Jennifer Fly Real Estate Seller's Market

If you are paying attention to the local real estate market in the Boulder/Denver area, you already know this: it is a strong Seller’s Market. This means that there are more Buyers than homes for sale, and Sellers have a lot of power when it comes to selling their home. Historically low interest rates, combined with low inventory and high demand for homes in our area have lead to multiple offer situations, where some Buyers may feel like they can’t compete.

According to Keeping Current Matters, before the health crisis hit us a year ago, there was already a shortage of homes for sale. When many homeowners delayed their plans to sell at the same time that more buyers aimed to take advantage of record-low mortgage rates and purchase a home, housing inventory dropped even further.

The latest Existing Home Sales Report from the National Association of Realtors (NAR) states that sales are up 23.7% from the same time last year while the inventory of homes available for sale is down 25.7%. There are 360,000 fewer single-family homes for sale today than there were at this time last year. This increase in demand coupled with such limited supply is leading to more bidding wars throughout the country.

Rose Quint, Assistant Vice President for Survey Research with the National Association of Home Builders (NAHB), recently reported “The number one reason long-time searchers haven’t made a home purchase is not because of their inability to find an affordably-priced home, but because they continue to get outbid by other offers.”

A survey in the NAHB report showed that 40% of buyers have been outbid for a home they wanted to purchase. This is more than twice the percentage in 2019, which was 19%.

So, what does that mean if you are planning to buy a home this year?

Don’t try to go it alone

This may be the biggest and most important financial decision of your life. You need a strong agent who can guide you through the entire process and advise you on issues such as value, inspections, title insurance, appraisals, loan terms, property lines, homeowners associations, and more. Homes are sometimes selling within hours of hitting the market, and with some new industry rules, only licensed agents who are members of the local MLS can see properties while they are in “coming soon” status. You need an experienced agent to help you prepare for and understand the market conditions, and then to negotiate on your behalf, sometimes against very stiff competition. We spend time with you before looking at homes to discuss what’s happening with the local real estate market in the areas you are interested in. We will also discuss the different ways that you can strengthen your offer and gain a deep understanding of your risk tolerance and how far you are willing to go to compete for a home, so you are prepared to submit the strongest offer ahead of time.

Get Pre-Approved with a Local Lender

Working with a professional, local lender is always important, but especially now. You may be competing against cash buyers, or buyers who can make a higher down payment than you. You need a lender on your side who will talk through the different loan scenarios and offer you options that work for your financial situation. This may mean changing the type of loan, or the amount of cash you are putting down in order to cover appraisal issues and other closing costs. We can refer you to a list of wonderful local lenders that we love, who understand how to support you in this market - these are lenders who understand the importance of completing a full pre-approval ahead of time and will answer our calls at 7 PM on a Saturday night when we are ready to write an offer.

Be Ready to Move Quickly

Since there aren’t many homes coming on the market each week, and the homes that do are selling so quickly (sometimes within hours!), it is critical that you have all your ducks in a row ahead of time, so when “the one” hits the market, you are ready! We set up listing alerts so we know the second something comes on the market, and if you like it, we need to get in as soon as possible to see it. It also means that before you walk in the home, you know what all your options are to compete, and are prepared to do so in a short amount of time.

Be prepared to miss out

We hope this won’t happen, but we always prepare our buyer clients for the possibility that they may lose a home or two before they get “the one”. Sometimes buyers aren’t truly ready to present the strongest offer possible the first time out, and sometimes there are just other buyers who are willing to do more to get the deal done.

Know you will have to give somewhere

The standard Colorado Real Estate Contract is very Buyer-friendly. This means that once a Buyer is under contract, they have several options to terminate the contract and have their earnest money deposit returned. In a strong Seller’s market, Buyers will have to give up some of these contingencies to strengthen their offer. While price is one of the main factors for Sellers, it’s not the only one, and sometimes the highest price gets beat by other favorable terms. Other options include offering additional or non-refundable earnest money, waiving the right to object to title, survey or inspection issues, and waiving the appraisal or offering an appraisal “gap” - where the Buyer agrees to bring extra cash in the event the home doesn’t appraise for the purchase price. Sometimes the Seller has specific timing needs for closing and needs a period of time after closing before moving out of the house. Your agent and your lender will be able to talk through the risks and benefits of each of these, so you can decide what you are comfortable with.

Know that getting your offer accepted is just the beginning

Once we have negotiated on your behalf and the Seller has accepted our offer, we still have lots of work to do. The time between contract and closing is busy and exciting. Depending on what the contract stipulates, we will use this time to conduct various inspections, an appraisal, and review title, HOA documents and other information about the property. You’ll also work with your lender to finalize your loan, and get ready for closing day!