Waiting for the Market to “Bottom Out”

Trying to TIME the Summit County Real Estate market.

Is it Better to Wait to Buy Summit County Real Estate or BUY NOW?

With the beginning of a new year and the inauguration of a new president, market activity in Summit County real estate and Summit County real estate has increased dramatically! There is renewed hope in our economy and the prospects for ALL real estate (especially Summit County RESORT real estate!) to once again be a solid and wise investment. However, with all the renewed interest and activity to purchase Summit County Resort real estate, I am continually hearing from prospective buyers that we think prices for Summit County Resort real estate are going to come down in the future so I’m going to wait until they do – and buy at the bottom of the market! The interesting thing about that statement is that the only way one really knows where the bottom of the Summit County Resort real estate market is, is AFTER IT GOES UP!! It’s like some people trying to play the “interest rate game”. In other words, there are always those “bargain seekers” who want to wait for interest rates to go down “another 1/4%” (or even another 1/8%) even when interest rates are already great – currently just over 5%!! The problem is they try to “time it” so right that they MISS OUT! Instead of going down, the interest rate goes up and they’ve missed “the bottom”!

Sometimes one needs to realize how GOOD CURRENT PRICING REALLY IS! Here in Summit County, the market has remained relatively stable after the ‘Wall Street meltdown’ (there have been over 100 properties sold in the past 60 days!) and, compared to other ski resorts, real estate in Summit County and Summit County is ALREADY AFFORDABLE – because we have not yet reached build-out! However, since prices had gone up so much in 2006 and 2007 (due to EXTREMELY low inventory levels at that time – 2-3%!), sales prices had already ‘adjusted’ earlier in 2008 by approx 5-10% – compared to 2006 and 2007! Therefore, there are some VERY GOOD opportunities to purchase PRIME resort real estate CURRENTLY – AT ALREADY LOW PRICES!

Could pricing go down further? Sure! However, although we did enjoy inventory levels of 3-4% in 2006 and 2007 – that’s why we had 30% appreciation during those years – consider the fact that right now the inventory levels are only about 8% in Summit County and Summit County. Normally a 10-15% inventory level is considered a “normal market”. Therefore, we currently have a VERY healthy market and unless inventory levels go up over 20% (2.5 times current levels!), there is no reason to think that prices will go down that much further than they already have! In 2002 – after the tech stock market bottom fell out AND 9/11 occurred, we had inventory levels swell over 30%! Even with that, prices only fell about 5-10%’and we’ve already experienced that at present! Why would they go down even further? Remember, we are a secondary resort market and most of our owners are professionals, executives and successful business owners who don’t need to sell – for the most part, they WANT TO SELL’when the time is right! With NO PRESSURE from large inventories, there’s NO REASON TO LOWER PRICES!

Therefore, if you’ve even been considering a resort real estate purchase, you may want to stop procrastinating and TAKE ACTION NOW! Also, with loan rates hovering around 5%, how long can they remain there? If one needs a loan, money IS available’one just needs to qualify for it – as it should have been before’then the nation wouldn’t have been in this “financial mess”! Could inventory levels go up further and prices go down’ Sure! But – WHY WAIT and find out that inventory didn’t go up and prices didn’t go down? Just like with the “interest rate game”, you may find out that your timing was off and you “missed the bottom”. If one can find a property that fit your parameters, if the price is “pre-2008″ (5-10% off of peak prices in 2007) and if one can get (and qualify for!) an extremely low rate loan, then my question would be: WHY NOT? Remember the words of Warren Buffet – “If you wait for the robins, spring will be over”!!

As I mentioned in a previous newsletter, Warren Buffett, probably one of the most successful investors of our time, recently said: ‘Be fearful when others are greedy and be greedy when others are fearful. What is likely is that the market will move higher, perhaps substantially, well before either sentiment or the economy turns up. So, if you wait for the robins, spring will be over. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

His words definitely apply to Summit County and Summit County real estate – there is really “no better time to buy than NOW”!

Art of Negotiating for Summit County CO Home
By Craig Walsh

Whether buying or selling Summit County, Colorado real estate or Breckenridge, Colorado real estate, negotiation is crucial to a successful transaction. Every negotiation should follow a formula, beginning with preparation and ending with a proposal accepted by all parties. Negotiating is about gains and concessions between willing parties. The more educated a client is, the better the chances of reaching a smooth, mutually acceptable conclusion.

