Short sales put families back in Sunray Meadows
Speculators initially bought at condominiums, but development is shifting
March 7, 2010
Steamboat Springs — Short sales are proving to be the mechanism that is putting young families into condominiums in place of speculators at Sunray Meadows on Village Drive.
During the overheated real estate run-up of 2007, speculators bought as many as four of the modest condominiums at a time, as the price increased to as high as $485,000 for a 1,060-square-foot two-bedroom unit with a one-car garage.
Now, some of those speculators have become unable to carry the debt and are upside down in their investments and looking for a way out. Short sales are a process initiated when a property owner goes to his or her mortgage lender before falling behind on payments and tells the lender there is trouble on the horizon. Because the foreclosure process is expensive for lenders, they often are willing to accept a buyout price that is less than what they are owed. The property owner loses his or her investment but avoids the damage to his or her credit rating that comes with foreclosure.
"Ken Gold and I have sold five units in Sunray on short sales since late 2009, four of them in 2010," said Realtor Lisa Ruffino, of Prudential Steamboat Realty. "We have two more under contract that have been approved and will be closing very soon."
She said she helped close the sale of a three-bedroom unit March 1 to a couple who had been looking for a larger home for two years and waited six months to close after signing the contract.
"That's unusually long," Ruffino said. "I work a lot with Bank of America, and they've hired 6,000 short-sale agents. Now, I have relationships with bankers who pick up the phone when I call. It didn't use to be like that."
Prices at Sunray have come down anywhere from $85,000 to $200,000. Now, patient buyers who can wait out the long approval process for short sales are acquiring condominiums at Sunray for as low as $240,000 for a 927-square-foot two-bedroom unit. A three-bedroom unit sold for $280,000 last week.
Of the five recent Sunray short sales that Gold and Ruffino made, the two that weren't to young couples or families were to Front Range residents eager to find modest vacation homes they could afford to remodel and keep for their own use, Ruffino said.
Ironically, declining prices in the real estate market have made it doubly hard on speculative buyers. They have put the damper on the construction industry, taking away many of the tenants who rented the speculators' condos, helping them make their payments.
"Before, they were getting top-rate rentals," Ruffino said. "When the rental market went south, they were losing money."
Gold and Ruffino have an inside track on short sales at Sunray — he was the listing broker for the project. She bought two of them, expecting to make one her home, before she got married and moved into a larger place. Ruffino said she is close to selling one at a break-even price and has a long-term tenant in the other.
One of the most encouraging things about the recent short sales at Sunray, Ruffino said, is that although in every case there was a deficiency — the unit sold for less than what was owed on the property — the bank did not exercise its option of requiring the sellers to sign a new promissory note to cover the gap. Instead, they absorbed the loss, paid full 6 percent commission to be split between the Realtors and paid for the closing costs. The banks have even taken care of past-due homeowners' association fees.
That doesn't mean the national banks are giving away money, however. They typically engage two or three Steamboat Realtors, whose names aren't made available to the selling broker, and pay them $50 to $100 to estimate the market value of the distressed property. If the sale contract doesn't reflect a corresponding value, the bank sends it back for a price adjustment.
"In one case, I had to go to a buyer and tell them they'd have to come up with another $4,500," Ruffino said.
Despite the speculation that took place at Sunray, the homeowners association has gained strength in the past two years, Ruffino said, and continues to offer a good value.
The monthly dues include all heat and hot water provided by a central boiler at the project, as well as premium cable television packages at reduced rates.
The HOA even voted to remove hot tubs from the property to reduce unwanted noise and save $30,000 in annual expenses. The tentative plan is to reinvest the savings in a picnic area or a tot lot.
Just a few blocks from Whistler Park and an eight-minute walk from the base of the ski area, Sunray Meadows is gathering momentum as a neighborhood for working families.
— To reach Tom Ross, call 871-4205 or e-mail firstname.lastname@example.org