3.5% of Pitkin County’s 17,000 residents work in real estate. That’s about twelve times the national average, according to Andrew Ernemann, Broker with BJ Adams & Company and current President of the Aspen Board of Realtors. Given the abundance of choices, how do buyers and sellers go about finding the right Realtor these days?
In early September, Western Home Journal convened a lively group of Realtors—all women–to learn why they are at the top of their game in a community where one in every 29 people is competing for a share of the market. Over Arnie Palmer’s and hors d’oeuvres on Pacifica’s outside terrace, the conversation was fast and furious, the passion was unrivaled, and the camaraderie was evident as we probed the state of the local market and discovered why boutique firms have an edge in local real estate.
“For me it’s not about the size of the company. It’s about who is at that company and knowing the individual you’re working with,” says Wendy Lucas, Managing Broker for Shane Aspen Real Estate. “The boutique real estate experience is intimate, and the people who seek us out have done their research.”
“We’re women,” says industry veteran Heidi Houston, of Aspen Sales and Rentals. “We nurture our clients. They become part of our family. Their kids are friends with our kids. We’re in it for the duration.”
Kim McKinley, of McKinley Sales, believes that personal dedication is part and parcel of running a successful business. “We are still here because we know what we are doing. The future of my company is based on the personal relationships we develop with people today.”
“I encourage my clients to rent first,” says Wendalin Whitman, of Whitman Fine Properties. “Once they know what they like, they can make a more educated
choice when it comes to purchasing a property.”
I’m in the market for a new home. Why would I hire you?
Whitman: I have a staff that is dedicated to customer service and education. I’ve always encouraged the rental market as an educational tool for my clients so that they know they’ve made the right choice. We start our clients in rental units and if they decide to make a purchase, we find them a condominium or townhome. When they are ready, we find them a single family home. More times than not, however, we also find ourselves in the property management business as our clients discover the realities of owning a vacation home. Houston: Smaller firms can really specialize. If you have developed properties, you know how to talk to people about building costs. If you understand the local planning process, you can walk somebody through buying a lot and building a house. At our company, 30% of our sales come from our rentals. Working with someone over a period of several years in the rental market takes patience, but it gives us a sense of what our clients want and what they like. We aren’t in it for the initial sale. We are in it for the duration.
Lucas: The type of person who goes out on his or her own is brave, independent, smart, and completely dedicated. People are attracted to me because I’m a New Yorker and I have a law degree from NYU. I’ve closed 1,500 deals in 22 years of work. All of us here are dedicated to our business, we are educated, and we are experienced. We read books on real estate, we go to conferences, and we know our market.
McKinley: We are still here because we know what we are doing. A lot of buyers don’t talk with brokers first. They just want to know about the property. Our job is to develop personal relationships with our clients so we know what they want. At my company, we are a cohesive team, and anyone who answers the phone is knowledgeable enough to establish an immediate rapport with a potential client.
Describe the typical buyer of today. How do they differ from the buyer of 2007?
Lucas: In 2007, we saw a lot of investment buyers. In fact, I listed and sold every single property at Willits, which is over 500 residences. And, while that was a community built for permanent residents, we also saw a lot of investment opportunists, lured by the loose lending environment and the 2% per month appreciation that was occurring there. As we found out, that kind of appreciation is simply unsustainable. I’m not seeing that now. My buyers are all cautious and they want the hard facts. They review recent sales comparables and they want to know what their exit strategy is before going in. They want my professional opinion on what the worst-case scenario is for them. McKinley: It used to be that you could show a property and your client would write a check. Now, buyers and lenders are much more careful. They are doing their homework and they want to know the comparables.
Whitman: The big difference I see now is that cash deals are more the norm because mortgages for investment and second homes are so difficult to get.
Houston: That’s precisely where the downfall could occur again. Mortgages are tight and approximately 70% of all sales (across the country) are cash. What does that tell you? Investors and certain types of buyers are able to acquire real estate with ease now, but what happens when they stop?
