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Tips for Denver Buyers and Sellers

Tips for Denver Buyers and Sellers


Tips for buying a home in this Real Estate Market

The Denver Metro Real Estate Market is as fast paced and competitive as it has ever been during the spring and summer buying season. As many of you know firsthand trying to buy in this market know there are just not enough homes to meet the ever growing supply of buyers.  Since the recession in 2008 average home prices and rents are up 50% according to the Denver Business Journal. This is due largely in part to the imbalance in supply and demand and the record low interest rates.

Most of the inventory shortage has been caused by the rapidly growing population and the lag in the ability of developers to bring new projects online fast enough. The other issue with the current supply coming on the market is the starting price point. Most new home build project start around the $350,000.00 mark and that is before you add any of the upgrades or finishes.

According the Denver Business Journal Colorado remains to be one of the fastest growing states in the country and even with the addition of approximately 500,000 new residents last year the unemployment rate remains the lowest in the nation at around 2.3%. The issue everyone is talking about is affordable housing for many of the lower wage earners and service jobs. Most first time home buyers tend to fall into the $300,000 and below price range. There are fewer and fewer homes in this price range and many first time home buyers are compromising the single family home and looking at townhomes and condos in order to stay in the areas they desire. The few single family homes that do come on the market in this price range usually see multiple offers over asking price, and they are only on the market a couple days.

Those of you who are already home owners are seeing high levels of appreciation year after year and may be sitting on a good deal of equity. So why aren’t more people taking advantage of this market and selling their homes? The biggest reason I hear from sellers is the issue of finding a replacement home in this market. Sellers want to time things so they are not without a home during the often fast paced process. Another reason seller’s continue to stay put are the low interest rates they purchased at and the relatively low payment they have because of that. One final reason many home owners are choosing to hang on to their homes is the ability to rent their home instead of selling. This allows them to often collect rent and cash flow in this market where rents are at an all-time high and vacancy is low.

So what is a good strategy to navigate this competitive market?

For those of you are in the process of buying or thinking about buying, there are few things you can do to help be successful in your home search:

  1. Make sure you are working with a good lender.

One of the most important pieces to having success in your home search is working with a reputable and available lender. In a market this competitive you want a lender who writes you a strong lender letter and one who has actually checked your information. You also want a lender who will call the listing agent and vouch for your ability to buy the home you are placing an offer on. You want a lender who is familiar with the Denver Metro Real Estate Market. Most importantly you want a lender who is available, this means taking your calls or emails on weekends.

  1. Make sure you are working with a good real estate agent.

The second most important choice you can make is the real estate agent you choose to work with. You will be spending a good deal of time looking at homes with this person so it helps if you get along. You want an agent that knows the market and can offer tips on how to write a competitive offer. Along with the lender you also want an agent who is available. In this market homes move quickly and you have to act fast in order make an offer.

  1. Be ready to write a competitive offer

As I have mentioned homes move quickly in the market and you need to be ready to make a decision on the home. This means knowing what your max price range is, what you are willing to bring to the table, and what you are willing to give up. For example many offers are $10,000 to $25,000 over asking price, buyers are willing to bring extra funds to the table to cover the difference if the home doesn’t appraise, buyers are making their earnest money non-refundable, they are waiving their inspection, and they are agreeing to post occupancy arrangements so sellers can stay in the home after closing in order find replacement homes. This is the reality of this market and as a buyer you need to be prepared to consider some if not all of these strategies to get a home.

  1. Be ready to compromise.

I have told many first time buyers this over the years, that in finding your home you need to be ready to compromise. If you are a first time home buyer often it is more important to get into a home and start putting your money into your own property and equity then it is to hold out for the “perfect home.” It is helpful before you start looking to make a list of the things you are not willing to compromise on and the things you are willing to compromise on. This will help your agent narrow down areas and types of properties to focus on. Also remember your first home does not have to be your forever home.

  1. Look for homes during the fall and winter months

Many buyers like to wait until the spring and summer to shop for homes, and this is a huge mistake in my opinion. I have had great success getting buyers under contract in the fall and winter months.  These off season months have huge advantages for buyers because they are often a lot less competitive.  Most buyers with children don’t want to move during the school year and many people don’t want to move during the holiday season, this means a lot less buyers to compete with. This is a season to take advantage of if you have the ability to do so.

While there are many strategies in this market these points are good things to keep in mind and of course if you are thinking of buying I am always happy to grab a coffee and talk about the process.

How you can be very successful in this Market

For those of you who are sitting on some equity in your homes and are thinking about selling here are some good strategies for you in this market:

  1. Plan ahead for your replacement property

As I mentioned earlier the biggest reason people are not selling in this market is the task of finding a replacement property. The best thing to do is have a plan. Most properties if priced right go under contract in four to five days and closing takes around 30 days. This means having a plan in place to either ask for a post occupancy agreement from the buyers, renting a home, or staying with family during the time between buying and selling. Most buyers in this market are happy to do a post occupancy agreement with very little to no rental charge, while you are looking for your replacement home. Most conventional loans allow for 60 days. This is a great solution for many sellers who need some additional time to find and close on their new home.

  1. Price your home right

This may be a very competitive market but it is still very important to price your home at what the comparable properties can support. Homes that are overpriced do still sit on the market. The first weekend is so important for your listing and if you price your home to high and then need to lower the price you will usually end up making less money than if you had priced it right in the first place.  If you are wondering what the comparable properties indicate for pricing your home please feel free to reach out to me and I am happy to pull some comps for you.

  1. Prep your home to sell

Again this is a competitive market so homes that don’t show well still sell, but if you want the highest price for your home it is still very helpful to spruce it up for showings. The less perceived work the buyer sees in your home the more comfortable they are to offer you a high price for your home or compete with other offers. Making small repairs you have been putting off, having appliances serviced, cleaning, and decluttering can still make a huge difference in how many offers you receive and the price you end up getting.

  1. Know your timing

Another thing to think about is when to list your home. Spring is the typical time most sellers want to list their homes, but there can be advantages to listing before spring, like a lack of competing properties on the market. February for example saw the lowest month of inventory on record in the Denver Metro Real Estate Market, meaning that if you are the only home on the market in your neighborhood your home should move fast. Now this is not to say that spring and summer are not an ideal times to list too, as this is when most buyers enter the market, so homes tend to get multiple offers for well over the list price. Sometimes timing isn’t as much in your control and that is ok too, the good news is that in this market it is really a sellers’ market all year round.

This market continues to be a strong seller’s market so this is a great time to trade up to that bigger property, sell that difficult investment property, or even downsize into something more manageable. So don’t be afraid to take advantage of this market if you are thinking about selling. There are ways to navigate the challenges. If you are thinking about selling I am happy to meet and go over your options and give you an idea of what you can list your home for.

The good news for both buyers and sellers is that Denver continues to be a great place to own a home. More and more companies are taking notice of all that Denver has to offer, one huge factor is the highly educated work force that is already in place. As more people move to areas they want to live instead of moving to where the jobs are, companies are starting to move to the people. Denver continues to grow and this means that home prices will continue to rise for the foreseeable future. This is not a bubble so if you are holding out thinking that it will pop and you will have a chance to buy property at a low again you are going to miss out and get priced out of this market. Interest rates will most likely increase some over the coming years and builders will start to make some dent in the demand, but even this will only help to cool the market off enough that we won’t have such high home price increase and we should see some leveling off. The secret is out and people are taking notice of our great state and the quality of life it offers, this is a great place to have a house and to call home.