Aspen home buyers spend millions in cash
August 29, 2006
Aspen’s real estate may sell for astronomical prices, but the big deals don’t necessarily translate into mega-mortgages.In fact, multimillion-dollar homes are more likely to sell for cash, according to some local industry observers.”It’s staggering,” said Charlie Bantis, senior vice president at Vectra Bank in Aspen.The oft-repeated industry estimate is that 60 percent of the real estate sales in Pitkin County don’t involve a loan, according to Bantis. “I have no reason to doubt it,” he added.But a tally of July transactions by Land Title Guarantee Co. in Aspen indicates 73 percent of the 108 recorded transactions for the month – or 68 percent – did involve loans.It’s generally buyers of local deed-restricted employee housing and others on the lower end of the resort’s real estate spectrum, though, who appear to be seeking conventional home loans.Wells Fargo Home Mortgage, the lender that handled the bulk of the loans in July, generally provides mortgages for Aspen residential transactions ranging from employee housing up to home sales of about $3 million, according to Jody Cooper, home mortgage consultant at Wells Fargo in Aspen.Big-dollar transactions may not have a loan attached to the deed, but that doesn’t mean there was no borrowing of some sort, Cooper added.”A lot of transactions look like cash, but they’re really not,” she said.That’s true, according to local real estate broker Rich Wagar. Wealthy clients sometimes have a line of credit with their bank of choice and, in effect, arrange to borrow money for a short period, though no traditional mortgage is involved. “Ninety-five percent of my deals do not have a financing contingency,” Wagar said. That compares to roughly 10 percent when Wager was selling homes in 1970, he said.Wager said he recently helped broker the purchase of a $520,000 condo at the Aspen Business Center that involved a loan, but has seen a $15 million deal close with a personal check for the full amount.”It’s just a drop in the bucket, cashwise – they can afford to write the check,” he said. “It’s hard to put it in perspective. It’s a little like you or me buying a sweater. You don’t take out a loan to buy a sweater.”Ed Foran, a broker with Mason & Morse Real Estate, said he, too, sees all-cash deals, though he offered no guess as to what percentage of residential transactions overall take place sans financing.”It’s completely anecdotal, but I do think you see a higher percentage of all-cash sales in Aspen than, say, Basalt,” he said. “Yeah, there’s definitely a lot of money in Aspen.”Buyers who can plunk down the cash for a multimillion-dollar purchase have an advantage in the resort’s hot real estate market, Wagar added. If there’s no financing, a deal can’t fall apart on a financing contingency. “It buys favor in the seller’s eyes,” he said.If the cash purchases are putting a crimp on the lending business – “lots and lots of mortgage lenders fighting over a few loans,” as one banker put it – Cooper says she hasn’t felt it.”Everybody is hopping busy,” she said. “I would say most lenders you talk to in this town are busy.”Wells Fargo, for one, arranges financing for real estate deals up and down the Roaring Fork Valley, and the market is booming, Cooper noted.But Wagar said he hears lenders lamenting the big buys for cash.”They complain that I only send them the small business, but it’s because the big deals don’t get loans,” he said.Janet Urquhart’s e-mail address is firstname.lastname@example.org.