According to an August 2016 report from Realtor.com, Denver still has a hot real estate market!
In fact, Denver comes in at number three on the list behind first place, Vallejo, CA and second place, Dallas, TX.
Shopping for a home in a sellers market can be a shock to homebuyers. The excitement of purchasing a new home can be met with frustration when buyers find the home they want and then find out that there are multiple offers. This becomes a bigger issue the lower the budget of the homebuyer. Affordable housing is scarce in Denver and the competition for affordable homes is intense.
So, how do you increase your odds in this sellers market?
1 | Hire a good agent
The number one thing you need to do is hire a good agent. How do you know if an agent is good? Ask questions. Ask what their action plan is for finding you a home. Ask what strategies they use when writing offers. Any good agent should be able to rattle off multiple strategies for writing a winning offer. Plus understanding what some of these strategies are will help you know what to expect when it’s time to write the offer and you can think about what you are willing to do.
2 | Price
The very first thing that will catch a seller’s eye is the price that you offer for their home. Although the highest offer is not always the best offer, a great offer price definitely stands out! In the case of multiple offers, homes typically sell for above list price, sometimes much higher than list price. So what’s the right price to offer? Well, first you want to have your Realtor look at sold comps in the neighborhood to get a good idea of the value of the property. Keep in mind that the house needs to appraise at purchase price if you are taking out a loan on the property unless you plan to make up the difference in cash.
3 | Down payment and loan terms
Having a substantial down payment typically makes you look more attractive to sellers. Extra cash also let’s the sellers know that if there is a deficiency between purchase price and appraisal that you have the money to make up the difference. Also, certain loan types are usually more attractive to sellers. For example, sellers would typically rather work with a buyer who is using a conventional loan than an FHA loan.
4 | Get preapproved not just prequalified
Sellers expect to receive a preapproval letter or proof of funds with your offer. It is not enough to be prequalified, so be sure to get a complete preapproval before you start shopping.
5 | Be flexible about closing or possession date
Before submitting your offer, find out when the sellers would like to ideally move out. Your Realtor can call the listing agent to inquire about this. The seller may need to purchase a new home and need some time to shop. If this is the case, and you give them that time and flexibility, this will make your offer more attractive, maybe even more attractive than a higher offer.
6 | Contract terms and contingencies
If you are competing for a house, don’t expect to ask too much of the seller. For example, in a buyer’s market, it is not uncommon to ask a seller to contribute to a buyer’s closing costs. In a seller’s market, you typically cannot expect to make such requests. And consider shortening or eliminating contingencies. Contingencies are those things that allow a buyer to back out of a deal. An example is the inspection objection. It is common in a competitive market for a buyer to agree to purchase a property “as is” and agree not to request any repairs from a seller.
7 | Sell before you buy
If you have a home to sell, sell it before you purchase a new home. No seller wants to choose an offer that is contingent on the sale of another property if they have the choice of another offer, which doesn’t contain such a contingency.
8 | Personalize it
Send a letter with your offer. Tell the seller who you are. Tell them why their home is perfect for you. Play on their soft side. It really can make a difference. I have had a listing agent tell me that my buyer’s letter made her seller pick our offer.
If you are buying a home in the Denver area, and need an experienced buyer’s agent, call Courtney Murphy at 720-476-0370 and visit www.MileHighHomesAndLand.com to start your home search today!