It’s no secret that the Denver real estate market is red hot with no signs of cooling down. This is the ideal condition for anyone in the metro area selling a home, and also a good indication that if you’re looking to buy -- the property is almost guaranteed to appreciate. Before jumping into a fiercely competitive ring, however, there are a few preemptive ways to prepare for the experience so that you realize the best possible outcome. These include understanding the dynamics of a booming marketplace, hiring the right agent, choosing the right lender, knowing where you want to buy, and understanding how real estate professionals get paid.
DENVER AVERAGE SALES PRICE FOR DETACHED SINGLE FAMILY HOMES 2008-PRESENT
PREPARE FOR A BOOMING MARKET
According to the Denver Metro Association of Realtors, between February, 2017 and March, 2018, the average price of a single-family home in Denver experienced an 11.8 percent gain. Due to record-low inventory, many homes priced at $400,000 in early 2017 accrued to $447,200 just 14 months later. This trend has been on the upswing since 2008, and is a telltale sign of a hot seller’s market. It is important to understand that a hot market favors those willing to be flexible on price. This means that those prepared to pay more than the list price and/or pay the difference between the contract price and appraised value are usually the ones who end up winning the contract. This also means that once a house is listed, the offers are going to arrive quickly and in large numbers -- and not all of them will be airtight. Hasty offers indicate, that as a seller, you can expect some of your top potential deals to be backed by shaky financing, flaky offers or poorly written contracts. As a buyer, this means that even though you may not have submitted the highest offer on a property, if you are patient, you may become the best candidate due to the above circumstances. Regardless, a highly active Denver real estate market means you will have plenty of company on either side of a property purchase.
HIRE THE RIGHT AGENT
Regardless of the big numbers getting tossed around these days, this is a people driven business that boils down to the wants, needs and dreams of individual human beings. A real estate broker who does not subscribe to that philosophy may be working in an “assembly line” mindset with a pushy sales-driven approach, where big numbers are superior to customer experience.
Seek out a real estate agent who is going to take the time to sit down with you, look you in the eye and learn about the ideas that are driving your desire to buy a home. An agent willing to do this for you is demonstrating their interest in building trust and serving you in a long term capacity. In the real estate world, personal service is often times the mitigating factor between a good experience and a bad one.
It is important to hire an agent based on proven track record -- a professional who has successfully brokered a high number of deals in the marketplace where you are looking to buy. Someone with such experience will understand the importance of negotiation, and will be skilled enough to serve your bests interests in terms of purchase price, inspection items, appraisal and more. Also, look for someone with a history demonstrating that they possess the contract writing expertise and the ticks-of-the-trade knowledge that get offers accepted rather than rejected.
FIND AN ACCOMMODATING LENDER
This is a competitive market, so it’s your job to shop around for the best option as there are plenty to choose from. In a high demand scenario like the Denver real estate market, service may be secondary to production in the minds of some lending institutions.
There’s a big difference between someone who wants to help you buy a home and someone who is simply trying to “sell” you a loan. This is why it is important to work with a lender who knows the market and is willing to offer expert advice based on how your financial situation can be leveraged towards a purchase. If your initial feeling upon meeting with a lender is that you’re getting the “assembly line” treatment, it’s best to look elsewhere. Buying a home is a major milestone and a situation you could be tied to for many years, so finding a lender who is going to take the time to educate you through every step of the process is ideal.
It is also important to look for a lender who is known for providing superior service beyond the confines of the nine-to-five, Monday through Friday work week. This means working with someone who is willing to answer phone calls and emails after hours during time-sensitive stages of the buying process. You want a lender who can be reached at the time your offer has been submitted so that they can contact the listing agent and verify that YOU "the buyer" have been approved for financing. This can be THE KEY factor in getting your offer accepted. This level of service is not often found with “big bank” companies and is much more inherent to a local mortgage broker who has a preferential relationship with the agent.
RESEARCH THE AREA WHERE YOU WANT TO LIVE
Some Denver neighborhoods are changing quickly. What appears today to be an upwardly mobile stretch of suburban tranquility could have been a troubled area just a few years prior. On the other hand, what was once an affluent neighborhood may, for the time being, appear to be block after block of fixer-uppers. Understanding the history of an area you have your eyes on can offer insight as to where things might be in five or ten years should you ever decide to sell.
If you have children or plan to, check out the schools in the area, the access to freeways and other high volume travel routes as well as parks, shopping centers and entertainment options.
UNDERSTAND HOW COMMISSIONS WORK
It is important to understand the role your money plays in the home buying process and how your real estate broker gets paid. In most real estate transactions, 100% of the commissions are paid by the seller. Simply put, as a buyer, the realtor services are essentially free. That’s not to say, however, a “for sale by owner” or a cut-rate agency listing might require a renegotiation of the buyer’s agency agreement to assure the agent is fairly compensated. (Reputable real estate agents don’t work for minimum wage).
Many agencies assign a transaction fee to the buyer. This practice is typically found among larger firms and can be an annoyance when you see the extra expense added to the final settlement. Be sure to ask the agent you're interviewing if they absorb this fee or pass it along to you as the consumer. Some agents will cover this out of their commission as an extra service to their clients.
303 PROPERTY SPECIALIZES IN RESIDENTIAL AND COMMERCIAL REAL ESTATE THROUGHOUt the DENVER Metro area AND ACROSS THE FRONT RANGE. CONTACT US TO LEARN MORE ABOUT OUR SUPERIOR, PERSONALIZED, ONE-ON-ONE SERVICE.