A Guide To Buy Homes In Denver, Colorado

When potential homebuyers set out to buy homes in Denver, it promises to be a journey filled with excitement on one hand and a lot of fears on the other. It is because the common person is not sure of the complexities of the homebuying complexities and do not know what to expect.

However, one factor is common and that is, if you buy a house in Denver, Colorado it is going to be the biggest investment in your life. Hence, it is critical to get it right and have an experienced realtor handholding you through the process when you start your search for Denver homes.      

Whether this is your first home or your tenth, this guide will provide you with all the information you need to navigate today’s homebuying process. Or reach out to us at Just Livin Realty for a personal consultation.

Let us show you in the video how we get all the families we serve READY for the homeowner process, of searching for homes, negotiating, and placing offers. You too will Avoid 7 Common Mistakes Buyers Make when looking to buy a house in Colorado…Please enjoy!

3 REASONS TO BUY A HOME

For first time homebuyers in Denver, it is not easy to decide whether to take the plunge or rent a home. Even for those who already have a home and want to second time buy homes in Denver, there are several reasons why it is so wonderful to be a homeowner all over again.

• Improve Quality of Life: With your own home, you can lead life the way you want to, buy the choicest fittings and appliances, and decorate the interior aesthetically. In a rented home, it is the owner who calls the shots.
• Financial Health and Stability: Investing in real estate is one of the safest ways to guard against wealth erosion over the years. Unless economic recession sets in, home prices typically appreciate over the years. Moreover, once you pay off your mortgage, you create equity on your home. Even if you rent your second home, rentals in the USA have increased by almost 66% over the last decade.
• Tax Deductions
  Homeowners receive tax deductions for mortgage interest and property taxes, which are both deductible on an individual’s federal income tax return.  

TIMELINE OF A HOME SALE

Most people have a general idea of what happens in a home purchase, but we’ve found that these assumptions can have costly consequences. For example, you may have heard that you need to save 20% for a down payment, but did you know that there are financing options that don’t require that much?

Your best bet for a successful home purchase is to lean on our experience and expertise, which is why we recommend that you reach out to us at Just Livin Realty first as soon as you start to look for houses to buy in Denver.

Here is what we suggest when you want to buy a house in Denver, Colorado. Hire an experienced realtor who is a strong negotiator and a local market master. The sooner you connect with us, the more time we’ll have to craft your ideal homebuying strategy. 

We will take care of the whole homebuying project, from looking for the right home to match your budget and needs to the time you get the keys of your new home in your hands.

Now let us check the 5 steps to go through to buy homes in Denver.

• Get preapproved: Know what you can afford and prepare to make strong offers. Learn more about calculating your buying power matching it with the average house price in Denver.  
• Check out properties: We will shortlist the properties that meets your requirements based on price, location, and size. A customized search alert informs us as soon as the right property is listed on the market.
• Submit and negotiate an offer: Based on your budget and other needs and evaluating market trends, we will submit an offer for a selected home. We will then receive a counteroffer from the sellers which will be negotiated by our team to secure a final price that works for you as well as appeals to the seller. 
• Inspection and Appraisal: We will ensure that inspection and appraisal is conducted for the house and any repairs are done before you move in.
• Closing: Primarily, this is where you come in to sign the final paperwork and contracts and get the keys to your home.

When you search and buy Denver homes, Just Living Realty has you covered. We take charge of the whole process till the contract-signing stage while you carry on with your daily routine.

4 CRITICAL QUESTIONS TO ASK A POTENTIAL AGENT

While there are many real estate agents in Denver, not all will provide the level of service you desire. To be sure that you will get the best out of an agent, interview the professional and ask a few relevant questions. 

However, before sitting across the table for a discussion ask for specific information like their professional accomplishments, their approach to work, and strategies adopted for getting the ideal houses to buy in Denver.

With this information, it is now time for an interview to know more through the following questions.    

• How long have you been in real estate?

The average Realtor has 10 years of experience. But while longevity is important, even more telling is the number of transactions they have closed or been involved in. Ask about their team’s dynamic and accomplishments if they’re a newer agent.

• Do you have references from past clients?

An agent who provides 5-star service and is proud of their work will be happy to provide references. Look at their ratings and reviews on sites like Google and Yelp.

• What will you do to keep me informed?

Do you want daily or weekly reports from your agent? Will the agent be able to meet these expectations? Determine how much communication you want, and then find an agent who will give you the attention and time you want and deserve.

• Can you provide me with further resources I may need?

From market reports to pricing trends, top agents have resources at their disposal. In addition, local experts have built relationships with their extended team of professionals and can often get priority service should a need arise.

