Denver Home Buyer Survival Tips or How to Buy a House in a Hot Sellers’ Market
If you haven’t heard, Denver’s real estate market is red hot! Even though we saw 38% more listings coming on the market in March of this year versus March of 2014, the supply is still out of balance. National Association of Realtors considers a six-month supply of homes to be the market equilibrium. We are far off those numbers in Denver real estate market with current supply of just under a month worth of homes, creating a buyer frenzy and bidding wars reminiscent of "Hunger Games".
Is it really that bad you might ask? According to a recent Denver Post article at least 56% of homes in the Denver areas have sold for over the asking price. Having represented 3 sellers in the month of April, we at Evolve can back that up. We have seen everything from buyers bidding considerably over the asking price, offering to take the property as is, waiving inspection rights, willing to come up with the difference if the home doesn’t appraise, to even putting escalation clauses in the contract, which offer to beat the highest bid by a certain amount.
According to another Denver Post article Colorado home prices rose the fastest in the country in the month of February. All this news is great for the state’s economy and home sellers in Denver, but what a buyer to do you might ask?
Yes, Denver housing market is in frenzy, but if you strategize well, commit to the process, you can still own your dream home in Denver. You might have your heart broken once or twice or five times after loosing the house you wanted, but with some hard work, right tools and determination, you will succeed. Here are just a few tips on making a successful home purchase in the current market conditions.
#1 Hire the right Realtor! You need to have a go-getter on your side, someone who will go out searching actively for you and not just sit and wait for listings to pop up on the MLS (you can do this yourself, see tip #3 about recolorado.com). We had a buyer who needed a 3 bedroom townhome in a specific community, so we at Evolve got addresses of all owners who had 3 bedrooms in that community and sent them fliers asking who would be willing to sell. Realtors can send out e-fliers to fellow Denver Realtors describing your specific parameters, there are many other ways to find listings besides just the MLS. An aggressive and savvy Realtor could be just what you need.
#2 Get prequalified with a trusted lender. A good reputable lender letter will put you ahead of other offers, listing agent and sellers don’t want the deal to fall apart at the loan stage, so preference is given to lenders who are known to be trustworthy.
#3 Use the right tools while doing your home search. Do not rely on Zillow or Trulia, their listings are not updated in real time, “zestimates” could not be any further from the truth and most listings you are looking at are already under contract. The best site to use while looking for home purchase in the Denver area is recolorado.com. It feeds directly from multiple Realtor MLS sites and that is what Realtors use themselves.
#4 Be prepared to compromise. With inventories at all time lows and demand outpacing the supply, you might have to reconsider certain things. No, we are not urging you to settle or buy the house you don’t love, but you need to keep an open mind. A house might be in perfect location and has the right price, but might not have all the bells and whistles you want. Learn to look past the décor and outdated features. A well-staged, nicely updated house will attract a lot more buyers and therefore offers. Nicely appointed homes quite often go for much more than what the cost of upgrading an older, less updated home with the same features would cost. Explore costs of getting those granite counters installed on your own, after the closing. You might be surprised.
#5 Be prepared to act fast. A house that is priced right will most likely sell within 24 hours with multiple offers, as did the last 3 listings Evolve Real Estate had in the South Metro area. If you want the house, there’s no more sleeping on it. Be prepared to be flexible with your schedules. If a house pops up on the market, you need to be available to see it immediately. This reverts back to tip # 1, make sure your agent has plenty of availability or can have an assistant or colleague available for you.
#6 Consider taking the house in as-is condition. I would never recommend my clients to not do an inspection. Definitely hire a good inspector to make sure the house is solid and has no major problems, but do tell the seller (in the offer) that you are willing to take it as-is, as in you won’t ask for any repairs, unless there is something major. After the inspection, if there are major problems, you can still cancel the contract and get your earnest money back; but going in, most sellers would prefer to know that you will not be nitpicking their house apart and that you would only consider major items if they come up. This has given some offers we have seen in the past two months a leg up on competing, higher priced offers.
#7 Offer to sweeten the deal. Have you Realtor contact the listing agent and find out what closing date the seller prefers (do they need to close fast or need time to look for a home themselves), offer to pay difference between appraisal and your offer price up to a certain amount if the house doesn’t appraise. This has been happening more often, with bidding wars driving home prices to new highs that appraisers are having difficulty arriving at those values. Find a way to learn about the sellers’ hot buttons and use them for your advantage.
Yes Denver’s real estate market remains highly competitive, but with the right set of mind, tools and people at your service, you can be on top of the game and get the house of your dreams.