For many in today’s economic climate, there is a perception that purchasing a “short sale” somehow equates with “deal of the century.” This is not always the case, especially in a “resort” area and second home market. In fact, with a healthy inventory and great selection of properties, most sellers who decide to list their property now, no matter what their situation, are prepared and willing to negotiate. A “short-sale” or “foreclosure” purchase, can take several months, and in many cases only impacts the psyche of the buyer, and not necessarily the wallet.
One of the most popular reasons a seller puts a property on the market based on my experience in working with sellers over the past 15+ years, is the desire to purchase a “replacement” property, which enables them to take advantage of being a “buyer” in this buyer’s market as well as the tax advantages associated with a 1031 exchange process. There are few short-sales in our resort area – those few over extended their equity in the property during the peak of the market. The bank is willing to take short the amount owed by the borrower, who may owe more than a comparable property listed for sale – while a seller who is not in default on the property, is simply pricing aggressively to be competitive with the supply.
In addition to other lien holders that the ‘short-sale seller’ may be in arrears with (i.e. homeowner associations/assessments, personal and real property taxes, utilities), there is a level of patience required on the part of the buyer. Once a “bid” is presented, the bank may take up to 30+ days for a response – if a response is given at all. The seller may also influence what the acceptance price will be, as they are still liable for any shortfalls in sales price and the amount owed to the lender. In the interim, as we see the lower priced properties, or low-hanging fruit, in the market get absorbed, the short-sale buyer can miss the market. This may not be true in Florida, Arizona, California and Nevada, but given the limited short-sale inventory, and availability of property at “distressed” pricing that doesn’t require short-sale negotiations here, a couple of sales in any segment can mean you missed the market.
In a buyer’s market, we recommend anyone looking to take advantage of these great opportunities to create a “wish list,” prioritizing their preferred location, type of property, and estimated “range” of pricing. Second, while not avoiding short-sales, look at comparable properties and price points, to avoid the often time consuming and frustrating process of a short sale, and potentially missing out on some very attractive interest rates or seller finance options. Finally, once the property of your choice is identified, don’t hesitate and make an OFFER.
An experienced and specialized real estate broker is your #1 resource for establishing what the best values are, and can best present offers to secure the best price possible. A savvy seller too, realizes this is a buyer’s market, and if they are truly interested in a sale, they will base their decision on motivation, inventory and competition, including those few “short sales” that may drive some on how they negotiate a bid on their property.
Exceptional opportunities exist right now – interest rates are at a 20 year low and areas like the resort community in and surrounding the ski area at Durango Mountain, are becoming more and more in demand. Our area has become increasing popular as a lifestyle choice for its alpine setting, views, location, weather, and affordability, especially when compared to other resort destinations in Colorado. Don’t find yourself saying “I shoulda bought in 2009!”… The long and the short of it…. THE TIME TO BUY IS NOW!
Wednesday, August 19, 2009
Saturday, August 8, 2009
On Real Estate, Mountain Lakes, Fish and Beer (Not necessarily in that order)
What a difference a couple of weeks can make. Your probably already know that interest rates are at historic lows. Couple that with the current housing price lows and affordability is at a 20+ year high according to most estimates we're seeing. Here's the thing though, Durango's market feels like it's taking off again. Anecdotal evidence:
- I showed property this week. Of the 13 homes I tried to show priced under $600,000, 4 went under contract before the showing, and the one the clients wanted went under contract the day of the showing.
- I put the same 23 acre property under contract twice in two weeks. The first time it fell out because the family decided they weren't quite ready to make Durango their full-time residence. But the deal was so good that one of my other long-time customers swooped in and purchased it. This property is 23 acres of incredible high-alpine property overlooking the Animas River Valley from a high perch on relatively flat land with no neighbors in any direction and national forest land leading to the Animas river as one of the property borders. And it had a 4,000 square foot home already on the site. It would have been priced over $2 million just a year ago. My customer has it under contract at under a million.
- We priced a small condo at Cascade Village to sell. There hadn't been more than a couple of sales at Cascade for over a year, and none in the type we were listing. It's under contract pending closing after being on the market for only a couple of weeks.
