Everything you need to know about real estate you could learn from my most recent lakefront condo sale. Not really everything, but real estate savant status is reserved for me and possibly dead-eyed-million-dollar-listing-Madison, so for everyone else, this listing and sale at Fontana Shores should be education enough. I’ve written at length of the difficult year the lakefront condo market is experiencing. By year I mean three years, but the only people counting are those who are trying to sell their lakefront condos. The lakefront condo market isn’t feeling well, and it’s suffering from an overall trend away from condominiums and towards single family homes. Times were, a vacation loving buyer would see a condo for $500k with slip and lakeview and ignore the small cottage up the road from the lake that lacked the view, but might have also had a slip. Today, many buyers don’t even look at the lakefront condo and instead fill their mind, appropriately, with all things lake cottage.
Yet, even in this era of condo neglect, there are still deals being made. Chief among the lakefront condo deal makers is me, and I’m proud to say that I continue to lead the lakefront condo market on Geneva in terms of total transaction sides since 1999. That’s eleven years of selling more lakefront condos than any other agent here, so I think I’ve earned my qualifications to speak about this particular segment of the market. The latest lakefront deal was for a penthouse unit at Fontana Shores. I listed this unit for $499k, and sold it on Friday for $456k. No, it wasn’t $456k because the buyer and seller agreed the sequential numbers looked nice on paper, rather it was $456k because the last unit that sold in Fontana Shores closed at $455k. If you’re a seller that thinks buyers don’t know what’s happening in the market, please stop thinking that.
When the Fontana Shores sellers called me over to the unit to give them an idea on price, I didn’t have to beat around the bush with them. The pricing was easy to determine, even though other units in the building are listed at far higher prices than I suggested. The other units have one thing in common- they aren’t selling. The last unit to sell in the building was my listing that I sold last October for $455k, which made the pricing structure easy. I told these nice sellers that the buyer of their unit is going to want to pay what the buyer of the most recent sale paid, and that’s that. The sellers listened, and agreed to list for $499k, which was a price that ultimately caught the attention of a buyer a mere two weeks later and we closed at the aforementioned price of $456k. Why one thousand dollars more than the other unit? The other unit was on the fourth floor, this unit was on the fifth- so the buyer decided the extra eight feet was worth a thousand bucks.
There is much that can be learned from this simple deal on the lakefront of the most glorious lake ever conceived (sorry Lake Columet, you and your asian carp disgust me), and the lessons can be learned by both buyer and sellers, and they can teach us something about the condition of the market as well. Buyers can be counted on today to base their willingness to purchase off of the sellers willingness to negotiate. This has always been true, but never has it been more true than now. Most buyers want to see flexibility from the seller, no matter how attractive the price may appear. Sellers need to be willing to negotiate roughly 10% off their asking prices if they want to engage modern day buyers. Sellers should listen to their brokers, and price their properties in direct correlation to the most recent comparable sales prices. If a nearly identical house just sold a block away for $500k, chances are no one cares that you put in a new stove last week. The buyer will want to pay you the same price, so please prepare yourself for that reality.
Lastly, there is much that can be learned from this deal about the health of our Lake Geneva vacation home market. During the second half of 2008 and all of 2009, buyers didn’t trust comparable sales. If the previous buyer just paid $700k for a similar house in the same association, the current buyer wants to pay $650k, because they surmised that the previous buyer simply overpaid. Brokers were at a loss when this was happening, because if you can’t trust a good comp, you’re assessing value based solely on the price that a buyer plucked from the sky. During this 24 month period, it was difficult to be a seller, buyer, or broker. Fast forward to 2010, and we’re now seeing enough new sales at the established lower levels that buyers have finally decided that previous comps are once again relevant, and they’re willing to offer and ultimately pay prices that are in line with those fresh comparable sales. This might seem like a simple and obvious step when in fact it is the most important step towards a stable housing market. Buyers actions of late are showing that they once again trust the comp-based market, and if the price of your property isn’t in line with that newly established market, chances are the buyer is going to find a property that is.
Congratulations to the newest member of the Lake Geneva vacation home market. Please do let me know when you’re available for me to show you the secret handshake. To the seller, I’m overwhelmingly appreciate that you trusted me to sell your fine property for you.