How To Buy Your Dream Home, Even When the Market’s Stacked Against You.
7 SECRETS to Making Your Offer Irresistible to Sellers
Most home buyers start their search just certain they’ll have no trouble finding The One: the perfect home in their ideal neighborhood and OMG! It’s even in our price range!
Aaaaand most buyers quickly discover that’s not the way it works… not in Denver, anyway.
Even in an economic downturn, sellers tend to have the upper hand around here. Quite frankly, that puts buyers like you at risk of settling for a home you don’t really love—and paying way, way too much for it.
We’re not going to let that happen to you. When you follow these seven tips, you’ll be better positioned to get a home you’re over the moon for—at a price you won’t regret.
1. Make a super-savvy offer sellers can’t refuse.
Dollars might be the most important part of your offer on a house, but they’re not the only part. You just might finagle a dream contract by including one or more of the following:
Escalation Clause
Maybe it’s because we’re a little (read: extremely) competitive, but we cannot stand it when one of our clients gets outbid on their dream home. One way to ixnay that possibility is to offer an Escalation Clause.
Here’s how it works: You make an offer on a home, but you let the seller know that if a competitive offer comes in, you’ll increase yours to beat it by a certain dollar amount—up to a set maximum.
With an Escalation Clause, the only way you’ll lose out on a house is if someone else is willing to pay too much for it. (And if that happens, we’ll do everything we can to find you another great place. Promise.)
Appraisal Gap Guarantee
From time to time, a home’s appraised value will come in lower than the agreed-upon purchase price. Since banks typically won’t lend more than 100% of appraised value, this can cause some seriously tense conversations.
For example, let’s say everyone agrees to a purchase price of $475K, but the appraised value of the home only comes in at $465K. Who’s responsible for the $10K gap? Does the seller have to come down? Do you have to pay more? Or do you just, you know, lose the house?
No, no and no—if you’ve offered an Appraisal Gap Guarantee. In a nutshell, you let the seller know that if the appraisal comes back lower than your purchase price, you’ll cover the difference in cash (or a portion of it). That helps them feel more confident about your offer—and more likely to accept it.
Pro-tip: Combining an Escalation Clause with an Appraisal Gap Guarantee is a powerful one-two punch!
Limited Inspection
In some situations, it makes sense to sweeten your offer by agreeing to let the seller off the hook when it comes to inspections.
Don’t misunderstand: You can (and should) still have inspections done, so you know what’s up with the home. But when sellers don’t have to worry about being nickled and dimed for repairs, they tend to be more willing to negotiate on purchase price.
Obviously, this is a tricky move; it means any (or all) problems with your new home are yours to solve. A smart real estate agent can help you determine if it makes sense to limit inspections.
Seller Rent-Back Agreement
When the market’s hot, sellers often start getting offers on their home long before their new place is ready for them. Offering a solution to that logistical nightmare via a Rent-Back Agreement will make your offer irresistible.
Long story short: You close on schedule, but you allow the sellers to stay in their—now your—home until an agreed-upon date for an agreed-upon rent amount.
Pro-tip: Be sure to determine who’s responsible for insurance and include a security deposit in your rental contract so you’re covered if anything gets damaged.
2. Work with an experienced real estate agent who has good relationships with other agents.
Just like in any profession, some real estate agents are… well, they’re just not great. Either they write killer contracts but they’re total jerks, or they’re as sweet as a Voodoo doughnut but haven’t the foggiest idea how to negotiate a home purchase.
What you need is a solid both/and option: a real estate professional who’s both liked and respected for the way they approach their work.
At Dwell Denver, we’ve helped folks buy and sell more than 320 homes over the past 15 years. Our fellow agents often choose our offers because they know us, like us and trust that we’ll deliver a successful—and dare we say fun—experience.
3. Learn about the market.
We’ve yet to meet a buyer who doesn’t know what they want. And also? We’ve yet to meet a buyer who didn’t change their mind (at least a little) when they learned more about the Denver market.
Listen, it’s absolutely OK that you don’t know everything yet. Unless you’re a real estate professional, there’s simply no way for you to know what you don’t know. That’s a comforting thought, isn’t it?
No worries, though: That’s what we’re here for! We’ll make sure you have all the market knowledge you need to make a smart decision with confidence. We’ll take you out and show you several homes in different neighborhoods…with different levels of finish… at different price-points. We show the bad and the meh, so you know the good when you see it.
4. Understand the three-legged stool of your new home.
As you’re dreaming about your new place, keep in mind the three factors that determine what properties are available to you: price, location and condition.
Now, here’s the tough truth: It’s not always possible to find a home that meets your expectations in all three areas. So before you get too far along in your search, rank those three factors in priority order. Where are you willing to give a little (or even a lot)?
This is an important exercise, because when you right-size your expectations, you’re less likely to feel discouraged and frustrated along the way.
Pro-tip: If you’re not sure what you can reasonably expect, see #3 and #6. (And call us. We’re happy to help!)
5. Put yourself in the seller’s shoes.
Understanding a seller’s mindset can make it easier to negotiate a home purchase. So, here are two important considerations:
Sellers typically receive several offers, which means they’re facing a tough decision.
Sellers tend to overvalue what they have because they’re both sentimentally and financially attached to it. (You’ll get to do the same one day!)
Keeping these two things in mind will help you develop empathy for the seller, which naturally leads to a better relationship with their agent and a better overall experience.
6. Have your financing in order before you start looking.
The financial part of a home purchase may seem like rocket science—but it’s actually not all that complex. Like most things in life, the toughest part is getting started.
So today, before you look at even one more listing, contact your lender and find out what you’re eligible to borrow. If you don’t have a lender you love, contact us for a referral. Not all lenders are created equally, and we can help you find the best one!
Knowing what you can afford will make your buyer journey more enjoyable in two ways:
1. You won’t be tempted to look at homes out of your financial reach.
2. You won’t unnecessarily limit yourself to lower-budget, disappointing homes.
Also, be sure to consider your up-front costs: inspections, appraisals, loan fees, down payment requirements, moving expenses and so on.
7. Play the long game.
Buying a home isn’t something you want to do on a whim. Yeah, yeah: That sounds obvious, but it’s all too easy to get swept up in the drama of it all and make a massive, expensive mistake. So, picture yourself 5-10 years from now: Will the home you’re considering today meet your needs then?
Will you need more bedrooms for more kiddos?
Are you really going to want all those stairs to deal with?
What about all that landscaping? It’s gorgeous, but how will you feel about keeping up with it when you’re a decade older?
Also, think about the home you’re in now. Do you have to sell it to finance your move? Or can you hold on to it as a rental to start building your investment portfolio?
The key is to make real estate decisions that work now and set you up for success in the future.
Buying a Home is a Big Deal
The Denver real estate market is intensely competitive, which leaves most buyers feeling stressed out and overwhelmed. We know you want to be 100000% certain about your real estate decisions, which means you need an agent you can trust to help you navigate the process. At Dwell Denver, we create customized buyer plans so you’ll feel confident and in control every step of the way.
Get started by booking your complimentary discovery meeting today.
