyler is a wonderful city for such a home and an ideal place for a millionaire to live and profit by the purchase and eventual resale of this home. The city is mysteriously recession-proof, and property values defy gravity.
- There is also an opportunity to buy all the surrounding property in "The Reserve at Lake Tyler" development, thus solving the lack of privacy we noted. See, the developer is in bankruptcy, and the whole project is up for sale.
- We should not feel sorry for the Cruz family, who got to live in their dream house for two years and are now happily back home in Chicago. So we shouldn't feel as though a decision to bid was tantamount to picking at the bones of the unfortunate.
- However, once over that hump, when determining how high to bid, we should feel sorry for the Cruz family who had gone through the financial wringer on this deal.
- There are a couple minor encroachments (oops!) including the dog pen.
With all that behind, Beard went to work selling the house. I really wish I had clued in and turned on my recorder sooner, because this was an Oscar-worthy performance that was equal bits tent revival, snake oil sales, aw-shucks fumbling, cheerleading, telethoning and sales 101. It was Art. If I ever have to auction off anything, I know who I'm calling.
I did finally tune in for the end, which you can listen to below:
The final bid
The winner at $1,325,000, was one red-sweatered Rick Mullins, who did not wish to speak to the media. He did, however, stay around to bid on some of the furnishings and appointments, including another $1,900 for the custom doghouse.
Then Beard started auctioning the contents of the house, and then some -- There were a number of items, including an interminable parade of oriental rugs, that didn't look like they were part of the Dream House. Locals confirmed that Beard had brought the rugs, as well as a number of other items from his warehouse in Jacksonville, in an effort to capitalize on the large crowd.
We were hoping to pick up some of the wicker pool and patio furniture, which went late in the auction, so we were there for most of it-- A good four hours.
Perhaps Tyler does have an unusually resilient economy after all -- We were surprised at the prices that the bidders (most of whom seemed to be locals) were paying. Not-terribly-attractive framed prints were going for $500. Wicker baskets and glassware that looked like it came from World Market went for $40-$50. It's hard to tell what the homeowners got because of the outside items, but our back of the napkin estimate was around another $30k.
The best bargains were on unusually large pieces of furniture, presumably because the market was limited by the number of people with the space for it. We struck out on the patio furniture, because we couldn't rationalize paying north of $1,000 for a three-piece set with cushions that already needed reupholstering. I did botch buying some snazzy office chairs at a steal price of $250. He who hesitates is lost, especially at the tail end of an East Texas auction.
UPDATE 2: Through a little research, we think we've learned a bit about the purchaser. There is a Rick Mullins in Westlake who does business in Tyler would appear to have the means to make such a purchase. Mike Bullock called his office this morning and they wouldn't confirm he was the purchaser, but they also didn't deny it. Our new friends at the Tyler Telegraph confirmed that the buyer was from the area. Plus, public records searches don't turn up any other good Rick Mullins candidates around.
Still researching, but in the meantime, the in-between time, here's some things that the Rick Mullins in question said to the Dallas Morning News in a poorly-packaged web sidebar to a piece on broker disclosures.