The “Offer To Purchase” a Summit County or Breckenridge home is the result of buyers who have done their “prep” work and sellers who choose to bargain. Spending quality time on the preparation phase will reduce the time and stress involved in the bargaining phase later. The experience of a Summit County CO real estate professional serves either side to glean a clear understanding of all aspects of the transaction.
Sellers, buyers, and agents for Summit County Co real estate can prepare for bargaining by finding out the facts. When negotiating a Summit County home’s sale, sellers and buyers can’t ask too many questions to enhance their negotiation position. The prime reason is to determine how motivated the other party is to buy or sell. The best way to get the information needed is by asking key questions in a friendly and gracious manner.

It is imperative to have answers to these questions:

1. Why is the seller selling his nice home? The answer to this question will help the buyer to make an offer that meets the seller’s needs. If a seller needs cash, a low cash offer on a run-down house may be the ticket. If a person needs money to live on during retirement, they may like 10 percent down with a 90-percent seller carry back.

2. What was the home seller’s purchase price? Without this information, buyers are at a severe negotiation disadvantage. If a home was purchased for a low price years ago, there’s a lot more wriggle room than if it was purchased within the last few years. However, if the seller has a high-motivation reason for selling and needs a quick sale, possibly the buyer could take over payments on the current mortgage.

3. Does the other party have a time deadline’ If one party has a job transfer or is already purchasing another home, then there is a helpful sense of urgency. Without a timeline, buyers and sellers can drag out the process by not making decisions.

4. Has the seller obtained a professional home inspection report? Today’s smart real-estate agents suggest that their sellers get a professional inspection report at the time of listing the home for sale. This makes the seller fully aware of defects. They are responsible to repair them or to fully disclose them to prospective buyers (averting future lawsuits). Even so, smart buyers include a contingency clause for the buyer’s approval of their own inspection report obtained at the buyer’s expense in their purchase offers.

5. What is the buyer’s motivation to purchase a home? If the buyer has indicated a key reason why he is considering a particular house (great condition, outstanding school district, need to move in quickly), the seller can use that information to enhance his negotiation position.

6. Ask a creative open-ended question to find out if there is anything else that needs to be considered.

Negotiate only with people who want to negotiate. If there is weak motivation by the other party, there is not a strong climate for negotiation. However, if the other party is highly motivated, then there is a strong circumstance to negotiate your best price and terms.

Articles © Copyright 2006 by The Walsh Group

Avoid Committee Decisions when Buying Summit County Property
By The Walsh Group

For the buyers of Rocky Mountain resort real estate who are actually making the purchase of a Summit County, Copper Mountain, Silverthorne or Breckenridge home, we have some advice about who to bring along.

Summit County home buyers who show up with their parents, aunts, uncles, and other unrelated individuals are often bombarded by a variety of conflicting opinions on value, desirability and functionality of the subject Summit County property.

These opinions, many of which are unsolicited, can cause confusion and will often result in “indecision”. In turn, indecision can mean the difference between acquiring the desired Summit County CO real estate and losing out to another ski resort home buyer.

It has been said, “A camel is a horse designed by a committee.” The Internet is full of comments about the ineffectiveness of committees. Part of the problem in a committee is that no individual is held responsible for the decisions, especially those made by a majority ultimatum. Unless you are prepared to adopt a heterarchy, which will give all of the relatives and friends equal authority to decide on your new home, then please reconsider whether to include them in your deliberations.

Synergic consensus occurs when a group of humans sitting in heterarchy negotiate to reach a decision in which they all win and in which no one loses. In a synergic heterarchy, all members sit on the same level as “equals”. No one has more authority than anyone else everyone has equal responsibility and equal authority within the heterarchy. The assignment for the heterarchy is to find a plan of action so that all members win and that is not always easy. It seems that the more people involved in decision-making, the more difficult it becomes to achieve the original objective. The same holds true when buying real estate.

We advise our clients to implement this solution: Whittle down your decision-making team very easily by including only those individuals who will share the financial responsibility of the purchase! Invite everyone else to see the property once you’ve made the decision and signed the contract. That will help ensure that you’ve made the best decision for you’and not for your fan club!

It is vital to take the time necessary to visit, inspect and reflect before making a choice. For opinions relating to value, desirability and functionality of the subject property, ask your real-estate professional. That’s why we’re here. When you’re ready to buy or sell, the specialists of The Walsh Group and RE/MAX Properties of the Summit will be ready to help you!

Articles © Copyright 2006 by The Walsh Group

Earnest Money for Summit County Colorado Real Estate
By The Walsh Group

In the competitive Summit County resort real-estate market, when a buyer really wants a choice piece of resort Summit County real estate, he is best off submitting a sizeable amount of earnest money along with his offer.

What is “earnest money” It is the down payment a buyer makes when offering to purchase a property, whether it’s Summit County CO real estate or any other property.

The earnest money is typically payable to the listing brokerage firm or a closing agent, such as a title company. The money isn’t actually deposited until all parties come to terms and sign the purchase contract. At that point, the money is deposited and held in an escrow/trust account until closing. The funds must be good funds from the start, unless the buyer and seller agree otherwise.

