Top Questions Every First-Time Homebuyer in Colorado Should Ask!

Are you a first-time home buyer in Colorado? Are you having some anxiety about the Denver real estate market? Don’t fret!

Regardless of what point you are at in your life, buying a home can be the first step in establishing financial stability and creating wealth for yourself. The value of a home typically increases at least 2 percent each year in “normal” conditions.

But the Denver real estate market has been far from normal. In 2022, Denver Metro homes appreciated on average 11.6 percent. In 2021, homes appreciated an even more astounding 17.2 percent (Megan Aller). That’s an enormous return on investment for home owners.

Homeownership is also a critical piece in being part of your community, and it’s good for your social life and your health. People who own their homes are usually more invested in their neighborhoods and their children perform better in school.

Usaj Realty brokers provide some answers below to a few of the questions Colorado first-time home buyers often have and offer advice on how you can be successful in the home search.

Q: I’m a first-time home buyer and I’m absolutely terrified. I’ve heard some things about the market and it seems so intimidating! What should I expect when trying to buy my first house?

This market can be intimidating. The Denver real estate market is short on inventory and experiencing high demand. Today, we are anticipating we won’t see much inventory until April or May. It’s important to be patient and have all your finances in order. The best thing you can do as a first-time homebuyer is to have all your finances in order. ” I always direct people to a trusted lender first,” says Irene Schiavo, Broker Associate at Usaj Realty “this will give you a good idea of what you can afford and get all your financial questions answered.” If you’re buying with cash, talk to your bank about your top price and how far your money can take you.

Q: Interest rates are high! Is now a good time to buy?

Yes! Getting in when you financially can is always the recommended route. There are many financial benefits to owning a home. Jenny Usaj, Employing Broker, reminds her first-time home buyers, “You can always refinance as soon as the rates come down. We recommend talking to your lender about this and seeing what refinancing would look like for you in the future.”

Q: Our budget is about $600,000 and we are looking at the surrounding Denver area. Will you share with us where we should look and what we can expect in that price range?

The average price for a home in Denver is right around $600,000 so this is a sweet spot in the city and there is a lot of demand. As a result, homes are going very fast. In terms of where to look, we can do an MLS search that shows areas and neighborhoods that have homes in the $600,000 range. We can also look at how much over that price point homes are selling. We might have to back down your price point to accommodate an expected above-listing price offer. There is a lot of data that can help you establish a price range that falls in your budget. Before we start looking at houses, it’s important to spend some time researching how far $600,000 can take you and maybe how much below list price we should be looking to get you under contract.

Q. I love using Zillow because it’s hands-off. Is there a benefit to working with an agent or can I use Zillow for all my research?

Zillow is often a favorite route but it often doesn’t have all the current and correct information. While it can feel like you’re being productive in your home search, you may be pointed in the wrong direction. We highly recommend working with a  real estate agent  and finding someone you trust. Feeling hands-off feels nice because you can go at your own pace, but working with a realtor accomplishes the same goal. Realtors are prepared to work with you on your schedule and on the weekends. They are part of the home-buying process and are a member of your team. There are lots of real estate websites out there but make sure you understand that all the information on those sites may not be up to date.

Q: If I buy a small house now, can I upgrade in three years?

Great question. In this real estate market, it’s important to get in where you can. The home you buy today may not be your dream home but homeownership is so important. Starting the journey at a price point that you’re comfortable with is critical to your ability to build equity and wealth through real estate. Our advice is to get in where you can. If the home isn’t quite big enough and you want to upgrade in a few years, you should be able to. The Denver real estate market is appreciating in different neighborhoods anywhere from 5 to 15 percent. It’s important to know those numbers upfront so you can look at your year-over-year appreciation in any of the neighborhoods you’re considering so you figure out how long you need to own the home before you have enough equity to upgrade. Many times, three years is enough time to turn around and make that next purchase.

Q: What questions should I ask before hiring a real estate broker?

Selecting your agent is a big part of building your real estate team. Finding one who represents your values, will work hard for you, and have knowledge of the neighborhoods you’re looking at are a few of the important questions you’ll want to ask. Some of the questions you might also include are: 

1) How long have they been an agent?

2) Why did they get into the field?

3) What do they love about it?

4) What strategies do they have that will help you find a home? Having a strategy to get you under contract is crucial in this fast-moving market.

Q: Is my realtor more motivated if I increase the price range of my home search?

Realtors are paid by commission so we don’t get paid until you get the home of your dreams. As a result, we are motivated to get what you want in the fastest way possible. This is a very special industry. Buying a home is a lifestyle, it may signal a life change, it builds wealth, and often makes dreams come true. Realtors who have been in the industry for the long haul and have made it their career shouldn’t be motivated by an additional $50,000 or $100,000 more in your price point. Most realtors want to be your partner in your purchase to help you build wealth and make your home-buying dream come true. 

Q: Does it matter what brokerage the agent is with?

Most realtors have internal knowledge that will be key to your success. It includes market knowledge and a strategy to get you under contract that may be independent of the brokerage they represent. That said, realtors need a lot of support. And that support directly impacts their ability to serve you well in your search for a home. Brokerages like Usaj Realty provide marketing support, transaction coordinators, and collaborative market insights that provide tricks and tips for agents to succeed, just to name a few features. So, yes, the brokerages can make a difference. The support the real estate agents are getting from their brokerage is a reflection of how much support and capacity they can provide to you as a homebuyer. It can make a big difference.

Q: What are the fees associated with buying a home?

Once you are under contract, you’ll have to pay for a home inspection to make sure there aren’t any major problems with the home. Also, if you need a loan to purchase a home, you’ll have to have an appraisal of the property. The lender will require a third-party appraisal of the home in order to secure the loan. You’ll also have some recording and title fees associated with the closing. Then, of course, there are commissions for the real estate agents involved in the transaction. In Colorado, most of the time the home seller pays the commissions for both the buyer’s and the seller’s agents. However, sometimes this isn’t the case, and how the commissions are paid should be negotiated upfront before the contract is signed.

Q: Do I really have to waive the inspection in order to have a competitive offer?

“When there are multiple offers on a property, buyers can write in certain language to make their offer stronger. It’s not uncommon for buyers to waive their ability to ask for inspection repairs on a property or limit requests to “health and safety” only. However, that doesn’t mean you cannot have an inspection! I will always recommend you have an inspection prior to buying a house. By waiving your right to “ask” for repairs, your inspection will be for informational purposes only and you can decide at that time if you’d like to move forward with the purchase. This way you can write a competitive offer and still have peace of mind that you’ll be comfortable with your new home!” says Kristina Casinelli, Broker Associate.

Q: What is earnest money? Is there a point that I can’t get it back?

“This is money that is due very shortly after going under contract to give you skin in the game.” says Christina Claxton Paterson, Broker Associate. Earnest money goes towards your down payment at closing, you will get the money back if something happens and the deal falls through, unless it is made non-refundable at the time of signing contracts or important deadlines are missed. Making a large (or a non-refundable) earnest money deposit can be a tactic to show the seller that you are very serious about becoming the new owner and encourage them to choose your offer over other others.

If you are a first-time home buyer in Colorado you can be sure that Usaj Realty will make sure you have a great experience buying your first home. If you want to learn more about buying a home we are happy to meet with you and talk through this process!