Along with every other real estate professional in Denver, for years we’ve been saying, “it’s a seller’s market,” “homes are going quickly,” so on and so on. But what does that really mean for a buyer? How do you navigate the current market, let alone the roller coaster of emotions throughout the buying process? Let’s walk through it.
It’s important to understand the current market you’re about to throw yourself into. You’ve probably heard home buying stories from co-workers, family, or friends advising on how difficult it is to purchase a home these days. While there’s certainly truth to their experiences, there also tends to be exaggeration (we all want to tell a good story, right?). The best place to start for an unbiased opinion of the market is with statistics. It may not be one of the most exciting parts of buying a home, but it’s one of the most important. It will help you understand the reality of what’s happening in the market, and more importantly, what’s driving it. You don’t need to spend hours doing research, you just need the 30,000 foot view so that you can begin to formulate accurate expectations for your upcoming journey. Luckily, we’ve made that easy for you. Skip the endless Google searches and read our 2020 real estate recap. Before you know it, you’ll be up to speed with the current market. It will be painless, I promise!
It’s important to have an organized plan before you start your search (yes, even your online search). Once you’ve educated yourself on the market, the next step is to make a game plan. Start putting together your advisory team, which consists of a knowledgeable real estate broker and lending partner. These professionals will help to facilitate your planning in each of their prospective areas. A few things to consider while planning:
- Time frame for purchasing
- When to start the search
- Type of financing that is best for you
- Down payment source and amount
- Type of home (condo, townhome, single family, etc.)
- Neighborhood statistics (zoom in from the 30,000 foot view!)
This list is just a starting point. Everyone’s planning will look somewhat different based on their home buying goals. The great thing about hiring a team? You don’t need to reinvent the wheel. They’ll coach you through the process to make sure you’re making the best possible decision for you and your family.
This is the fun part. Once your plan is complete, it’s time to work your plan. In our current market, time is of the essence for touring homes. Traditional pre-pandemic home touring consisted of clustering several homes and viewing them back-to-back in a short time period. Usually, there are other overlapping groups touring the same home you’re looking at. Today, overlapping showings are a no-no, and bookings to view hot listings in desirable neighborhoods fill up fast. It can occasionally take one or two days for a tour slot to become available (picture anxious buyers hitting refresh over and over again). The moral of the story: When a home catches your eye, schedule a tour with your broker. Whether that’s in-person, via FaceTime, a recorded video, or on Zoom, it doesn’t matter. Just get your eyeballs on it so you have the opportunity to compete.
Submitting an Offer (or two, or three)
Now the planning pays off (hopefully). With Denver’s low inventory, you’ll likely be in competition with other buyers for a home. Emotions get high, and anxiety can creep in. Don’t worry. This is normal. The greatest advice I can give you is to trust your broker regarding the value of the home you’re interested in and listen to their negotiating strategy. Remember that they’re on your team, and together, you’ve already outlined the desired outcome in your planning session. I like to call the plan a “guard rail.” It’s outlined before all the craziness begins, and it’s there to keep a buyer from making an emotionally-based, often poor decision. Don’t let the plan fly out the window when things get stressful!
We are in a deep seller’s market, consisting of multiple offers. There can only be one winner per home, and while hopefully that winner is you, be mentally be prepared to walk away when things go awry. Stick to your plan. Listen to your broker’s advice on a recommended maximum price for the homes you are offering on, and you’ll be fine. Your solace in losing will be knowing that someone else overpaid!
Buying a home can be an emotional roller coaster.The process is filled with hope, anxiety, stress, disappointment, frustration, and eventually joy. To help manage these emotions, set expectations, plan properly, and seek counsel from your real estate broker. These guard rails should soften the blows. Remember that your broker has their head in the game every day, and their years of knowledge can be trusted. Their council, along with your perseverance, will get those keys into your hands in no time.
Admittedly, before venturing into real estate as a profession, selling a home without representation crossed my mind a few times. Now, I frequently take calls about For Sale By Owner (FSBO) listings and inquiries on properties where the buyer only wants to talk to the listing agent because they are representing themselves. Having peeked behind the curtain to see the intricacies of the real estate transaction, I’m glad to have hired a Realtor® to guide my way to the closing table.
Selling Your Home without a Realtor®
When selling your home, the “commission carrot” can cloud your judgement and tempt you to go it alone. A good real estate broker will provide value that far exceeds the fee charged at the closing table. Here are the three main steps in the home selling process where utilizing a professional can most benefit you:
The biggest mistake owners make is setting the listing price incorrectly. They usually base their pricing on the internet, typically by Zillow’s Zestimates. Big mistake. Nearly 25% of Zestimates are off by more than 10% from the sale price. Zillow even states in the fine print that these estimates are a starting point for determining value. Overprice your home, and the phone might not ring after your listing goes live. Underprice it, and you may leave money on the table at closing.
According to the National Association of Realtors® (NAR) 2012 Profile of Home Buyers and Sellers, 66% of all buyers hired and interviewed only one agent. There’s nothing wrong with hiring the first agent you meet, but make sure you ask the right questions and more importantly, that you get the right answers. We’ve compiled a list of questions to ask any potential real estate suitor to help get the conversation started.
Why Are You in Real Estate?
It has been proven time and time again that to be good at what you do you have to love what you do. This is a great conversation starter, and it lets you get to know the agent and their background that led them to their real estate career. If the agent deflects and just wants to ask his or her questions about your price range, number of bedrooms, location, etc., then they probably think they have you in the bag. Business is about relationships, you will be spending a lot of time in person and on the phone with this agent over the next several months. Personality conflicts will add a barrier to effective communication and can make it hard to respect the real estate advice that you receive.
Are You Full-Time or Part-Time?
You don’t hire a part time lawyer, surgeon, dentist, or pilot so why would you hire a part time real estate agent? To be great at a trade you need to be 100% invested in that trade and practice it day in and day out. When was the last time you re-programed your all-in-one TV remote from memory? Chances are if you don’t do it multiple times a week you will have to reference someone for help.
Sometimes the jargon used in real estate seems confusing, and words appear to be interchangeable. When looking for a condo, loft, apartment, or cooperative apartment, this may help clarify for you. What’s the difference?
A condominium is a type of ownership. Often shortened to “condo”, it is a collection of individual residential or commercial units and common areas as well as the land upon which they sit. A condo can be attached to other units or can be a collection of detached units.
Individual ownership within a condo is construed as ownership of only the air space confining the boundaries of the unit. The boundaries of that space are specified by a legal document known as a Declaration which is filed with the local governing authority. These boundaries will typically include the wall surrounding a condo, allowing the unit owner to make some interior modifications without impacting the common areas. Anything outside this boundary is held in undivided joint ownership interest by a corporation established when the condo was created. The corporation holds this property in trust on behalf of the unit owners as a group and does not have ownership itself.