Real estate rut
This is Amy Vangoey’s first ride on the real estate rodeo. She’s learning the hard way about the arena floor.
Vangoey and her husband, Channing, are both brokers for Prudential Colorado Properties. Real estate is the only job in their house, and business has been slow. Since the most recent high-water mark in 2005, the number of April sales in the valley has dropped by nearly two-thirds. April sales this year were just more than half what they were in 2007.
The slowdown that’s hit the local real estate market has been tough on brokers, especially those like the Vangoeys, who depend on their commissions to pay their own bills.
“We’ve really scaled back,” Amy Vangoey said. “We haven’t traveled this year, and we’re not going out to eat as often.”
And, when it came time to buy new clothes, “Target has a great fashion department,” she said.
Real estate just about everywhere runs in cycles. While the Vail Valley has so far avoided most of the fallout from the nation’s real estate slowdown, it hasn’t been entirely immune. But this is the first time Vangoey’s career has run through a down cycle, and she acknowledged it’s taken her by surprise.
“We didn’t tuck nearly enough away when it was good,” she said.
Some brokers who have ridden out a few down cycles have been a little better prepared for this one.
Laddie Clark of Alpine Resort Real Estate has sold real estate in Eagle County since 1991. Over the years, he’s learned not to depend on his commissions.
“I manage some rental properties, do some property management and have some other business interests,” Clark said. “Commissions are just the icing on the cake.”
To get through the slow times, Cynthia Kruse is a firm believer in business plans and budgets.
Kruse is a broker for the local Re/Max agency. She’s also the president of the Vail Board of Realtors. Like virtually everyone in the business, she looks for the sunny side, but still has a strategy.
She learned the value of budgeting in her first career in corporate sales.
“It tells you what you’re going to need in the next year,” she said.
A business plan to go along with a budget can also help a broker plan ahead on
areas where it’s wise to cut back and where it’s smart to spend more.
Advertising is one of the things a broker doesn’t dare cut, Kruse said, but there are places to cut back.
Cars, for instance. A broker has to project an image, from attitude to clothing to cars. Vangoey now drives an Infiniti ” Nissan’s luxury brand ” and is getting ready to trade. But her next vehicle will probably be a Nissan, she said. She has to save a few payment dollars by driving a less prestigious brand.
Barbara Meese of Beveridge Real Estate in Eagle has cut back, too, mostly on some household expenses. Her home is also on the market. She’d planned to flip the home, but the “for sale” sign has gone out a little earlier than she’d planned.
“It is nerve-wracking,” she said.
While some brokers try to pinch pennies between closing dates, others still hold down other jobs.
Ron Denning got his real estate license and started with the Prudential Gore Range real estate office in Eagle about a year ago. He just closed his first deal earlier this month. Like most agents, Denning is an independent contractor who works under an agency’s umbrella, and is paid only when he sells property.
To get by, Denning has kept his jewelry-making business active from his Eagle home. But even that business has its rough spots right now.
“It’s hard, with gold over $900 an ounce right now,” he said. “It used to be I’d have to spend $500 to make $1,000. Now I have to spend $1,000 to make $500.”
Still, the other jobs in the Denning home keep the bills paid.
Meese has been in the real estate business ” locally, and in the Denver area ” long enough to have seen a few up and down cycles.
The down times always drive some brokers out of the business, she said.
“That’s healthy, too,” she said.
But the ones who survive wind up a little wiser, although they still project the optimism anyone in sales has to have.
“If you’re selling real estate in Colorado, I still believe this is the place to be,” Meese said.
Everyone interviewed for this story sees better times coming.
“My 2008 has already been better than my 2007,” Vangoey said. “I’m representing more buyers now, and that’s been good.”
Meese said she’s confident she’ll have a couple of homes under contract soon. And, she said, she’s been showing one of her listed homes nearly every day, a positive sign.
It might even be getting easier ” but just a little ” to get a mortgage as the worldwide credit crunch seems to be settling out.
“There are loan products out there,” Kruse said. Fannie Mae, the nation’s biggest mortgage backer, this year increased the top amount for a “conforming” mortgage at least until Dec. 31, making it easier for people in this market to buy.
But the days of the “no documentation” loans that led to much of the national housing crackup are probably gone for good.
“I think that’s a positive adjustment,” Kruse said. “It’s really a great time for buyers.”
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