Once you’ve created your ‘Features Shopping List’ you’re on your way to buy a house in Colorado. Get ready to work on defining what 'getting the best deal' means to you.
(If you haven't read my article on how to create your home shopping list, you might want to do it now.)
For most people, getting the best deal means getting the house they want at the best price possible, with the smoothest transaction possible. If it means something more than that to you, take the time to write out exactly what your goals are. Then share that information with your real estate agent, if you're working with one.
There are lots of great deals out there – here's how to make sure you're getting yours at the best price possible.
- Review your shopping list to be sure the house you're considering has your most important features.
- Investigate neighborhood price trends.
- Determine the right amount to offer.
- Make your offer as appealing as possible.
- Submit your offer.
I'll bet you thought #3 was the only thing, right?
I'm going to move quickly through each step. If you have questions or want more details or examples, please feel to email or call me.
Step 1 was covered in previous posts.
Step 2 -Whether you're planning to 'fix & flip' or to live in the house a number of years, the question of future value is very important. No one can tell the future, but there are ways to tell what the trend is currently.
You need to examine the absorption rate, days on market, percent of owner-occupied vs rentals, and price trend. Then, compare those numbers to the history of the area. Don't rely on nation-wide or state-wide statistics or news releases, they may be completely different. (A good real estate agent can help you with all these statistics.)
Step 3 - To determine the right amount to offer, examine recent sales for nearby houses in a similar condition and with similar features. Not all buyer's agents will do this market analysis for their clients, but hopefully you've found one who will.
If the trend is that prices are dropping, make your offer lower than similar homes have sold. How much lower depends on how long the house has been on the market, does it have more or fewer features than most houses in the neighborhood, seller motivation, is it bank-owned or a short sale, has there been a recent price drop, how much interest is there in this property, and how badly do you want it.
If the trend is that prices are increasing, make your offer equal to the lowest price a similar house has recently sold for. (Note: 'similar' includes condition, location, special features such as view, etc., not just size and number of bedrooms.)
In my local market, there's a few areas where prices have started to rise, and there's a large portion of the market that seems to have stabilized. But even in those areas I advise caution.
If you're buying a house as an investment, it's essential you get the best price and agressive technique is paramount. If you're buying a family home that you could stay in for a number of years, how badly you want the house is an important factor that you need to take seriously.
Step 4 - making your offer as appealing as possible takes some finesse, especially if your offer is low or you're asking the seller to pay your closing costs.
Some ways to do it include finding out when the seller wants to close and using that date in the offer, commit to get the inspection out of the way right away, include a letter from a lender stating that you can get the loan*, use the correct forms and fill them out properly and clearly**, eliminating as many of the standard contingencies as possible, finding an agent who'll go to bat for you rather than just faxing it in and waiting for a response.
Often times, there are other creative ways to make your offer appealing which vary from one situation to the next. It just takes some creativity and willingness to work a little harder.
Step 5 - It seems obvious to say 'Make Your Offer,' but I've heard of many buyers who lost out just because they hesitated. Yes, the market is changing - right now, local inventory is down 25%. So it's likely you're not the only party interested in any particular house.
If the house came on the market already priced to get attention, or if you're looking for something unique and found one that fits the bill, make the offer asap.
The point I want you to understand is, get that house under contract. Here in Colorado the commission-approved contract heavily favors the buyer. You have much more control over the situation after you get the house under contract. Until then, you've got nada.
* Some lender letters are better than others. Make sure yours is a strong one.
** If you're working with an agent, they should take the time to go over every line on the offer with you until you understand each one.
Read part 4 of How to Buy a House in Colorado.
Start reading 'How to Buy a House in Colorado' from the beginning.
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How to buy a house Denver to Boulder.
How to Sell a House Denver to Boulder
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I write posts on real estate issues and local events in the Denver metro area, especially those communities between Denver and Boulder, as a public service. My hope is to give people an idea of the ‘flavor’ of our community, in case they’re new or moving to the Denver area.
I am a residential real estate agent, happily helping folks buy a house or sell a house in the beautiful and friendly suburbs northwest of Denver. Read what past clients have said about me.
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Copyright © 2009 Joetta Fort, The DiGiorgio Group
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