- Another customer put a completely re-envisioned and remodeled historic home under contract in Durango's historic district, on 3rd Avenue no less, at nearly 25% less than it's original list price (a realistic price to market when listed).
- Still another found a new condo in the historic district at a price of $265,000 for a two-bedroom right on 3rd Avenue and College, the heart of historic Durango. It makes me feel like a buffoon. I paid over $450,000 for a condo in basically the same location two years ago.
- Both bank-owned properties in Engineer Village at the ski resort are now under contract. So much for distressed property opportunities there, though there are still some tremendous condo deals at the mountain, and more great home bargains in the immediate vicinity.
Don't' take my word on the market. Check out these independent sources:
Business Week, Where the Real Estate Market is Already Bouncing Back: Historically, the West coast is a real estate trendsetter and as sales there increase it suggests the rest of the country may soon follow, July 24, 2009
USA Today, What the Latest Data Shows: Recession Likely to End in September, July 28, 2009
NAR: Existing Home Sales Rise Again, July 24, 2009
Forbes, Experts Say Now is the Time to Buy, July 23, 2009
Realtor Magazine/AP, Investors Drive Foreclosure Prices Up, July 23, 2009
Realtor Mag/Business Week, Housing Experts: Now is a Perfect Time to Buy, June 22, 2009
All of these links and more can be found at my website http://www.coloradosecondhome.com/. There you'll also find my recently published articles on the beers of the four-corners titled, "The Great Four-Corners Beer Exploration." It's a four part series for Inside Outside Magazine. Here are the links if you're interested in why this region, Colorado specifically, has more micro-breweries than any other part of the country:
Four Corners of Beer, New Mexico, June/July 2008
Four Corners of Beer, Arizona, August/September 2008
Four Corners of Beer, Utah, November/December 2008
Four Corners of Beer, Colorado, January 2009
I'm contemplating a short return to the writing trail to focus on the vineyards of the southwest. Much like the Beer Exploration, I'll have to travel to all the vineyards, meet their people, drink their wines, and eat their food, all in the name of research.
In other statistical news:
- Sales in Durango of homes priced under $425,000 are up 4% through all of June of 2009 compared to last year. The low end and first-time homebuyers market is red-hot in fact. This is where the market comes back.
- Sales of higher-end homes are still soft, and there are deals out there, finally, like the one I detailed above. Sellers have gotten real and they have to compete with a bunch of other sellers if they want to dispose of property in the high-end right now. Land sales are also still slow. Good deals abound in that sector. The market is essentially having a sale. It's a wonder all of the customers I have aren't rushing through the doors like there's only one Cabbage Patch Doll left on the shelves. Well, some actually are.
HOMES WITH MORTGAGES
FACT: Approximately 30% of all U.S. homes are free and clear and do not have a mortgage.
It seems like every time we turn on the evening news or read a newspaper headline, the bad news deepens our fear and concerns about the economy. With the news media in full throttle, using terms such as “MELTDOWN” and “CRISIS,” it’s easy to understand why you might lack confidence in buying or selling a home. We have to remind ourselves that the media reports NEGATIVE news, not positive news. Their key objective is to pull in an audience (and advertisers), not to make you feel good about yourself. They announce the unemployment rate rising, despite the fact that millions of people are still working, making money, eating at
restaurants and even buying/selling homes. In fact, while 3.3% of homes in the United States are in foreclosure, 96.7% are in good standing.
Instead of internalizing the negativity the headlines can cause, choose to be optimistic and focus on the opportunities around you.
FACT: Of the 70% of households that do have a mortgage, 96.7% are not in foreclosure.
Source: Mortgage Bankers Association
Are we really spinning out of control?
The Housing Affordability Index is at the highest level of affordability in history.
There is still time to take advantage of lower home prices and historically low interest rates.
And, despite what the nightly news reports, financing is still readily available for qualified buyers. When mortgage rates fall to a record low, housing affordability surges to a record high.
Source: Board of Governors of the Federal Reserve System
Source: National Association of Realtors®
How's the new real estate company doing in the midst of all of this? I couldn't have imagined it going better. We may have timed our entry into the market perfectly.
We're here to help. Be it beer, fishing, backpacking, high mountain lakes, or even real estate.
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