Steamboat Springs Ken Gold and Lisa Ruffino, of ReMax Steamboat, have seen the market come full circle at Sunray Meadows, where they have six condominiums available at short sale on behalf of distressed buyers.
Asking prices at the Village Drive development include $269,000 for a two-bedroom condo up to $329,900 for a three-bedroom, two-bathroom condo with a two-car garage.
Those asking prices are higher than the original sale prices recorded almost six years ago but well under the peak of 2007, when the modest condos at Sunray topped $400,000. Values now are closer to where they were in 2004 and 2005.
It's a problem for some and opportunity for others, Gold and Ruffino observed. Sunray Meadows is an attractive and well-cared-for project close to Steamboat Ski Area.
Short sales are a strategy most commonly used by property owners who realize in advance that they can't sustain their mortgage payments and turn to their lenders to reach an agreement to sell the property for less than the amount of the note on the property. The lending institution saves the cost and administrative hassles of going through a foreclosure, and the owners, though they lose their investment, have the potential to see their credit restored years sooner than it would be in a foreclosure.
Ruffino and Gold agreed that the typical short sale owner in Sunray is someone who never meant to hold the condo for the long haul.
"They never intended to move in or have a long-term lease," she said.
Ruffino said this week that she and Gold accounted for about 80 percent of the original developer sales on behalf of Wintergreen Homes.
The project, about three-quarters of a mile from the ski area's gondola, got its start in 2003. Wintergreen, which had successfully developed the Villas at Walton Creek and Quail Run projects just to the west of Whistler Road, experimented with a modular project in the first building at Sunray.
The first units that were delivered by truck were not as complete as the contracts and government approvals had called for. The result was a lengthy construction stoppage of more than a year. After the delay, the company switched to stick-built construction for most of the 136 units in the 16-building project.
The developers also made certain that the original modular units were brought up to the same quality, she added.
Significantly, the 18-month delay in construction allowed
the project to incubate and values to increase as the Steamboat market heated up.
"We started marketing in 2003, but the project wasn't finished until 2008," Ruffino said. "We closed the first and second buildings in February and March 2005, and closed the third and fourth buildings in May and June of 2006."
One buyer in the second phase ended up having two closings in a single day, the first to purchase, the second to sell a Sunray unit, and cleared $50,000.
Ruffino, who had put down a $5,000 deposit in the fourth building, got caught up in the delay, profited handsomely from it and got married in the bargain.
She closed on the condo for $225,000 in the early summer of 2006, planning to live in it, but got married and purchased a house with her new husband. Ruffino rented the top-floor Sunray unit for one year, put it on the market and closed on a sale at $445,000 in September 2007.
When Intrawest purchased Steamboat Ski Area in March 2006, prices really took off, Gold said. Buyers not just at Sunray, but across the board in the Steamboat market, saw appreciation of 35 to 40 percent in one year - giving a false sense of how investments here would perform.
"The market had been fueled from 2000 on by ninja loans," Gold said. "Super-low interest rates, no down payment and no-doc loans were so alluring people had the : sense of, 'I can buy it and sell it at a profit after a few years.'"
When the bubble burst and adjustable-rate mortgages reset from 4 or 5 percent to 8, 9 and 10 percent, Gold said, the change coincided with a softening of the rental market that some owners were depending on to help make their mortgage payments.
The readjustment of prices at Sunray has been difficult for some owners to accept, Gold said.
"That 30 percent is gone. Prices are down 20 to 30 percent and that's a bitter pill to swallow" for owners, he added.
Short sales, long buys
Gold said purchasing a condominium through a short sale is a long, sometimes difficult process. It can be rewarding for those with patience, but he urges prospective buyers to weigh the extra hassle against the asking price of market rate condos that also are for sale in Sunray.
It takes a long time just to turn a bona fide offer into a contract, Gold said, and often, the waiting period ends with a rejection from the bank.
"It's at least 90 days before there's a contract," Gold said.
A substantial part of the delay can be attributed to the nationwide backlog of pending short sales.
Sellers "are just a number" to national banks, Ruffino confirmed.
Ruffino said banks ask listing Realtors in a short sale to justify a current market value for the property and typically are willing to accept slightly less, but not a lot less, than that amount.
Ruffino cuts through a good deal of the red tape by engaging a short sale facilitator based in Denver, who receives a commission on top of the real estate commission. It's well worth it, she said, to work with someone who deals with lending institutions daily, has closed hundreds of short sales and knows the right balance between staying on top of a purchase offer and pestering the bankers until they are irritated.
Still, short sales can be consummated.
Gold and Ruffino put two under contract Aug. 3 and have another pending. They're also accepting backup offers.
"A lot of buyers are (viewing) short sales as a windfall," Gold said. "But there's no guarantee a bank will accept a (low) offer."
- To reach Tom Ross, call 871-4205 or e-mail firstname.lastname@example.org