I’ve said before that the lake access market is the meat and potato portion of our greater Lake Geneva real estate market, but you certainly wouldn’t know it given the light volume of the past two years. The Geneva lake access market, defined as homes that have private access to the water through an association park or pier system, makes up the bulk of our existing market inventory right now, with over 100 such properties available priced from $185k to well over $1MM. Obviously lakefront homes have lake access, but that’s not the type of access we’re talking about here. As a side note, the cheapest lakefront house on Geneva is listed for around $1.35MM right now, which would have been an unheard of entry point just a couple years ago. Back to the lake access market.
The access market hasn’t been particularly active this year, although we did have 12 sales from June 1 through today. There are an additional 4 properties pending sale, which proves there is market movement, even if the movement isn’t going to represent a volume recovery in 2009 as I hoped it would. Over the same summer months in 2008, we have 17 such sales, so we’re still behind last year, and last year wasn’t exactly a barn burner either. So what’s the deal? Well, I’m really flattered that you asked little old me for the answer.
The problem with the overall lake access market, without looking at a property by property breakdown, is pricing. Profound insight, eh? More accurately, it’s the list price. Here’s what’s going on. Sellers are reticent to price their property at prices that “seem” low. Every agent worth their salt (of which there are fewer and fewer by my count) should be informing their sellers that while there are more buyers in this market now, they are still looking for deals. Sellers need to list 10% higher than they want to sell for, and that’s a conservative estimate. Might be more like 15% if sellers really want to have a chance at the bulk of the buyers in this market. So knowing that they’re going to have to negotiate lower, sellers aren’t listing lower. They’re listing high, with prices that look more like 2006 than 2009. There are several exceptions to this new rule right now, but mostly involving properties that are either estate situations (beneficiaries liquidating assets), or properties that have been on the market for a long time and have been forced to reduce in attempt to seduce a buyer. It’s a classic case of reduction seduction. Watch the Tribune steal that phrase for a post (If you read this blog, and read the Sunday Tribune, you’d swear they just read my blog and then re-write on my topics about a month after I initially write them… it’s flattering)
So if prices are too high, should you wait for them to come down? If you’re a buyer, unhappy with the pricing you’re seeing at Lake Geneva, should you “wait the seller out”. No. You should negotiate the snot out of that seller. If their list is too high in your opinion, then offer them a low price that seems fair to you. If you’re out of your mind and want to buy a lakefront home on Geneva for $800k, then you’re wasting your time and the seller obviously won’t play ball. But if you’re looking at a home that’s listed at $800k and think it’d be a deal at $650k, but doubt the seller would take a price that is 20% below his ask, offer it anyway. You might be pleasantly surprised at what the end result is.
There’s pride involved in every home sale, and in every home purchase for that matter. When affluent sellers and affluent buyers clash in our Lake Geneva market, there’s even more pride on the line. That pride is what can stand in the way of an attractive list price, but many times will melt away once negotiating drags on for a couple weeks. If you’re a buyer looking for a lake access property right now, be it a $185k cottage in Glenwood Springs (can you say deal?), or a $800k home in Club Unique, let’s get our game faces on. Let’s meet up, find a property, and then unleash our negotiating prowess upon the seller of your choosing. Just remember that no matter how bloated the asking price, the sales price may be exactly what you’re looking for.