Three Things Buyers Need to Know to Successfully Buy in Denver
Buying a house can be completely nerve-racking—especially in Denver’s crazy real estate market. You’ve probably heard horror stories about potential buyers offering gold bars and firstborn children to try to win a home.
But never fear, it’s not as hard as you think. Sure it’s a process, but it’s one that can be totally successful with some solid intel and good prep. We’ve distilled the craziness into three crucial steps in our Dwell Denver Buyer Process:
Find an effective agent.
Secure an effective lender.
Get clear on your offer strategy.
It’s simple but not always easy! Let’s break it down.
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Step 1 to Buying a Home in Denver: Find an Effective Agent
Finding an effective agent is a must unless you have your own real estate license. Now here’s some great news: In most cases, buyers don’t have to pay their agent’s commission! This fee is covered in the seller’s costs. Go and get yourself an effective agent whose only job is to protect your interests, get you a great house, and minimize your contract risks.
So, what defines an effective agent? You want someone who is experienced in this market, a good personality fit for you, a full-time agent, and someone who isn’t burned out. Interview at least two agents. This may seem like a pain, but a small investment of your time here will pay off in actual dollars later! If you don’t care about dollars, totally hire your best friend’s sister’s nephew who just got his license. (We’ll be here when that doesn’t work out.)
How to Interview a Real Estate Agent
First, be courteous and let the agent know up-front that you’re shopping for an agent and that this conversation isn’t the first strategy meeting on a done deal. Once that bit of business is out of the way, make sure to ask potential agents about their market experience, how they guide their buyers in winning a bidding war, and if they have any secrets to jumping over the bidding war altogether. (We do…and while we’re not posting them here, we’ll tell you if you call!) Ensure they have a strong history of helping their buyers win bidding wars.
During the interview, you’ll begin to suss out if this agent is a good personality fit. Yes, this matters! You’re going to have to really trust this person’s guidance, and you’ll have loads of money riding on their opinion at times. You’ll also spend a lot of time looking at houses together, so she should understand the kind of person you are and what you like—so you don’t waste time looking at houses you don’t want.
A Quick Word of Caution About Choosing An Agent
If you find an agent who comes across as a “bulldog” and you think they’ll be a good negotiator—but you don’t actually like them—don’t choose them. Let’s talk about why.
If you’ve been reading our blog for a while, you know that listing agents have a huge influence on their sellers’ choice in buyers. If you like your agent, chances are that the listing agent will, too. If you don’t like your agent, neither will the seller’s agent—and you’ll hurt your chances of getting a great deal before you even get started.
Choose an agent who seems likable and confident. Stack the odds in your favor for an overall positive experience and a better chance that your offer will be picked!
Why It Matters if Your Agent is Full-Time
In all honesty, it’s really tough to make ends meet as a real estate agent. Since 100% of an agent’s salary comes from commissions, only the best of the best can successfully do this full-time and still buy gas/pay our bills/feed our dogs. That means many agents have second jobs to make it work.
Here’s the problem with that: This is not a forgiving market.; If your agent can’t leave her desk job to show you a house and prep an offer at a moment’s notice, you may lose out. With 68% of Denver homes going under contract in seven days or less (Land Title March 2018 statistics), having an agent who is able to get you in the door and strategize an offer is 100% critical to your success. Only a full-time agent will be able to focus on you as their only job.
Avoiding Burned-Out Agents
Your interview is the perfect time to get a gut feeling on if potential agent is still excited by their job. It takes a significant amount of energy to win in this market, and you don’t want someone who is already burned out. An agent with five years on the job and the moxy to make it work may be a better fit than one with 20 years on the job who doesn’t have the mental stamina to give you an edge. Being an effective agent takes an incredible amount of energy and commitment, and you deserve that.
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Step 2 to Buying a Home in Denver: Find an Effective Lender
If you’re paying cash, skip this bit. But here’s a pro tip for the other 75% of you buying a home and in need of financing: a great lender can help get your offer accepted and give you a solid edge over buyers who haven’t yet secured financing.
In order to help you win in today’s extreme sellers’ market, your lender should:
Be someone you like and trust so you can ask all of your financial questions. Wondering if you should pay off student loans or put that nest egg towards the house? Your lender should guide you and make you feel like every question is a good question.
Be available at all times—late nights and weekends included—to provide an updated lender letter as needed. These letters of financial qualification are necessary to submit with all serious offers. Your lender will also need to be available to speak to a listing agent on your behalf at 9 pm on a Sunday night if bids are coming in and the competition is ON.
Be local to Denver. Most listing agents will prefer a local lender who knows the market. Much like full-time agents, a listing agent has to be really good to function within this market and stay in business. This level of comfort for the listing agent will work in your favor.
Not be the cheapest option you find on the internet. Again, someone who lives in a different time zone may not be available when you need them to speak to the listing agent on your behalf. Only a lender is qualified to speak to your financial strength; your agent can’t do that part.
A good agent will have recommendations of lenders they’ve successfully worked with, so this should be an easy step!
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Step 3 to Buying a Home in Denver: Get Clear on Your Offer Strategy
Price is one of several factors in creating your winning strategy, but it’s definitely the most important. How much money should you spend? What do you want, and what are you really willing to offer to get it? These questions may take some soul-searching, so you should think about them before you begin your hunt.
A bidding war can provoke unprepared buyers to offer too much, and fear of bidding wars can intimidate other buyers into playing it safer than they should. We want to save you from both of these situations. So how do you determine how much you should spend? Once you contract a lender, they will let you know how much you qualify to borrow. Sometimes buyers don’t want to spend quite as much as they are qualified for, and only you can decide what you are comfortable paying for a house. Talk your financial limits over with your purchase partner, or another trusted source, and your buyer’s agent. Figure out your top number before you go into a bidding war. Living on ramen for the next three years shouldn’t be a side effect of buying your dream home! The best way to determine your top price is to ask yourself, “At what price am I OK if I don’t get it?” Once you’ve set your ceiling, be willing to bid competitively up to that point—and walk away if the cost surpasses your comfort level.
That being said, keep in mind that house prices and interest rates are trending up almost every month. This means that a home you qualify to buy this month may be out of your price range as early as next month. Things move that fast in this market! If you are close to getting the house you dream of and still within sight of your budget, work with your agent on an aggressive bid plan and do not hold back!
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Get Ahead of the Market with Dwell Denver Buyer Strategies
By putting these Dwell Denver buyer strategies into place before you begin your home search, you’ll be ahead of the curve and ready for whatever the market has in store.
If you still have questions, or if you’re ready to shop, we’re here for you! It’s time to make your money work for you by investing in the home you want and the life you dream about.
Ready to buy your dream home? Dwell Denver is ready to help!