YOUR BUYING POWER

Before you search Denver homes, the important point is asking yourself what you can afford. Do not consider the average house price in Denver only and the purchase price you have to pay. Consider the later maintenance costs like property taxes and home insurance. The key factor here is knowing “What can you afford.”    

Therefore, what you should instead ask is, “What is our buying power?”

Let’s check the different components of the very important “buying power” concept.

What is Buying Power

Your buying power is comprised of the total amount of money you have available each month for a mortgage payment. This means the money you have each month after fixed bills and expenses, as well as any money you’ve saved for a down payment, the proceeds from the sale of your current home (if applicable), and the amount of money you’re qualified to borrow.

Why is Buying Power Important

Once you know how much is your buying power, you will get an estimate of the type of house you can afford, including the location and size.

It will also prevent you from becoming “house poor,” a common term for someone who’s put all their money toward the down payment, leaving them nothing left over for fees outside of their monthly house payment. This will prevent you from enjoying the lifestyle you are used to, forcing you to make compromises that can affect you emotionally.

How to Calculate the Buying Power

Buying power is calculated by adding the money you’ve saved for a down payment and/or the money you made from selling your home (minus fees and mortgage payoff). Include other sources of income such as investments that can be used to make your monthly payment.

The general rule of thumb is that your monthly housing costs should be at or less than 28% of your monthly gross income. This number should include your mortgage payment towards your loan principal and interest as well as your property taxes and insurance (PITI).

Use the worksheet below to figure out an estimate of your buying power.

SAVING FOR A DOWN PAYMENT

Your buying power when you buy a house in Denver, Colorado is also impacted by the down payment you plan to make. Your monthly payments will be substantially reduced if you can make a large down payment. Depending on the average house price in Denver, with a 20% down payment you can negotiate a lower interest rate and will not have to purchase private mortgage insurance (PMI).

Here are some suggestions for saving for a down payment.

First-Time Buyers

If you’re thinking of buying a home one day, one of the first steps to take is to start saving for a down payment. Here are some tips to make saving easier.

• Set a savings goal. One way to figure out how much to save is to use the average sales price for homes that are similar to what you want and figure out your target down payment percentage.
• Cut back on expenses. Review your monthly expenses and look for ways to save. Think about items you can live without or cut back on temporarily while you’re saving.
• Look for ways to boost your income. Get a side job or sell items online or at a garage sale to increase your income in a short amount of time. Be sure to save any windfalls you get, including your annual income tax refund or work bonuses.
• Check out home-buying programs. Your state, county or local government may offer special programs, such as grants, for first-time buyers to use.
• Ask your family. Twenty-eight percent of first-time buyers were given money from family or friends to use toward the down payment of their home.²

Repeat Buyers

If you’re thinking of buying another home, here are more ways to save more money, in addition to the tips listed above:

• Rent a room. If you have an income flat (or mother-in-law unit) attached to your home, rent it out and channel the income into a high-interest savings account.
• Make your money work for you. If you don’t plan to buy for at least five years, invest it and let the compound interest work for you. Discuss this option with your financial planner or broker to see if this is ideal for you and your goals.
• Tap into your 401(k). If you have a 401(k) plan, you may be allowed to borrow a portion of it, the lessor of up to $50,000 or half of its value, for your down payment. Remember, it’s a loan so you’ll have to pay it back. If you leave or lose your job before you’ve repaid the loan, you’ll have between 60 to 90 days to repay the balance or face stiff taxes and penalties.

Investors

Whether you’re buying a second home or a rental property, here are a couple more tips to save for a down payment.

• Tap into your equity. If you’ve paid off or paid down your mortgage on your primary home, you may be able to tap into your equity to purchase another property. Contact your lender to learn more about a HELOC or home equity loan.
• Get a partner. Find a friend or relative who’s willing to purchase property with you. Typically, you’ll split the costs and profits equally. Just make sure to work with an attorney to create a partnership agreement to fit your situation.

GETTING PREAPPROVED

The most important step for taking a loan to purchase your property is to get it pre-approved. Survey shows that around 93% of first-time buyers financed their home purchase while repeat buyers accounted for 83%. The reason why our experts always recommend that you have a pre-approval from a lender is to know your buying power and search Denver homes accordingly. Further, it also indicates to the seller that you are serious about buying a home.  

Preapproval vs. Prequalification

The two terms are often confused because they are so similar. But they are very different and it’s important that you understand the distinction.

• Prequalification — An estimate of how much you could qualify to borrow. It doesn’t entail a credit check or official documentation.
• Preapproval — Proof of your buying power. It requires a full loan application, a credit check, and documentation regarding your income and assets.

