Denver is one of the most competitive housing markets in the country. The latest statistics coming from the Denver Metro Association of Realtors do not paint a very rosy picture for home buyers these days. In fact, it can be downright discouraging and an environment encouraging of burnout.
- Inventory at record low levels
- Home prices near all-time highs
- Multiple offer situations
- Record time for homes going under contract
It’s not easy to stay optimistic with such conditions in play.
But, here’s some good news for people hoping to buy a home this year and why you should stay the course. You can look at the glass half-empty or half-full, and below you’ll find some reasons to be positive and embrace the process.
There is no question that we have been living in a sellers’ market for quite some time now. The average home price in Denver has been inching up (or sometimes lurching) for well over five years. Inventory has struggled to meet demand and new homes have been slow to come on board.
However, there are steps you can take to improve your chances of landing a home that makes you happy and fits your lifestyle and budget. Sometimes, just a few tweaks in the process will make the difference between success and disappointment. Even though you may have missed out on opportunities, there are always new properties coming on the market that may be better suited for you. There is no one “perfect” home; keep an open mind and trust the process.
Below you’ll find 8 tried-and-true applications to get under contract.
#1: Set Expectations Right Away
Being able to stay positive comes down to the expectations you have from the get-go. Knowing the market data before you launch into the process can help you with expectations of timelines, tactics, and probabilities. Your Usaj Realty broker will help walk you through your exact home criteria and set you up for success as you begin your home buying journey. They will be able to tell you how quickly homes in your criteria are selling and if they are selling for above the asking price. Getting a clear picture from your lender on what you can afford is also a huge first step when beginning the home buying process. Usaj Realty’s Kira Fleischer reminds people, “Have a clear idea of what you want and start the loan pre-approval process as soon as possible. This gives you the advantage of being able to act fast when the right property appears on the market.”
#2: Focus on What You Can Control | 7 Day Rule
Jenny Usaj, employing broker for Usaj Realty, urges homebuyers to be open to the idea of looking at homes that did not sell the first weekend after listing. When searching for a home in a red-hot market like Denver, going after the “just listed” properties can be fraught with disappointment. Yes, it’s exciting to want to be at the forefront of a potential bid but the competition can be daunting, especially if the home is near or outside your budget. Instead, focus on houses or condos that have been on the market for seven days or more. By taking this approach, you may have better luck in submitting an offer and having it accepted. After a week, the seller may be more amenable to reducing the price and compromising on contingencies and inclusions as well.
#3: Set MLS Alerts for “Back on the Market” Properties
That house you had your eye on that was under contract is now suddenly back on the market. Or, a house you weren’t even dialed into because it was “pending,” is now up for grabs. How will you learn that these homes are available again? Make sure your broker has you set up on alerts for when homes go “back on the market.” In these situations, the seller is most likely even more motivated to get a deal done and negotiate appropriately.
#4: Set MLS Alerts for Price Reductions
Just like “back on the market” properties, sellers who have agreed to price reductions are much more motivated to consider offers and agree to compromises. As we head into the spring season, people get anxious to move on and start anew. Tori Bradley of Usaj Realty had recent success with this tactic: “On a recent deal, we waited and found a house that was on the market for over a week. Then the seller reduced the price and we sent in a full price offer that was immediately accepted, which takes so much stress out of the process.”
#5: Consider an “Attached” Residence – Condo or Townhome
If you are looking for a deal and want to be able to have room to negotiate, maybe a condo or townhome would be a better fit for you at this time. The months of inventory in Denver for attached vs. detached homes are potentially tale of two markets, depending upon your budget. For example, attached homes priced between $500,000-$749,000 have .50 months of inventory; detached homes have 0.27 months. (DMAR). While on paper, it may not seem significant, it does allow a bit more wiggle room for negotiation from a home buyer’s perspective.
Furthermore, the median price for a condo is $400,000 compared to $595,000 for a detached home. For first-time home buyers, this is significant. Especially when you just starting out, a condo can make much more sense due to the pricing, lack of required maintenance, and social opportunities available in multifamily housing. Right now in the 80202 zip code (downtown Denver), you can find some great places to buy.
#6: Submit Backup Offers
So you were outbid on your last offer? Just because you think it’s over doesn’t mean it’s over. Go ahead and place a backup offer in case the deal falls through. Even though mortgage rates are at an all-time low, lenders have tightened the rules on loan underwriting. Higher credit scores, consistent employment history (and income), and a solid down payment have become increasingly important and required. As a result, many of the “under contracts” fall out of contract once it’s discovered the applicant doesn’t qualify for a loan. Having a backup offer in place can make you “next in line” and get you closer to homeownership.
#7: Work with a Realtor With Strong Communication Skills
Kristin Boritzke, broker at Usaj Realty, recommends having the expectation from the forefront that the going may be challenging, and to focus on patience and persistence to eventually get into a great home. “As a realtor, I work hard to stay persistent for my buyers and am always in constant communication with them as well as the listing agents which helps to ease nerves and keeps us all on the same page. It can be extremely discouraging to lose out on what may feel like your dream home time and time again in certain price ranges in the Denver market, but I believe everything happens for a reason and that there will always be another home.”
#8: Think About Buying a House That Includes an ADU or Separate Living Area
Purchasing a more expensive residence that includes an accessory dwelling unit (ADU) or separate living space will enable you to rent out part of your home to cover the additional expense. An ADU can take many forms including a living space above a garage, a separate stand-alone cottage, or even an attached space that may or may not be connected to the main house. Additionally, you can establish a basement or lower level living area as an area to be rented, either short-term or long-term.
“Depending on the space you have available for rent, you could earn a considerable amount of money each month to help pay part of your mortgage or even all of it!” said Andrea Henderson, Usaj Realty broker who turned her basement into an Airbnb short term rental. “Consider it a house hack!”
“The finished downstairs of our home is finished with two bedrooms and is the perfect space to share. We wanted to offer a private experience so we hired a contractor to come to build a wall to separate the upstairs from the downstairs. This was the start of our Airbnb rental.”
#9: Reevaluating Your Criteria
Maybe you’ve had your heart set on a home in the city of Denver? But what about the suburbs and communities just outside the city limits? Often if you cast your net in a wider area, there lie more opportunities. For example, Wheat Ridge, Edgewater, Aurora, and the other suburbs that border Denver often offer less expensive properties. Furthermore, you may want to reconsider your size requirements and think about purchasing a smaller home that could be added on or remodeled to fit your needs.