Home shopping in today’s extremely competitive real estate market, such as Denver, can dampen the excitement that usually comes with searching for a new home. With the challenges of increased housing cost, low inventory and bidding wars, it’s somewhat customary to lose out on your first few deals before you finally hit home, pun intended.
So where do you start? Sometimes just jumping in head first and hoping for the best is a good tactic, but for a situation as emotional and arduous as the current housing market can be, it would serve you well to be prepared. Read further for essential information and direction to assist you on this adventurous journey.
1. Move Quickly.
Colorado’s population growth has helped build one of the strongest sellers’ markets in the country, and this is especially evident in the Greater Denver area. While supply and demand can certainly vary by neighborhood and price point, it almost never pays to drag your heels when you find a home you love. Remember that the home-buying process typically provides time and multiple opportunities to back out of a contract if you feel compelled, but you’ll never get that chance if the home goes under contract with another buyer because you took too long to submit an offer.
2. Know your Seller.
The old law of “know your customer” works the other way in real estate: Know your seller — as well as you can. This is difficult to do as an individual, especially since many listing agents are tight-lipped about an owner’s true reasons for selling. But a well-connected buyer’s agent can often clue you in about changes in the neighborhood or other area like changing family situations, financial struggles, relocation, or general desires to upsize/downsize. These factors can help frame your offer in terms that are most likely to resonate with that seller, whether it’s sale price, closing date, cash vs. financing, or a guarantee of appraisal deficiency (offering a certain level of cash to cover any variance between the sale price and the appraisal value).
3. Secure Financing Now.
In many scenarios where a seller receives multiple offers, the price will be weighed against the perceived security/legitimacy of the financing. Cash is typically king, but if that’s not an option for you, it’s still possible to strengthen your offer by demonstrating a lower level of risk. At a minimum, include a pre-approval letter with your offer. When possible, also have your institution’s loan officer reach out to the listing broker immediately. This will show that the involved parties will be proactive in the deal and could give the seller the added confidence necessary to take your offer over one that’s similar (or even slightly lower).
4. Be Flexible.
Whether due to bidding wars, timing, or other factors that are frequently outside of your control, be prepared to lose a few deals before ultimately going under contract. Understanding this will help you make prudent decisions when formulating or increasing an offer. Just like getting caught up in the excitement of a live auction, convincing yourself that any home is “perfect” can easily lead you to offer an amount or terms that you may regret later.
Often, the inventory in certain neighborhoods ends up being more expensive than you hoped/expected, and those prices may be continually climbing. An experienced real estate agent can help navigate these challenges, but can also suggest alternate neighborhoods that have similar benefits with a lower price tag. Staying open-minded will provide more options and increase the likelihood of finding the most house for your money.
5. Befriend an Experienced Realtor.
This may sound self-serving or even obvious, but many buyers make the mistake of waiting for attractive homes to come across Zillow, on a weekend drive through the neighborhood, or through word-of-mouth. By the time these opportunities appear, those with the best value, best condition and/or best locations often have pending offers. This puts you at the back of the line and unlikely to secure any deal at all, let alone a good one.
Remember, too, that not all real estate agents offer the same value. To maximize your likelihood of getting advance notice on upcoming listings (especially “pocket listings” that are never officially listed on the open market), work with an agent who has a proven track record of buying and selling in the area you’re interested in.
Brought to you by Creation Chamber and Sondra Lockett-Cameron, Marketing Coordinator for TJC Real Estate and Management Services and the Distinctive Team.
Your Neighborhood Realtors® Since 2005