While there are no specific “rules” stating how much earnest money is enough, the amount is dictated somewhat by the price of the property. A typical seller wants the earnest money to fall somewhere between 2% and 5% of the offer price. A typical buyer wants to offer as little earnest money as possible.

After all contingency dates in the purchase contract have passed, the earnest money becomes “hard”, which means the buyer could forfeit the earnest money should he/she not go through with the closing. This is important to a seller because once a property goes under contract it usually goes “off the market” and other potential buyers go by the wayside.

Therefore, once the earnest money is “hard”, most sellers can breathe a sigh of relief in knowing their property will close (sell). It’s obvious that most sellers have a vested interest in fulfilling the purchase contract. Unfortunately not all buyers feel the same. There are buyers who will terminate a purchase contract on the day of closing. They are willing to lose $500 or $1,000 in order to move on to another property, etc. However, they are much less willing to lose $5,000, $10,000 or $20,000.

So what’s a buyer to do? If you want to be a stronger buyer and you want sellers to take your purchase offer seriously, write a bigger check! That’s right. Offer more earnest money than expected. The best buyers are those who are motivated and financially capable of buying a property. Sellers are more willing to enter into serious negotiations with, and respond more favorably to, a buyer who presents a strong earnest money deposit with the offer. If you’re not serious about your offer why should a seller take you seriously’

Whether you’re buying or selling, you need an experienced real estate broker’someone who understands the complexities of a real estate transaction and someone who is looking out for you! The knowledgeable buyer’s agents and listing specialists in The Walsh Group will be happy to help you with all of your real estate needs.

Articles © Copyright 2006 by The Walsh Group

Get Approval First for Summit County Property
By The Walsh Group

There is a more efficient way to buy Summit County, Colorado real estate and Breckenridge, Colorado real estate. And that is to put the horse before the cart.

In some cases, buyers will make a purchase offer for Summit County CO real estate and apply for a mortgage loan afterwards. It is far better for the buyer’s broker to counsel the buyer to apply for a loan with a reputable mortgage lender before submitting an offer for Summit County or Breckenridge real estate. The buyer can then arrange for a valuable pre-approval letter.

The reason is simple. When an offer is presented, many sellers want to know if the buyer has been pre-qualified for the mortgage loan for the Breckenridge or Summit County resort real estate.

If the buyer has not been pre-qualified, many sellers will require the buyer present a “pre-qual” letter as a contingency to the contract. This is different from a pre-qualification letter. A pre-qual letter gives many sellers a peace of mind and the impression that the buyer qualifies to purchase their property.

But is that truly the case’ In reality, a pre-qual letter is simply one step in the underwriting process. A typical pre-qual letter will state the dollar amount the buyer is qualified to borrow. But that qualification is contingent upon the lender’s final verification of information the borrower supplied, such as income, employment, savings and debt, as well as a satisfactory appraisal. True, it does show that the buyer is willing to get the ball rolling, but a pre-qual letter does not guarantee that the buyer will obtain financing.

Therefore, the horse needs to go first. What is really needed is the buyer’s pre-approval. With a pre-approval, the lender has documented, substantiated and approved the buyer’s entire loan application. This means that all of the underwriting process is complete, with the exception of the property appraisal.

When a buyer presents an offer with a pre-approval letter, it allows the buyer to approach the buying process from a position of strength. Informed sellers understand the difference between a pre-qualification and a pre-approval. In a multiple-offer situation, a pre-approval often means the difference between successfully getting the property that the buyer wants and losing out to another buyer who is better prepared.

That’s why it is important for both buyers and sellers to use the services of a broker who not only understands the differences between a “pre-qual” and a “pre-approval” but takes the time to inform and educate their sellers and buyers to the difference as well.

The Walsh Group is that broker.

Articles © Copyright 2006 by The Walsh Group

Powerful Buying Strategies in Summit County CO
By Craig Walsh

Buyers who follow the rules of the game have the best chance of winning the Summit County CO real estate of their dreams at the best price. I heartily suggest that buyers of Summit County CO homes heed the following points:

Get Pre-Approved

The way to make a strong offer on Summit County CO real estate (or Silverthorne or Breckenridge CO real estate, etc.) today is to get “pre-approved.” This happens after all information has been checked and verified. The buyer is actually approved for the loan. The only loose end is the appraisal on the Summit County Colorado real estate. This process takes a few days or weeks, depending on the situation. It’s very powerful and a weapon I recommend all my clients have in their negotiating arsenal.
Sell First, Then Buy

If you have a resort home/investment home to sell, sell it before selecting another one to buy! I haven’t seen a contingent sale work in the last three years, unless it’s with a new home builder who has other resort homes to sell and can afford to put one on a contingency. When selling first, specify the sale “subject to seller finding suitable housing.”