McKinley: Mortgage companies are more open to working with buyers now. If the mortgage doesn’t fit in the conforming box, many lenders are willing to look at alternative financing.
Lucas: I am able to help every client get a mortgage in about 45 days. I’m even getting 0% loans down valley for primary residences.
We’ve heard that most of the bank-owned inventory is cleared out in Aspen. Is that true, or will we see more of these properties coming on the market in the next six months?
McKinley: Inventory is down, and that trend is continuing. However, we’ll still see foreclosures as part of our market for another five to seven years.
Lucas: Because I am an attorney, I do a lot of short sale work and I don’t see that area slowing down. There are a lot of people who have been able to hold on to their properties until now, when, for whatever reason, they are being foreclosed on. On the other side, the banks are certainly getting better at it. They are now able to slowly release their inventory, not dump it. And, they aren’t selling it at deep discounts. They understand this market better than they ever have, and they are negotiating with astute buyers.
Houston: Properties have come down in price. That “dumping” that we saw early on was due to the fact that the short sales and foreclosures were completely over-priced. Today, although the sellers would like to see prices going up, things have leveled out to a lower price per square foot and banks are able to sell these properties for a more reasonable market value.
McKinley: Banks need to be very cognizant of their credit ratings too. They can’t afford to carry a lot of bad inventory.
Whitman: Refinancing investment properties is extremely difficult right now. I predict that we will see more auctions and foreclosures at the higher end of the market.
Houston: Mortgages were higher than auction prices. We’ve seen some sellers whose egos were bigger than their sales. Had they simply sold, they could have walked away with more money.
Whitman: The market here was hot, but when it changed, it changed so quickly. I’m not sure it was just an ego thing. The Madoff investment scandal and 9/11 were cataclysmic events that devastated a good part of the market. In Aspen, we are finally seeing some recovery from those events.
What are the big investment opportunities in Aspen right now?
McKinley: A few years ago, we couldn’t give townhomes away. Now we are seeing more than a year of townhome inventory on the market.
Lucas: We are seeing bidding wars on properties. I submitted an offer for an Aspen townhome that was on the market for a week. We got into a bidding war with a buyer who stepped in at the last minute and offered $100,000 over the asking price!
Whitman: The downtown core is now selling at $2,500 per square foot. That’s a huge transition and indicator of its appeal.
Houston: So many buildings in downtown Aspen have done an exterior upgrade within the last two years. It’s amazing how much per square foot those prices went up after those changes were made.
What’s going on in Snowmasss Village?
McKinley: That’s a tough market because there are still a lot of aging properties that are competing against the new product that’s coming on the market. Projects like the Viceroy have created a competitive disadvantage for the old properties. It’s ski in, ski out, and it’s brand new.
Houston: The other side of that argument however, is that there continues to be a whole group of people who don’t mind redoing properties. Snowmass Village is both a family market and a winter market.
The numbers of families looking for a home that is priced under $1.5 million in the Aspen School District is astounding! Snowmass Village still has those properties and that is its biggest draw at the moment.
McKinley: Snowmass Village is quieter and it offers a different lifestyle. Some people truly want that product, which is only found in Snowmass Village.
Describe some of the trends that have an effect on the current real estate market.
Whitman: Right now, we’re seeing extremely high prices in The Preserve because it’s a flat mile to downtown. Red Mountain is still highly coveted, but Starwood suddenly has available properties for sale. I have clients who refuse to look at property outside the roundabout because of the traffic issues. The core is the place to be in 2013.
Houston: There’s hardly any raw land left in the upper valley. We are going to see the return of redevelopment opportunities and a more steady use of TDR’s.
Lucas: In the mid-valley, it’s all about Whole Foods. That was a game-changer and it has really changed the face of Basalt.
McKinley: There’s a bigger vision out there, and it’s about lifestyle and convenience. That vision will drive the pace of real estate throughout the Aspen Valley.