What happens once you find a house? It’s time to make an offer

There are numerous steps in the home buying process. Finding the right home is a big one, but putting in an offer is also a monumental step in becoming a homeowner. Having a Realtor walk you through the purchase contract (more formally known as the contract to buy and sell) helps the process become more clear. Be prepared for negotiations. Don’t take those negotiations personally (that’s why having a Realtor negotiate on your behalf helps ease the stress.)

The Colorado contract to buy and sell; a state form put out by the Colorado Real Estate Commission (CREC) is now 16 pages long. It changes slightly every year (hence the reason for my annual CREC update) but the idea stays the same. This is a contract between the Buyers and Sellers of a property outlining the details of the purchase agreement (purchase price, dates, financing, contingencies, title review, parties involved, and more).

As a Realtor I complete this contract to reach the best terms possible for my Buyers. Every piece of the contract can be negotiated. Most commonly Sellers will counter on price and dates. Negotiations can go back and forth, ideally ending in a contract agreeable to both parties. Typically, from the time an offer is given to a Seller it is 2-3 days before a final contract is agreed upon. There is often verbal negotiation between the parties until a final agreement is reached. The waiting can be hard for Buyers (I know I’ve been there too just like everyone else), but the only way to take that first step towards homeownership is to put in an offer. With your pre-approval letter and offer in hand, you are one step closer to being a homeowner.

Look for future blogs talking about the key components of the contract to buy and sell. It’s all in the details!

It is a GREAT time to sell!

Boulder / Denver real estate market is primed for Sellers.
Over the past month we have seen a change in the local real estate market that hasn’t been seen in years. Due to the extremely low inventory of homes for sale and an increase of buyers due to low mortgage rates, homes are selling at record prices and at record speeds.“New advice from the trenches on buying a home: Look early. Think fast. Hone your quick-draw skills with the checkbook.Metro Denver’s real estate market, not long ago a buyer’s domain, suddenly has shifted to a seller’s paradise, at least in some neighborhoods and price ranges.Realtors’ offices are rife with fresh anecdotes of sellers happily cherry-picking from multiple offers — some of them above the asking price.

How fast is the market moving? A new report shows that Denver is No. 2 in the nation for the shortest length median of 89 days.” Read More

We are seeing bidding wars and full price offers across Boulder County and Denver lately.

“Home buyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report. ”We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALTORS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.” Read More
Time to get off the fence and make a move! Let’s talk.

Getting preapproved as a Buyer

These days, many folks who come to me wanting to start searching for a home, have already talked with a lender. That’s great! If folks haven’t met with a lender, the first thing I do is have them work out how they are going to finance their home purchase (unless they are lucky enough to be able to pay cash).

By getting approved now, you will know exactly what you qualify for (and are comfortable with) before you begin shopping, avoiding uncertainty and disappointment. Sellers will know you are a serious buyer because your financing is already arranged.

Right now, we are experiencing a Seller’s market in some areas, leading to multiple offers and a need for the ability to act quickly. Sellers want to know that the Buyer they go with has financing solidified up front. It’s one more thing working in your favor as a buyer. Submitting a preapproval letter means you, the borrower is fully qualified to purchase the home, subject only to an appraisal and title work.

I recommend talking with several lenders (either a lender at a bank or a mortgage broker that services loans from multiple sources). If you ever need names just let me know. I have folks I’ve worked with whom I trust and count on to provide my clients with excellent service.

When you call to get preapproved you will need:

1. Personal Information –
Names, Addresses, Social security numbers

2. Assets –
Sources of down payment, Bank names and approximate balances, Information regarding stocks, bonds and 401Ks, and other financial assets

3. Debts –
Information about: Credit cards, Car Payment, Installment loans, Alimony and Child Support (if applicable)

4. Income –
Employer information for past two years, Monthly Income, Other Sources of Income (rental, alimony, child support)

When preparing to purchase a home:

DO

 Save every pay stub – most of this can be accessed online these days
 Save every bank statement (all pages) – most of this can be accessed online these days
 Pay every bill on time
 Make copies of all checks before depositing them (non-consistent income, gifts, tax refunds, etc.)

