Trying to buy a home in Denver’s sellers market may leave you feeling like your experiencing Darwin’s, “Survival of the Fittest” theory first hand. Would it surprise you to know that the highest price isn’t always the seller’s natural selection? Ultimately, sellers are looking for the offer most likely to end up in a closing, or the one that best fits their needs.
10 Tips to Surviving a Sellers Market
- Reset Your Expectations. Donna Hansen of Ion Real Estate says “Some clients come in with the expectation of finding their perfect dream home. I then talk to the buyer about what is available in this market and help them adjust expectations accordingly.” With less than a one month supply of homes for sale, and multiple offers on most homes, buyers should have accurate information and expect some bumps along the road.
- Sell Your Existing Home First. If your offer contains a contingency on the sale of your home, it may be quickly dismissed in favor of a contract that does not have a contingency.
- Time is of the Essence. During a sellers market you should be one of the first showings. Properties expected to sell quickly will typically be listed on a Thursday. Don’t wait for the weekend to look at the property as the seller may already have accepted an offer by then.
- Write Your Best Offer. If you find the home you want, make your best offer. While price is not always the most important factor, do not offer less than list price. Ask your agent to do a Comparative Market Analysis to determine the best pricing and realize you may need to offer more than the amount the seller is asking.
- Determine What Is Important to the Seller. Are the sellers looking for a fast closing? Do they want delayed possession while they close on their new home? Have your real estate agent ask the seller’s agent for advice, then tailor your contract to match the seller’s expectations.
- Get Credit Approved. Show the seller that you are qualified. Most buyers will accompany their offer with the standard pre-approval or pre-qualification letter. By asking your lender for a Credit Approval you’re making yourself a stronger candidate. This means that your lender has pulled your credit, reviewed your income and sent your file through an automated underwriting system, instead of writing a letter based on a cursory look at your credit and getting a general overview of your income.
- Give Favors, Don’t Ask for Them. “A sellers market is not the time to ask the seller to give you personal items or to pay your closing costs,” says Donna Hansen. “Find out which items are customarily paid for by the seller and offer to pay a few such as title policies, escrow fees, or transfer fees.”
- Shorten or Waive Contingencies. By federal law, you have 10 days for inspections due to lead-based paint, unless you waive that right in writing. “Always get a home inspection, but consider waiving your right to demand seller’s repair problems found in the inspection.” says Brian Cloudius with Keller Williams’ Trinity Team. If a home warranty will cover the repairs required, Brian buys a policy on behalf of his clients, thereby eliminating the need to ask the seller for repairs. Additionally, you can talk to your agent about comparable sales to decide if you want to waive an appraisal contingency.
- Increase Your Earnest Money Deposit. The earnest money deposit is part of your down payment and by increasing it above normal limits you are showing the seller you are serious about closing. Ask your agent for advice on the deposit; then consider doubling or tripling that amount.
- Give Sellers Time to Move. Buyer possession can be a sticky point. It’s hard enough to juggle multiple closings if you are selling and buying at the same time. This is even more difficult if the sellers are doing the same. Cut the sellers some slack by giving them two to three days to move out after closing without expecting compensation. Another option is to allow the seller to rent their former home for a few months so they can find a replacement.
If you’ve had a recent home buying experience in Denver (positive or negative) please leave a comment and let us know what worked or didn’t work for you!