So says Treavor Theelke at Land Title Guarantee in his monthly sales activity report. I’d say he’s right. Eagle County sales, which were showing a downward trend in the last quarter of 2007, turned in the lowest number of transactions since 1996 with 104 sales - just 72% of sales recorded in January of 2007. The high end of the market remained strong in January with 6 transactions of over $4,000,000. Conditions in the national market are obviously coming to roost here in the Eagle Valley.
What does this mean to you and I? First, we can no longer cruise along with our heads in the sand fantasizing that we are insulated from national economic upheavals. Even though our area is financially much stronger by a long shot than most of the US, we must eventually fall victim to at least the increasingly dour media that pervades our modern life. Even people who now have cash to spend on a vacation home in Vail must be injecting into their buying decision some consideration of the general financial markets and how the drying up of liquidity will effect them in the near future. Once we accept that 1)real estate is cyclical (I’ve seen 3 such market adjustments in my 32 years in the local real estate business) like just about everything else, and 2) that down-cycles beget up-cycles and are, in fact, healthy for the market, things don’t look so bad.
To date, neither Sonnenalp Real Estate nor I have felt the negative effects of the national real estate/financial malaise but it is my feeling that we are in the midst of a major readjustment in our local supply/demand equation. Demand is dropping, supply is expanding, and it’s a fact of life that Buyers always realize this before Sellers realize it (or want to accept it). Deals are not getting done now and won’t get done until Sellers accept the fact that more and more Sellers are starting to chase fewer and fewer buyers.
A positive approach is the only way to solve any problem. No matter what the condition of the Market, Real estate changes hands due to a successful blending of Price, Terms, Condition and Marketing. As a Seller in a tightening market you must be even more adept in your understanding of these factors to be competitive. You’ve got to stand out in every way you can.
First, the Condition of your property must be as good as it possibly can be. Know that there are most likely 3 or 4 properties that are similar to yours that bear that rarer buyer’s attention. Maybe now is the time to sit down and analyse what should and must be done to improve your property’s condition. Anything “Dog Eared” will kill you. Also, make sure everything from windows to carpet to furniture is spotlessly clean. Attention to detail is all-important now.
Second, make sure your marketing team is aggressive and visible and has a positive, problem solving attitude. It’s really easy for a broker or a brokerage company to get depressed in a slower market and stop doing the right things - like spending money on marketing your property! The wrong attitude here can be devastating in a slower market.
The Third Factor - Terms - is not currently an issue with interest rates low and a lot of cash in the pockets of Buyers. Know, however, that a liquidity crunch will effect even the strongest of Buyers. While they may have cash for your property, if a business loan dries up that cash is going somewhere else other than into a vacation home! It may soon be the case that “creative financing” and owner carry financing will again be an important factor in getting a sale finalized.
Finally the Painful Factor….Price. If you’ve paid attention to the three previous parts of the equation and your property is still sitting, you must accept the fact that it is up to you (and only you) to bridge the gap between your property and the market by adjusting your price downward to meet the buyer’s requirements. That Buyer is certainly not going to come up to you in this market! When all else is said and done, only the realization that bringing your property’s price in line with the new supply/demand reality is going to get the job done for you.
One last bit of advice to Sellers if they want to be successful in today’s real estate market: 1) Most real buyers in today’s market are not trying to steal from you. They just have a vastly larger load of reasons why they should not buy your property, and 2) If you find a real Buyer for your property, treat that Buyer like he is the last Buyer you are going to see for the next 12 months (he quite possibly may be)…. and then act accordingly!
John Nilsson