Buying before selling might cost you tens of thousands of dollars. Let’s pretend that we find the perfect property and you love it! You make an offer and ask the seller to reduce the price and wait until you sell your resort home. The seller figures there is risk of passing up another buyer who doesn’t have to sell a home while he waits for you. So, he says, “Okay, but only with a full-price offer! ” Now you have to sell your existing house in a hurry so you take a low offer.

Play the Game of Nines

Before house hunting, make a list of nine things you want in the new place and then a list of the nine things you don’t want. This is called the “Nine of This and None of That” and is used as a scorecard to rate each property that you see. The property with the biggest score wins! This game helps to avoid confusion and keeps things in perspective while comparing dozens of homes.

Keep in mind the difference between “Skin” and “Bones”. The Bones are things that cannot be changed such as the location, view, lot size, noise, school district, and floor plan. The Skin represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the house with good Bones, because the Skin can always be changed to match your tastes.

Do Not Be Pushed into Any Resort House

Your agent can show you a complete list on the Multiple Listing computer. When homes are selling quickly, agents many times advise their clients to make an offer on the spot if they like the property. That is good advice only if you really like the property and you’ve seen enough to compare them.

Stop Calling Ads!

What’s not mentioned in the ad is usually more important than what is. Many resort homes have some drawback that is not mentioned in the ad, maybe traffic noise, power lines, or litigation on the unit.

You need someone looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs and will point out any drawbacks. So whether you decide to work with me or not, pick an agent you feel comfortable with and enlist the services of that agent.

Did you know that many homes are sold prior to any advertising? When an agent hears of a great buy, he’s going to call his client, who he knows will buy from him. So to get the best buy on a property, I always recommend that you pick one agent and stick with him!

Articles © Copyright 2006 by The Walsh Group

Where do the Summit County Locals Eat’
By The Walsh Group

Springtime in the Colorado Rockies is a great time to sample the Epicurean adventures around the Summit County ski resort area. Local residents of Summit County CO homes can point the way to the best places to go for an enjoyable evening while the snows are melting and the rain is pouring down outside.

While checking out the Summit County CO real estate and Colorado resort properties in the neighboring areas of Dillon, Silverthorne, and Frisco, Copper Mountain and Breckenridge, ask the locals to divulge their favorite restaurants and bars. They are the ones who know the secrets about tasty food and beverage as well as culinary bargains near Summit County CO real estate and the Summit County area. Here’s a little of what we’ve learned:

Wine country tasting and sampling is not only in the wine vineyards of California and on the western slopes of Colorado. Tucked away on a picturesque corner on Main Street in Frisco is Samplings. Operating on the “small plate” concept, Samplings offers visitors the opportunity to try many different menu items and to sample its extensive wine list of more than 350 wines. Use the Flight Program to sample three wines that share similar qualities. Carefully selected wines are paired exquisitely with seasonal flavors.

Diners in Breckenridge have the option of a Samplings-type experience at the lounge of its sister location, The Cellars. They also offer fine dining and three-to-five course evening upstairs in the dining room. Don’t worry about dressing up. The atmosphere at these locations isn’t stuffy so your relaxed mountain attire is welcome.

If an evening at home in front of a roaring fire with that special someone is your plan, you’ll find that perfect bottle of wine at several fine wine stores throughout Summit County. Ridge Street Wines and Cheese and Chocolate on Main Street in Breck offers one stop shopping for the flavors that naturally go together…wine, cheese and chocolate. Even budget-conscious folks can find a tasty bottle as Ridge Street Wines has an entire rack of bottles for under $10.

Going one-step further is Foodies in Frisco, with a variety of gourmet food to tempt and delight your discriminating palate. Foodies stocks hard-to-find gourmet items along with organic steaks and high-end olive oils. The establishment offers samples of tasty goodies along with up to 15 different wines. As a bonus, the store offers wine education and dinner discussions with winemakers for all who want to further an epicurean education.

Next door to Foodies in Frisco is the Frisco Wine Merchant that stocks more than 200 wines. Choose anything from Vintage ports and high-end Cognacs to very affordable bottles. Check out the free wine tastings every Wednesday from 5-7 p.m.

Speaking of knowing what the locals know, no one knows this real-estate market better than Craig Walsh and The Walsh Group of RE/MAX Properties of the Summit. With over 14 years experience in this market, and a team of experts to meet your vacation or investment property needs, The Walsh Group is your best bet, whether you are buying or selling.

Articles © Copyright 2006 by The Walsh Group

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