Realtor Cam Boyd is cautioning property owners to think carefully before putting their homes on the market this spring. But if they do go forward with sale plans, he has an anecdote about supply and demand to share from his college years.
"There are still people selling and buying right now," Boyd told his audience at the Steamboat Grand Resort Hotel on Tuesday. "If you don't have to sell a property right now, I probably wouldn't try to do that."
With more than 2,000 listings on the Steamboat market this winter, Realtors such as Boyd, an owner/broker at Prudential Steamboat Realty, constantly are fielding questions from property owners about the condition of the market.
"People are asking, 'What can I do to try to get my property sold?'" Boyd told an audience of about 60 people. Even after seeing dollar volume in the Steamboat market decline from a record $1.5 billion in 2007 to $725 million in 2008, Boyd's sense of humor is intact.
As a college student, Boyd told his audience, he detected an unfulfilled need for cold beers in his dormitory. He invested in a large refrigerator and stocked it with cases of Hamm's beer, which he purchased, all those years ago, for $6 bucks a case.
His dorm mates were prone to sudden thirst, demand was high and he was able to sell Hamm's for $1 a can. At least he was able to get that price until a couple of other guys started underselling him and the absorption rate declined until he had to sell the beer for 50 cents a can.
Changing demand, high inventory and declining prices in Steamboat's real estate market are not entirely unlike his college retailing experience.
Real estate markets are like teeter-totters, Boyd said. Declining demand and increased inventory push prices down. Increasing demand and declining inventory have the opposite effect.
Boyd was speaking at a seminar entitled "Selling in Today's Market" along with Prudential colleagues Colleen De Jong and Cindy MacGray, and Kathryn Pedersen, vice president of mortgage lending at Yampa Valley Bank.
Pedersen said despite the challenges in the credit markets today, housing lenders are eager to make loans for people with high credit ratings, and a single-point difference in credit rating can translate into a quarter of a point on interest rates.
"There's a lot of competition for strong homebuyers," Pedersen said.
De Jong told her audience that in today's buyer's market, it's more critical than ever for sellers to study the comparable market analysis prepared by their listing broker to understand where to price their property.
That analysis will take into account similar properties that have sold or sales that are pending.
Buyers who choose to list their property at prices above fair market risk fewer showings and missing the critical first few weeks that a property is on the market, she said.
"You're going to need to price it right from the start," De Jong said. "But be open to changing your mindset. Sales are at about 93 percent of asking price and not necessarily original asking price. You may have to be prepared to revise your price after one, three, six and 12 months."
And sellers should be prepared to revise their asking price downward in increments of at least 5 percent, De Jong said.
"Small incremental adjustments don't really make a difference," she said. "You really have to make a significant adjustment."
Past the peak
Accepting that the peak of the current Steamboat market cycle has passed can be difficult for sellers who haven't gotten over their perceptions of what their home was worth in 2007, De Jong said.
Research shows that activity on new listings peaks after two weeks and drops off markedly after four weeks on the market, she explained. Among the more than 2,000 properties of all types currently listed on the Steamboat Springs Multiple Listing Service, 200 reflected a price reduction in the past 30 days, De Jong said. During that time, 21 properties went under contract.
De Jong said Prudential's office has taken heart from the fact it had 300 showings in January compared to 250 the year before. But she tempered that optimism by pointing out it could be a case of fewer buyers looking at more properties in their chosen category of property.
The 300 showings translated into five contracts written, she added. Boyd said sellers need to understand the mindset of buyers, who are fully aware that they have an advantage in the negotiations. As an example, he described a savvy buyer who might make multiple offers on similar properties, then compare counter offers in order to determine which was the most motivated.
In spite of the analytical buyers who are in the market today, De Jong advised sellers to counter all offers.
"Yes, buyers are often fishing to see what your bottom is," she said. "I encourage sellers to counter all offers within 24 to 28 hours. Pam Vanatta taught me that the first offer you get is often your best offer. The main thing is, don't get angry. Get angry at the people who didn't make an offer."
MacGray said home sellers need to invest the effort to keep their house ready to show at all times and be sensitive to the fact that most buyers form an impression very quickly.
"Within eight seconds, buyers decide if they like a home or not," MacGray said.
And don't assume that they won't snoop in your drawers and even the refrigerator.
Getting a signed contract marks only the halfway point in a sale, MacGray said, and there are 20 more steps to be taken before closing. Sellers who are willing to respond to the buyers' needs are most likely to be successful.
"Keep the ball in play," MacGray urged. "If they need 90 days to close, ask why. If they ask for a carpet allowance, think carefully before saying, 'No.' Offer solutions to the buyers' problems."