Tips For Buying in a Seller’s Market
Today, a typical buyer in the Denver Metro area who is looking for a home in the $150,000 to $400,000 range will have to compete with multiple offers. This can be an incredibly frustrating experience, especially when a buyer loses out on a house they loved while prices continue to rise.
Nobody wants to overpay on a home, but gone are the days when you could find an inexpensive fixer-upper that’s been sitting on the market. Back in January of 2010 there were 4,578 active listings in the city of Denver between $150,000 and $400,000. This January there were only 1,353. And sadly, this isn’t expected to change anytime soon. Denver was named the sixth fastest growing city in 2015 with over 4,000 people moving to Denver each month.
With rents rising at a rate of 13%, buying a home is still the best option so here are some tips to beat out the other buyers to purchase a home in Denver.
1. Prepare to Buy
- Meet with a local lender to get a pre-approval letter.
- When a listing agent receives several offers on a home they will look for a pre-approval or pre-qualified letter along with the offer. They will also call the lender to find out how strong of a buyer you are. It will pay off if you’ve met with a local lender and begun this process. Offers without lender letters are considered not as strong. Listing agents will favor local lenders they can easily communicate with over those lenders who may be out of state, or a pre-approval letter that was generated by a website.
- Learn the market.
- On average, homes in Denver are selling at 99%-100% of list price. Have your realtor make appointments for you to see a variety of different homes in your price range so that you get a realistic idea of what is available for the price you want to pay. This can be a rude awakening for many buyers but it’s best to learn what you can get for your money before you try to put an offer in on your dream home.
2. The Search
- Don’t wait until the weekend.
- If your Realtor has set up a search for you and in your inbox is a listing for a property that you think could be perfect, go and see it ASAP! With such a small amount of inventory houses are frequently going under contract within hours of being listed. If you see something you like, you’ve got to make a move.
- Be flexible with what you’ll accept.
- There are many things you can change about a home but location isn’t one of them. If the location is ideal but the bathroom has the ugliest toilet you’ve ever seen, take into account that a toilet can be replaced. It can be hard to look past cosmetic imperfections or a messy house, but if you can you may find a great house where no one else is looking.
3. The Offer
- It’s okay to pay more for something you love.
- It is not uncommon for offers to come in $15,000 or more over the list price. With home values in Denver growing at an average of 8.4% a year, you’ll make up the extra cash as equity in no time. If you’ll be heartbroken if the house goes to another buyer for a certain price over yours, offer that price instead.
- Don’t ask for favors.
- You don’t want to ask for the seller to pay your closing costs when they’re just looking at the bottom line. Do what you can to make your offer the most competitive by altering what you ask for to suit the seller’s needs, whether that’s a few extra days after closing to take possession or an agreement to split or pay for closing costs.
- Tug on the emotions.
- Like it or not we have sentimental connections to our homes and sellers will often choose a buyer that they feel a connection too over one with a higher price. I include an introductory letter with every offer I submit. These letters are designed to introduce the buyers to the sellers in a way that they can relate too. Take note of personal items in the home during the showing, you may share a hobby or family tradition that will make a seller want to choose you over another.
