Money talks, cash shouts
Buyers who can pay up front are noticed
By Tom Ross (Contact)
Sunday, October 5, 2008
Steamboat Springs — Given the slow pace of real estate sales in the Steamboat Springs market this fall, it feels premature to label cash buyers a trend — but something is going on out there.
“The last two years, sellers didn’t really care a whole lot about cash offers,” Coleman Cook of Colorado Group Realty said. “Today, with all the struggles in the financial markets, cash speaks pretty loudly. Cash buyers are in a very good position right now.”
Cook was looking forward to a closing on a piece of undeveloped land Oct. 3.
He noticed the listing by Colorado Group colleague Kris McGee and called it to the attention of his clients. They were able to negotiate an almost 10 percent reduction from the asking price on a desirable piece of property.
Pam Vanatta, broker owner at Prudential Steamboat Realty, is seeing the same emerging trend.
“Cash is king right now,” Vanatta said. “Many of the buyers right now are investors and have cash. They think they can get good deals, and they can.”
Vanatta was one of the Realtors involved in a cash transaction on a luxury home that closed for nearly $2.595 million in Old Town during the week of Sept. 22 to 28. The asking price was $2.975, which translates into a 12.7 percent reduction in price.
Not all of the cash buyers looking for good deals this season are realistic in their offers, Vanatta said.
Cook said the power of cash in the market is the ability to close a sale in two weeks instead of 30 to 40 days, during which the seller lives in uncertainty.
“In this market, there is no guarantee that after 30 days we’ll get a loan commitment,” he said.
Some of the prospective buyers are financially astute and see a chance to put money that has been pulled out of the stock market to work. The prospect for returns of 15 to 20 percent throughout the next five years is appealing right now, Vanatta said.
“Most of the people are really sophisticated buyers and sellers who understand the market is what it is,” Vanatta said. “There are also sellers who have to sell, and that’s what changes the market.”
Eliese Pivarnik, of Colorado Group, agreed that cash offers tend to get the attention of sellers in a slow market.
“Cash definitely makes somebody much more likely to negotiate the price of an offer, she said.
Pivarnik was in the midst of negotiations on behalf of a cash client, but said it was premature to discuss the transaction.
Her colleague, Jon Wade, said he is working with four cash buyers this month, and he is not convinced that cash is buying real estate here for below-market prices.
“If there’s a premium price built in, you might be getting a reduction,” he said.
One of Wade’s cash buyers has put a home in the Sanctuary under contract.
“This is a builder/developer in the Midwest. This is extremely smart money,” Wade said. “They’re also down-to-earth Steamboat people. If you walked by them on the street, you wouldn’t know it.”
Wade believes the same market drivers that were in place during Steamboat’s unprecedented run-up remain in place.
He observed that Intrawest owns Steamboat Ski Area, many people would love to move to Steamboat, the mountain and downtown commercial districts are improving, and the valley is running out of land.
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