Currently, there is a significant shortage of inventory in the U.S. real estate market. This scarcity of properties available for sale has had a cascading effect, pushing up property prices and further putting prospective homebuyers under strain. Adding to this inflamed scenario is rising interest rates, further intensifying the urgency to secure mortgages before they spiral out of control.
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However, do not let this apparently bleak scenario of higher mortgage rates limiting your purchasing power put you down. If you are struggling to buy homes in Denver, there are several strategies that you can use to navigate this fiercely competitive real estate market to your advantage.
It is not only generous offers that quickly capture the attention of buyers when they search for Denver homes. There are several other tactics like the five given below that you can deploy to get ahead of competing buyers. With limited inventory, you need all the skills at your command to get your dream home.
Our team can assist you in evaluating the advantages and drawbacks of each tactic, enabling you to create a compelling offer that positions you favorably in pursuit of your dream home—while ensuring a balanced approach.
Please take a moment to watch the video below regarding our Clear Plan for buying a home during uncertain times…
1. Showcase Strong Financing
Sellers typically prefer buyers who have strong financing, have mortgage pre-approval already sealed and dusted, and can show proof of a quick closing.
The most preferred is of course all-cash purchase when you buy homes in Denver since sellers do not have to wait for you to navigate the full mortgage process first. Do not lose heart though because this route is not common among buyers. As per data from the National Association of Realtors, most home acquisitions are financed through mortgages and sellers know that.
When you start your search for Denver homes, get a massive advantage over other buyers by first getting a preapproved mortgage. It is proof that your intentions about buying a home are serious and you can meet the asking price of the seller. This increases your credibility before sellers in the market.
Additionally, the choice of lender can impact the transaction process. While sellers may not directly engage with the lender, their agents often do. Opting for a lender with a strong track record, especially with specific loan types like FHA or VA loans, can streamline the process. If needed, we can connect you with reputable lenders known for their reliability and expertise in handling various mortgage options.
2. Put Down a Sizeable Deposit
To show sellers your commitment when you buy homes in Denver, put down a sizeable earnest money deposit that will be held in escrow by a title company. It is a signal to the seller that you are serious about going through with the deal.
The earnest money deposit is typically 1-2% of the sale price. Factor this amount when you set your budget based on the prevailing average house price in Denver. While the earnest money deposit can strengthen your bid for a house, you risk losing a part or the full deposit if the deal falls through for any reason.
Our team at Just Livin’ Realty Group can assist you in determining the optimal deposit amount based on your unique situation.
3. Ask for Few (or No) Contingencies
Real estate offers commonly include contingencies, which are conditions allowing parties to exit the agreement if specific criteria are not met. These clauses, found in the purchase agreement, require mutual acceptance by the buyer and seller to be legally binding.
Typical contingencies involve:
- Financing: A financing contingency grants the buyer a timeframe to secure a mortgage. Failure to do so permits the buyer to withdraw, allowing the seller to explore other offers.
- Inspection: An inspection contingency enables the buyer to professionally inspect the property for structural, electrical, plumbing, and other issues. Typically, the seller decides whether to address these issues; if not, the buyer may opt to cancel the contract.
- Appraisal: Lenders usually require homes to be valued at or above the sale price. An appraisal contingency allows the buyer to assess the property’s value professionally. Should the appraisal be lower, the seller may need to renegotiate the terms.
- Sale of Prior Home: Some buyers need to sell their current home before purchasing a new one. If they fail to do so within a specified period, this contingency enables them to exit the contract without repercussions.
Avoid contingencies as much as possible when you buy homes in Denver as they reduce the likelihood of a sale and make the offer less appealing to the seller. Hence, with the competitive real estate market of today, it is wise to give up contingencies to bag your dream home.
However, it’s crucial to weigh this decision carefully and understand the associated risks. For instance, forgoing a home inspection contingency might reveal unforeseen renovation needs later, and waiving an appraisal could endanger the mortgage approval. Without contingencies, withdrawing from a purchase could lead to forfeiting the earnest money deposit.6 Let us assist you in evaluating the risks and advantages.
4. Offer a Unique Selling Proposition: Flexible Closing Date and Leaseback Option
Even though money and a quick closing are important for sellers, other factors often play a major role in selecting buyers. Be flexible in the terms offered to sellers as per their convenience and you can ensure that you inch ahead of others when you buy homes in Denver.
To illustrate this point better, here are two flexible options you can offer sellers.
The first is to offer a longer closing period to sellers. This becomes important when a seller goes through a major relocation and needs more time to look for housing in the new place.
The second is offering a short-term leaseback option. This agreement allows the seller to continue to stay on the property after closing for a fixed period while using the sale proceeds to purchase another house. Hence, the seller need not move twice, once to a temporary place and then to a permanent one.
These flexible terms can be a game-changer, especially for first-time homebuyers. If you have a lease with a short notice period or one that can be easily transferred, you have the advantage of offering a more accommodating timeline compared to buyers dealing with the sale of their current home.
These terms are not for everybody and hinges on a seller’s specific needs. By communicating with the listing agent to understand the seller’s preferences, we can work together to craft an irresistible offer that benefits both parties.
5. Work With a Skilled Buyer’s Agent
In today’s competitive real estate market in Denver, it’s crucial to partner with a seasoned and reliable real estate professional. At Just Livin’ Realty, we ensure you grasp the entire process and assist you in crafting a compelling offer while mitigating risks.
Moreover, we excel in creating offers that resonate with both the seller and their listing agent. Listing agents wield significant influence in helping sellers assess offers and prefer collaborating with adept buyer’s agents who are proactive, communicative, and respectful
Upon acceptance of your offer, we adeptly manage subsequent negotiations and streamline all the documentation and intricacies of your property purchase. The added benefit is having a knowledgeable, licensed ally by your side, safeguarding your best interests throughout the entire process.
Helping You Get to the Right Offer
In many cases, a competitive offer doesn’t need to be all-cash, contingency-free, or significantly above asking price. But if you’re serious about buying a home in today’s market, it’s important to consider what you can do to sweeten the deal.
If you’re a buyer, we can help you compete in today’s market without getting steamrolled. And if you’re a seller, we can help you evaluate offers by taking all the relevant factors into account. Contact us today to schedule a free consultation.
Assisting You in Securing the Ideal Offer
Securing a competitive offer in the current real estate landscape doesn’t always necessitate an all-cash payment, a contingency-free agreement, or a significantly inflated bid. However, for those serious about purchasing a property today, it’s crucial to explore strategies to enhance your offer.
As a prospective buyer, our team can equip you with the tools to stand out in today’s competitive market without feeling overwhelmed. For sellers, we offer assistance in assessing offers comprehensively, considering all pertinent factors. Reach out today to arrange a complimentary consultation.
Sources:
- National Association of Realtors –
https://www.nar.realtor/newsroom/pending-home-sales-dwindle-4-1-in-february - National Association of Realtors –
https://www.nar.realtor/newsroom/existing-home-sales-fade-7-2-in-february - Forbes –
https://www.forbes.com/advisor/mortgages/housing-crisis-tips/ - Realtor.com –
https://www.realtor.com/advice/finance/earnest-money-deposit-mistakes-buyers-make/ - Bankrate –
https://www.bankrate.com/real-estate/contingency-clause/ - Home Buying Institute –
http://www.homebuyinginstitute.com/mortgage/risks-of-waiving-a-contingency/
Realtor.com –
https://www.realtor.com/advice/sell/what-is-a-rent-back-agreement