Slow Down Seller

There are times, like this week, where I fear my upbeat posts will lead to some market confusion. That’s not to say that I think I can sway the market with verbose commentary, but it is to say that I understand the importance of reflecting actual market sentiment in this blog. I mean column. While I’m fine with sensationalizing the lake (it’s been known to cure Scarlet Fever by placing a drop of Geneva Lake squarely on the left shoulder of the afflicted), I never want to sensationalize the market activity at Lake Geneva. There is an undeniable wave of momentum surrounding Lake Geneva real estate right now, and it’s my charge in life to tell you about that obvious condition. That said, it’s also my job to tell you why the momentum is there, and what it means for pricing both now and for the remainder of 2010.

If you look at the pending sales surrounding Geneva Lake right now, the price ranges that are experiencing activity are quite divergent. Property priced under $380k is moving nicely at the moment, as is property in the upper reaches of our lakefront market. The rest of the market is largely flat. The lakefront condo market remains slow, as list prices teeter at levels that appear more reminiscent of 2006 than 2010. My new listing at Fontana Shores ($499k) has gone under contract after only a week on the market, and this sale is owed to our proper list price. The last three bedroom sale at Fontana Shores was a unit I sold last October for $455k. In working with the seller, we looked at that sale, matched our list price to reflect that hard reality, and sold the unit in less than a week. In this sale there is a lesson for the market and for sellers everywhere. Just because a market is reflecting increased buyer activity it doesn’t mean those buyers are willing to overpay.

Sellers might have read my columns over the past few weeks and felt a jolt of optimism as I report to you the sales that might easily portray a market that is on a hot streak. It’s easy for sellers to get ahead of themselves and view a spurt of buyer activity as a market rebound. It’s easy to view increased momentum and assume the party is on and we’re all going to be rich and buyers are going to show up with stars in their eyes and briefcases full of cash. It might be easy to think that way, but it’s not rational. Not only is it not rational, increased seller confidence would be a monumental mistake that could potentially kill any nascent recovery.

Here’s the thing to remember. Even though buyer activity is on the rebound, for now, that motivation is fickle and can evaporate literally overnight. The buyers that are active in the market have discovered some previously shrouded motivation, but they’re not willing to pay prices that are even remotely out of line with the value that current comparable sales suggest. As buyers finally scratch that Lake Geneva vacation home itch that has been festering for years, or a lifetime, they’ll arrive at Lake Geneva with preset spending limits and an inordinate amount of knowledge as to what the market is doing at the moment, and what they should be paying. I’d like to think they’ll glean some of that knowledge from this site, but even if they don’t, they’re generally not going to get all caught up in the magic of deep blue water and white sails to the point where they’ll overpay. Sure they’ll be enamored with the lake, and why wouldn’t they be?

Sellers, do your best to refrain from optimism for now. Buyers are active, but they know what they want to pay, and chances are it isn’t your list price.