Loan Application Rules

Your mortgage loan isn’t guaranteed until the final paperwork is signed. To ensure a smooth loan application process, and prevent any wrenches from getting thrown into your homebuying plans, follow these ten rules.

• RULE #1: Do not change jobs, become self-employed or quit your job.
• RULE #2: Do not buy a car, truck, or van (or you may be living in it)!
• RULE #3: Do not use charge cards excessively or let your accounts fall behind.
• RULE #4: Do not spend money you have set aside for closing.
• RULE #5: Do not omit debts or liabilities from your loan application.
• RULE #6: Do not buy furniture.
• RULE #7: Do not originate any inquiries into your credit.
• RULE #8: Do not make large deposits without first checking with your loan officer.
• RULE #9: Do not change bank accounts.
• RULE #10: Do not cosign a loan for anyone.

LET US CONNECT YOU
We know the best financial planners, mortgage lenders, and attorneys in our area to help you save for and plan your home purchase. Ask us about our Trusted Partner Program so we can ensure you get the VIP treatment.

FINDING YOUR NEXT HOME

Whether you’re a first-time buyer or a seasoned homeowner, stepping out to search for Denver homes can be daunting. For more than half of home buyers, the most difficult step in the home buying process was finding the right property at 56%, which was even higher for Younger Millennials at 64%.

That’s why we teach our buyer clients to focus on the WHY, WHERE, and WHAT.

The first step to finding your ideal home is determining WHY you want to move. Do you need more space? Access to your preferred schools? Less maintenance? Or are you tired of throwing money away on rent when you could be building equity? Pinpointing the reasons why you want to move can help you assess your priorities for your home search.

Next, you need to determine WHERE you want to buy. Do you prefer a rural, urban, or suburban setting? How long of a commute are you willing to make? Which areas feed into your preferred schools? These decisions will impact your day-to-day life while you live in the home.

Finally, think about WHAT kind of home do you want to live in. Start with the basics, like your ideal number of bedrooms, bathrooms, and square footage. Do you prefer a one-story or two-story layout? Do you want a swimming pool?

Keep in mind, you may not find a home with all of your “wants,” or even all of your “needs.” If you’re faced with a tough choice about how or what to compromise in your home search, return to your WHY.

INSTANT MARKET UPDATES
Stay on the pulse of the housing inventory in our local market with notifications whenever homes hit the market, change price, or go under contract with our Instant Market Updates. Ask us for more info!

MAKING AN OFFER

Once you find a home that fits your WHY, WHERE, and WHAT, it’s time to make an offer. And yes, a high offer price gets attention. But most sellers consider a variety of factors when evaluating an offer. With that in mind, here are three other tactics you can utilize to sweeten your proposal and outshine your competition.

• Put Down a Sizable Deposit

Buyers can show sellers that they’re serious about their offer and have “skin in the game” by putting down a large earnest money deposit. We can help you determine an appropriate deposit to offer based on your specific circumstances.

• Ask for Few (or No) Contingencies

Buyers in a competitive market often volunteer to waive certain contingencies, which are clauses that allow one or both parties to back out of the agreement if certain conditions are not met. We can help you assess the risks and benefits involved in this offer strategy.

• Offer a Flexible Closing Date and/or Leaseback Option

People sell their homes for a wide variety of reasons, and flexible terms that work with their personal situations can sometimes make all the difference. We can reach out to the listing agent to find out the seller’s preferred terms, and then collaborate with you to write a compelling offer that works for both parties.

YOUR FIDUCIARY ADVOCATE
We can help you compete in today’s market with offers that are designed to win over both the seller and their listing agent, without letting you get steamrolled. Schedule a consultation to learn more about our negotiation expertise.

NEXT STEPS

In this ultra-competitive real estate market, one of the greatest advantages you can give yourself is to work with a skilled and trustworthy real estate professional who is watching out for your best interests every step of the way.

We are home sales experts in our local market, and we are confident in our ability to handle your transaction and any surprises that may pop up along the way to the closing table.

So if you are considering buying a home in today’s market, we invite you to reach out to us at the contact information below. We would love the opportunity to learn more about your specific situation and explain to you in more detail what we do differently to win our clients the home of their dreams in our local area.

Sources:

1. Statista –
   https://www.statista.com/statistics/200223/median-apartment-rent-in-the-us-since-1980/
2. NAR 2021 Profile of Home Buyers and Sellers –
   https://cdn.nar.realtor/sites/default/files/documents/2021-highlights-from-the-profile-of-home-buyers-and-sellers-11-11-2021.pdf
3. NAR 2022 Home Buyers and Sellers Generational Trends Report –
   https://cdn.nar.realtor/sites/default/files/documents/2022-home-buyers-and-sellers-generational-trends-03-23-2022.pdf