DON’T

 Bounce any checks
 Open any new accounts
 Visit automobile lots (where they check credit)
 Take cash back from deposits

What is a CMA and why do I need one?

I spend many hours a week working on comparative market analysis reports for clients, friends, and neighbors. It’s my job to know our Boulder County market and analyze what’s happening.

In Realtor lingo, we call these reports CMAs (comparative market analysis). The CMA is a side-by-side comparison of homes for sale and homes that have recently sold in the same neighborhood and price range. Factors such as type of home (single family vs. attached dwelling), # of bedrooms/baths, location, lot size, etc. are all considered when coming up with value.

The purpose of a CMA is to show fair market value, based on what other buyers and sellers have determined through past sales, pending sales and homes recently put on the market. I use both active and sold properties in my analysis.  Recently sold properties help me calculate the true value.  Properties currently for sale help me determine the direction of the market, and where to set the asking price to be competitive within the current market. I also look at properties that have expired (market rejected) and withdrawn (for a variety of reasons). All that data helps us understand where the value is in today’s market.

A CMA is an important tool for both buyers and sellers.

Why does a Seller need a CMA?

When you are looking to sell your home, you need to be priced according to today’s market. You don’t want to price yourself out the market (by starting too high) but you also don’t want to give away your home and lose money in your pocket. What you want or need to get out of your home has no bearing on its value. What buyers are willing to pay for a similar home gives you an idea of what price you should list the home at to be competitive in the market. I assume if you are putting your home on the market, you want to sell it. Right? Every couple of weeks I give my Sellers an updated CMA. The market is dynamic. The CMA is a here-and-now snapshot of the market, based on the most recent data available, but it can instantly be rendered obsolete by a new listing, or a change of status in a home with the same criteria. Why? The market is constantly changing – new listings, pending sales, closed sales, price reductions, and expired listings.

Why does a Buyer need a CMA?

It is important to know that the home you are buying is being purchased for fair market value. You don’t want to pay too much for a home just because you love it. You also don’t want to come in with too low of an offer just because you want a deal. There is a chance you could lose that home by not understanding its value. I help buyers make sense of recent sales and other active listings to guide them to an offer price. It is a buyer’s final decision how much their offer should be, but using my market knowledge and expertise will help get you there.

A CMA also looks at the average time on market for sold and active listings, as well as inventory levels specific to the neighborhood where you are looking to buy or sell. A CMA starts wtih a lot of information (like a big puzzle) and I break down that data to make it easier to understand.

A CMA is not an appraisal. A real estate appraisal is a comprehensive evaluation performed by an independent professional appraiser. Typically, a CMA prepared by an experienced agent with good knowledge of the local market is right in line with your home’s appraised value.

Now you know what to expect next time you need a CMA.

 

There is no perfect home. Differentiate your needs from your wants and prioritize.

I’m sorry to be the one to break it to you, but you should know, there is no perfect house. Are there things I wish were different about my house? You bet. The two favorite things about my house; the location and the natural light (thanks to all our sunny days here in CO). I am a firm believer in location, location, location.

What is important to you? What do you need in a house? Buyers often times tell me they need a minimum number of bedrooms and baths, a garage, a fireplace, etc. That is a great place to start but a list of your needs and wants can help keep you on track as we start to look at the possibilities.

Let’s break it down:

Needs: These are must haves. Things that are required of the new home you are considering.

Examples:

  • Ranch home for an elderly couple
  • 2 car garage for a home hobbyist
  • Office space for someone who works from home
  • Location – i.e.: close to public transportation if that is how you get around

Wants: These are items you would like to have in a home, but are not a requirement. This list can go on and on and on. Make sure you prioritize this list so that you don’t miss out on a home just because it doesn’t have wood floors  for example (you could always change that later). Think about the things you can’t change, like floor plan and location.

  • Fireplace
  • Corner Lot
  • ¼ + acre
  • New Windows
  • Traditional 2 story home

There is a fine line between wants and needs. One that is often blurred (and rightfully so). If you are looking with a significant other it is especially important to take the time to talk about this before you start looking, so that you know what the other person is thinking.

A home is a very personal thing. Let’s go find that almost perfect home!