It is no secret that Denver is a sellers’ market. With limited inventory, high demand, and a flourishing economic environment, the price of Denver homes have been increasingly by eight to nine percent each year. As a buyer, you need to know how to navigate a sellers’ markets. Here are some mistakes you should avoid.
1. OFFER MISTAKES
In a sellers’ market, the seller has the upper hand in most negotiations. This means that low-ball offers will be thrown in the trash, without much thought. So it is important to put up your best offer to show the seller that you are a serious buyer. Offers at the listing price is a good place to start. If you believe the home is worth more than the listing price, consider an initial offer above listing.
Another common mistake is taking too long to make an offer. In a sellers’ market, the adage “early bird get the worm” is particularly true. Many homes get multiple offers within days of being put on the market. Being one of the first offers in the hands of the seller shows that you’re a serious buyer.
2. NOT WORKING WITH A QUALIFIED AGENT
New agents who do not have a lot of experience in a sellers’ market may not know how to navigate the nuances of the market. An agent with great negotiation skills should be your top priority. Look for an agent with experience in hot markets – they will be able to advise you on the best course of action to help you achieve your home ownership goal.
3. NOT BEING PREPARED FOR A BIDDING WAR
In the Denver market, nearly 70% of all home sales receive multiple offers. Even when you put in your best offer, a seller may counter demanding a higher price or may pit you against other buyers in a bidding war. The best way to win a bidding war is to make sure you are looking at homes well within your budget. If the home goes into a bidding war, you will have more room in your budget to make a higher offer. Read our recent blog post for more bidding war tips.
4. NOT BEING PRE-QUALIFIED OR PRE-APPROVED FOR A MORTGAGE
Not getting pre-qualified or pre-approved from a mortgage lender is one of the most costly mistakes a buyer can make. It is important to know exactly how much the lender is willing to lend you before starting the home buying process. Without a pre-approval or qualification, you run the risk of having a deal fall apart during the underwriting process. This is not only frustrating for the seller, but also very costly for you as a homebuyer. As a buyer, you will have to start the process over with the mortgage refusal on your record. If you are not sure where to start, try a reputable mortgage broker, who works with a number of different lenders to find you the best mortgage for your credit history, price point, and property type.