Budgeting for a new home may require you to access a down payment assistance program. There are several options that require repayment while others offer grants that you do not have to pay back.
Denver Buyers Up Their Game To Be Last Bidder Standing In Real Estate Deals
Denver's tight housing market has morphed into a version of "The Hunger Games," with buyers scrounging for whatever weapons they can find to remain the last bidder standing. "Everything is flying off the shelf," said Chad Ochsner, a broker with Re/Max Alliance in Arvada. "We are used to a market where the buyer has a house to sell. It is now a market where a seller does not have a house to buy."
The National Association of Realtors considers a six-month supply of homes available for sale a "balanced" market and the national average is at about 4.6 months.
Metro Denver's supply, by contrast, is now under a month. And for homes under $400,000, it can be measured in days.
"Denver is an extreme case," said Danielle Hale, director of housing statistics with the National Association of Realtors in Washington, D.C.
How extreme? About half of homes getting listed sell within seven days, said Heather Heuer, managing broker with PorchLight Real Estate Group in Denver.
"If a property is on a market for three weekends in this market at any price point under $400,000, then it is overpriced," she said.
A balanced market would call for 7,332 detached homes available for sale in the $200,000-$399,000 price range in the metro Denver area, PorchLight estimates.
But at the end of February, there were only 723 available in a seven-county area that includes Elbert County but excludes Boulder County.
In the under-$199,000 market for attached homes, primarily condos and townhomes, metro Denver had 181 listings for sale in February versus the 2,652 that a "balanced" market would dictate.
By some estimates, as many as a fifth of metro Denver home sales may be happening outside the multiple listing service, REColorado, as buyers and their agents hunt down prospective sellers before they list.
Of those that do list, a new sales approach, which looks more like an auction, is becoming the norm, especially for the most affordable homes.
"Sellers are creating a time window to accept and evaluate offers, and sellers aren't always basing their choices on what was the highest price," said Eric Thompson, president of Windermere Real Estate Services in Colorado, which has offices in Fort Collins and the Denver Tech Center.
Homes expected to move quickly will typically list on Thursday with buyers getting to tour on Friday and Saturday. After offers are collected, listing agents present them to sellers and help cull them, with winners often announced on Monday.
In spring 2013 — the last time mortgage rates dipped below 4 percent and buyers went into a frenzy — the local housing market was still recovering. Presenting the first and best offer often won the day.
With 30-year mortgages averaging about 3.78 percent today, the newer game still requires speed, but a buyer must outsmart and outlast 10, 15 or 20 or more contenders.
That typically starts by bidding above the list price, assuming a home is reasonably priced to begin with. In a normal market, a seller gets the listing price or better about 5 to 10 percent of the time, said Thompson. In metro Denver, they are now getting it 56 percent of the time.
Seller agents have learned that the highest-priced offer isn't always the strongest and that the heated competition can trigger buyer's remorse and broken contracts.
Sellers look for the offer most likely to end up in a closing and accept backup offers to avoid a second round of bidding. Some agents take it another step, asking the runners-up to match or beat the highest-priced offer, which is allowed under current rules.
Full-price cash offers still typically move to the front of the pack. Next in line are those who have prequalified for a mortgage and have the cash on hand to cover any shortfall between what they offer and the appraisal.
Listing agents say that they look closely at a buyer's source of financing — bank, mortgage lender or broker. Within that, they weigh the reputation of the lender, downgrading those known for stringing out the approval process or stranding buyers at the closing table.
"Reputation does precede you in this market, especially if the lender has been a jerk in the past," said Amanda DiVito Parle, a real estate agent with Re/Max Alliance in Arvada.
Conventional loans rank above FHA and VA financing, and buyers using down-payment assistance programs have the slimmest chances in competitive situations, agents said.
To tip the odds in their favor, some buyers write "love letters" or send videos pleading their case. Others bake cookies or send flowers. But agents give those tactics mixed reviews, and some don't present the offerings to clients.
For some sellers, the pleas risk creating unnecessary emotional anguish and can even backfire by coming across as creepy and desperate, DiVito Parle said. One example includes prospective buyers who purchase flowers to leave behind before they even tour a home.
The new approach is more subjective, which can open the door to allegations of bias. And while agents said fair housing law violations haven't come up, it probably is only a matter of time.
"We have cautioned our agents to be careful about crossing that gray area into protected classes," Ochsner said.
Would a 65-year old Latino widow have a case if her technically superior offer is rejected because the seller was swayed by a video from a white family with cute children?
Given how tight the market is, one way that buyers can get the upper hand is by allowing sellers to rent their former homes for a few months until they find a replacement.
In fast-moving markets, sellers usually downgrade buyers who make a purchase contingent on unloading their current home. Now some favor such clauses, if only to buy themselves more time in their house hunt.
Buyers also can improve an offer's chances by waiving their right to demand sellers repair problems found on inspection, a common practice in a buyer's market.
Still, many contracts continue to blow up after an inspection and Thompson said Windermere now encourages its sellers to pay for their own inspections on major systems, which can help buyers get more comfortable with making on-the-spot decisions.
"The second they sign the contract, their power goes away," Thompson said of sellers. "They are at mercy of a buyer performing."
Two years ago, agents said higher home prices would restore balance to the market by bringing out more sellers. Prices did rise substantially, but the inventory of homes for sale remains tighter than ever.
As of 2:54 p.m. Tuesday, there were 4,145 active listings in an 11-county area surrounding Denver, down from 4,175 five hours earlier, said Anthony Rael of the Denver Metro Association of Realtors.
Rael said 2,607 sales have closed this month, and 4,102 have gone under contract.
Of the active listings, only 1,212 were priced under $400,000, the part of the market in highest demand among buyers. Most are existing homes offered for sale.
The volume of listings normally doubles in April versus January in metro Denver. But buyers this year have been out in force since mid-January after a sharp drop in mortgage rates.
Buyers entering the arena in coming weeks need to realize they will drop into hand-to-hand combat with battle-scarred competitors who are frustrated and still hungry for a home.
Denver Colorado Realtor -Michael Steffen
Michael is a motivated realtor specializing with investors and new home buyers located in the following areas; Denver, ArvadaAuroraBennettByersCastle PinesCastle RockCentennialCherry Hills VillageColumbine ValleyDeer TrailDenverElbertEnglewoodFranktownGreenwood VillageHighlands RanchLarkspurLittletonLone TreeParkerSedaliaSheridanStrasburgWatkins, Wheat Ridge, Lakewood, Castle Rock, Thornton, Westminster, Evergreen, Golden. Michael Steffen uses advanced internet marketing to insure your property gets maximum exposure and holds a high value of ethics in his work to ensure the ideal scenario for everyone!
My name is Michael Ross Steffen. I’m an Exit Realty Cherry Creek Agent in the Denver metro area and Team Leader For Generation Property Group! We specialize in advanced Internet marketing, buying, s....