Dear First-Time Homebuyers,
It’s not news that the Denver real estate market is one of the most difficult markets to break into for first-time homebuyers. According to realtor.com, Denver is the 4th hottest market in the country! When properties in the area hit the market, usually within days, if not hours, multiple offers are on the table and emotions high. Here at Red Chair Realty, our team of agents are usually going up against five to fifteen other offers on a property or we are accepting numerous offers for our clients. It is craziness, and we feel it is only going to get more competitive as the summer months approach.
As full-time Realtors with over 30 years of experience, we feel it is important to educate our first-time homebuyers about not only the current real estate market here in Denver, but what to expect before, during, and after you go under contract for a new home.
1- As a buyer, you should never, EVER pay for a realtor. Buyer’s agents are paid by the seller at closing. The seller of the property pays a certain percentage that is usually split evenly between the buying agent and the listing agent on the transaction.
2 – Let your Realtor do the work for you! We cannot stress this enough. Buyers lose buying power when they themselves call the listing agent of the property that they want to see. Do not show your cards; and have your Realtor do all of the scheduling, communicating and negotiating on your behalf. This way you can be properly represented and better positioned to have your offer accepted.
3 – Before you go and tour that potential dream home, get pre-approved by a lender. In a hot market like this, most Realtors if not all won’t even take their clients shopping until they have been pre-approved. It is seen as a license to shop. Also, you will find out how much house you can actually afford.
4 – Be ready to make a quick “yes” or “no” decision. With how the market has been this spring, there is no time to “think on it”. If you take time to “think on it”, chances are that house is already under contract and off the market. Talk to your Realtor about what items and features of a home you are willing to compromise on, that way they will be able to help you make that quick decision when the time comes.
5 – Be prepared to go up against multiple offers. If the home buying process wasn’t emotionally draining enough, now buyers have an added layer of stress of having their offers turned down multiple times on various properties.
The most important thing you can do to prepare a strong offer is to work with your Realtor and Lender together to come up with a creative, balanced offer that you feel will speak to the seller and their current situation. Other than offering over asking price, what are things you feel you can compromise on? For example, offering the seller a “lease back” so that they can stay in the property after closing. If you know the seller is also on the house hunt and has not found a new home yet, offering this option can help take the pressure off of them to get out.
6 – Once your offer is accepted, exhale, and go deposit the earnest money ASAP at the listing agents office! Depositing this check promptly after your offer is accepted shows the selling side you are indeed a legit, serious buyer and easy to work with. It is your “financial promise” to them.
7 – Be prepared for a few out-of-pocket expenses. Most first time homebuyers we have worked with can feel blindsided by the additional expenses they incur after going under contract on a property. As the buyer, you should be prepared to pay for:
– General Inspection with Radon Review ~ $300
– Sewer Line Inspection ~ $135
– Improvement Location Survey Map ~ $25 to $250
*Your Realtor should schedule these inspections for you and has to be present for all of them. Good inspectors will ask you to follow them around the house during the inspection to take notes on certain items. Much of the inspection process is about understanding the home and making sure to note all of the home maintenance items and how the home functions. A good Realtor might help point out areas to watch so that problems do not develop down the road. Many of today’s contracts are written with a home inspection waiver. We do not advise purchasing a home without an independent home inspection with the focus being on health, safety and all major mechanical systems.
8 – Do not be afraid if the inspection report claims there are structural issues. Nine times out of ten, these things can be worked through and fixed. No need to panic. Your Realtor can present an inspection objection to the listing agent which will list out the items that you would like fixed on the property before your closing date. The listing agent will then return an inspection resolution to you that lists out the items the seller agrees to fix or not fix. Usually there will be a seller credit given to the buyer at closing if the seller chooses to not fix the items before the closing date.
9 – Always ask your insurance company for a Loss History Report on the property. This is an important step of the buying process that most realtors don’t know about or skip. Here at Red Chair, we always have our clients get a Loss History Report from their insurance company so that we know if the property has had water damage or mold in the past and when it was fixed. Items such as mold and water damage can make a property uninsurable. You want to know if your property is insurable or not before closing right?
10 – What should you bring to closing? Besides yourself (and maybe a bottle of champagne), make sure to bring your photo ID and the funds for closing in the form of a cashiers check made payable to the title company. Your Lender will walk you through these steps leading up to your closing date to make sure you are prepared.
Every homebuyer we work with here at Red Chair Realty has a uniquely different situation. Right now is a great time for first-time home buyers to build a new chapter in their life and to become part of a new community. We hope this list above is helpful and gives insight to the home buying process that at times can feel like a rollercoaster. Give us a call today if you are beginning your home search or have questions for us!