Buying Denver House in Seller’s Market

Tips To Make Your Offer The One That is Accepted:

Buying Denver House in Seller’s Market: According to Realtor.com, Denver has the hottest real estate market in the country. Inventory is low, down 15% from just a year ago. Number of days on the market has fallen 31% in the last year. And median home prices are going up every month.

June was a record month for residential real estate sales in the Denver Metro area with 2.15 billion in home sales.

Unless you have been living under a rock, you’re probably well aware that buying a home in the Denver area can be a challenge in this market. It is a seller’s market! Buyers go out to find the home that meets their needs.  When they finally find that home, their excitement can soon turn to disappointment when they find out that their offer was passed up by a better offer from another buyer.

It’s happening all over the city. My neighbors just moved here from Illinois. They are retired and moved to Denver to be near their family. They told me that they were hoping to purchase a ranch home. However, after being beat out on several homes they put offers on, they ended up buying a 2-story. They told me that they were just glad that they were able to get a home and have their offer excepted…finally.

Tips for Buying Denver House in Seller’s Market

 
As a buyer in this hypermarket, there are several ways to make your offer stand out above others.

1. Hire a good agent! Don’t go shopping on your own. Many people think that they have an advantage shopping on their own due to the fact that the seller doesn’t have to pay the buyer’s agent fee. However a good agent will well make up for that one advantage. When you are buying a seller’s market, you are at a disadvantage and you want someone working for you who knows the market and knows how to best negotiate on your behalf. Another factor, is that an agent may be able to find a home for you through his/her network that may not be released on the market yet. There are homes selling right now that don’t ever hit the MLS, homes you would have never found on your own.
2. Price! It’s probably no surprise that the price you offer to pay for a home is the first thing that will stand out to a seller. Although highest offers are not always the offers excepted, it is definitely the most weighted factor. So, if you find the home you really want, plan to offer above list price if you know there are multiple offers on the table.   The amount to offer above list price is something to consult with your agent about. And you need to be in the position financially to pay this price. And I’m not talking about being able to qualify for this amount or being able to afford the monthly payment. Do you have the cash available to make up the difference between appraisal value and sales price? Which brings us to our next point….
3. Down payment and loan terms.   Having a substantial amount of cash to put towards the purchase makes you look more attractive to sellers.   Should sales price exceed appraisal value, sellers want to know that you will be able to make up this difference in cash. Sellers will also typically favor a conventional loan to an FHA loan.
4. Pre-approved NOT Prequalified. Just this week I had another agent tell me that a pre-qualification letter isn’t worth the paper that it’s written on. Before you shop get pre-approved! Prequalified is not enough! You need to do all you can to show a seller that you are financially qualified to buy their home so get pre-approved before you shop and definitely before you put in an offer.
5. Closing time. Your agent should ask questions of the listing agent prior to writing up an offer in regards to time frames that work out best for the seller. When would the seller ideally like to move out of the house? Maybe they put their house on the market in June but ideally would like to stay until August 15^th. If you are able to, cater to their time frame. Maybe you close July 20^th, but allow them to stay rent-free until August 15^th. This could make your offer more attractive than a higher priced offer that doesn’t offer them the flexibility of moving out on their ideal time frame.
6. Contract terms and Contingencies. Do not expect or ask for the seller to cover any of your closing costs. And consider shortening or eliminating contingencies. What are contingencies: contingencies are those things that allow a buyer to back out of the deal. Typically a buyer has the option to back out of a contact to buy a home based on appraisal, loan and inspection. A seller doesn’t want to choose a buyer only to have that buyer back out of the contract three weeks later. So, shortening the length of time for contingencies or eliminating them all together will certainly make you look like a more attractive buyer.
7. Sell before you buy. Often times buyers need to sell their current home to have the money to buy a new home. And in another market this is totally reasonable, however in this market, sell your home first! If you are involved in a multiple offer situation, the seller will most likely not pick your offer if your offer is contingent on selling your own home first.
8. Personalize it! Send a letter with your offer. Tell the seller who you are. Play to their soft side. Include a picture of your family. It can help!

Looking to Buy a House Today?

If you are ready to buy a home in the Denver metro area, call me today: 720-476-0370. I would love to help you find a home and construct a winning offer.