Cosmetic Issues = Buyer Savings

In a high demand real estate market like Denver, Sellers have the advantage. When Buyer demand outpaces available inventory, the Seller is king, and they have the upper hand at the negotiating table. Don’t abandon all hope, Buyers! In any market, there are things you can do to educate yourself so as to gain an edge in the process.

One area Buyers should pay particular attention to is the cosmetic condition of properties they view. In a Buyers’ Market, Sellers have to work harder to appeal to Buyers, including staging and taking care of deferred maintenance. Sellers can get away with minor deferred maintenance or cosmetic issues when the market is in their favor. BUT – these issues can still give the Buyer a little wiggle room at the negotiating table.

The following is a list of items you can use to your advantage when trying to negotiate concessions or a lower price as a Buyer in a Sellers’ Market (or any market):

  • Overly colorful paint, or paint in poor condition. If the basement is hot pink or the exterior paint is flaking off, it is worth asking for a minor break in the price, or a “paint allowance,” to help cover the cost of updating the home. You might not get what you ask for, and you may have to offer full price with a “paint allowance” stipulation, but the answer to a question you don’t ask is always NO.
  • Damaged carpet or other flooring. I once helped clients buy a house that sounds terrible – but was really a hidden gem: listed under FMV (fair market value), but the house needed all new paint, there were no window treatments of any kind, the main level smelled like dog and the finished basement smelled like cat. UGH – right? They bought this home in a desirable suburb for about $20,000 less than it was worth, and by painting and replacing flooring themselves and purchasing quality blinds on sale, they were able to make this house shine and gain instant equity. Don’t pass up an opportunity like this because the house is a little rough around the edges.
  • Fence in disrepair. Wood fencing is a common source of deferred maintenance. I don’t know many homeowners who enjoy staining or painting the fence every year or two. Use this to your advantage. If the Seller has left the fence alone for a few years, or it has obvious damage, ask for a break in price, or ask whether the Seller will meet you in the middle on repair or replacement costs. If you’ve made a fair offer and the Seller is motivated to close the deal in a timely manner, you may be able to pick up a few bucks on an item like this.
  • Road construction or other pesky projects – current or future. Even in a Sellers’ Market, major road construction, noisy building sites, even nearby home construction can be a pain. Noise. Pollution. Ugly views. Extra traffic. None of these things are pleasant to put up with. As a Buyer, do your homework! If there is a new road going in half a block away, the Seller should disclose this information if they have it – but they don’t always do that. Learn everything you can about a city or neighborhood, and if there are projects underway or planned for the near future, use this information to your advantage. A motivated Seller with a smart Realtor on their side knows major construction projects near the home will not improve the market value in the short run, and they will likely want to sell the house before the dust begins to rise. Use this information to negotiate a better price, or possibly concessions on the home.

Buying a house is a big deal, and there are a lot of moving pieces. When you work with an experienced Realtor, you’ll reap the benefits of someone who’s got your back – and knows every in and out that could save you money and give you an edge. In a market like Denver, Buyers need all the help they can get to score a great deal. If you’ll be in the market soon, I’d love to help you find the right home and maximize your potential at the negotiating table.

Jack Meyers

The Meyers Group
jackestate@aol.com
303.263.3050
Twitter: @jackestate

 

 

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If You Had a Do-Over…

If you’re like a lot of people, you learn by doing. When it comes to buying a home for the first time, a lot of learning takes place in the form of mistakes. Purchasing a home is a major investment, and first time buyers are more educated than ever thanks to the internet and other technology. Still, you don’t know what you don’t know, and first time buyers don’t always know the right questions to ask, sometimes causing home buying newbies to miss out on useful information. Here are a few tips from first time buyers who will do things differently next time.

First Time Buyers

Talk to a mortgage broker long before you are ready to buy. 

If you make great money, have cash in the bank and an excellent credit score, you are probably well on your way to buying that first home. If you aren’t sure of your credit score, whether you have enough credit, or whether your household income is sufficient to help you qualify for the type of home you’d really like to live in, talk to a mortgage pro now, before you need them. If buying a home is out of your grasp for any reason, a qualified, experienced mortgage professional can guide your next steps and help you gear up to qualify for a home loan; this beats finding out by surprise that you can’t buy a home 3 months down the road, even though your lease will be up and you’d really like to buy at that time.

Talking to a mortgage broker will help clarify items like:

  • How much money should you have in the bank?
  • Are your student loans in good standing?
  • Is your debt to income ratio acceptable? If not, how can you fix it?
  • Is your income adequate?
  • Do you have enough/too many lines of credit open?

If you’re on the fence, buy sooner – not later. 

In many cases, renting your home is akin to throwing money away; you are basically paying your landlord’s mortgage, and not getting anything more than shelter out of the deal. If you can buy, do it. Invest wisely, but don’t wait to buy if you know you’ll be in a particular area for 3-5 years or more. Many first time buyers wish they’d pulled the trigger sooner.

Get prequalified for a loan before you shop. 

Even if you are starting your home search online, as many buyers do, you’ll want to be prequalified before you begin searching in earnest for your first home. It is heartbreaking to find the perfect $350,000 home only to learn you qualify for a maximum loan of $275k. A realistic home search is the right home search for you, and you’ll enjoy the process more (and waste less time) when you know you are looking at homes in your price range. The key term is PREQUALIFIED, not preapproved. A preapproval letter is informal and doesn’t offer the official status of prequalification, which means you are qualified by a bank or other lending institution to borrow up to a certain amount.

Work with an experienced Realtor. 

An experienced Realtor will provide helpful tips on the search process, aides in negotiating the deal, and handles all the details of your transaction. Especially in a fast-moving marketplace, it is vital to have a professional representing your interests in the transaction. Even if you are planning a purchase a year or two from now, it doesn’t hurt to interview Realtors in your area to find the right professional to assist in your home search. Most Realtors can keep an eye out for homes that match your specifications and email you property matches on a regular basis so you can keep an eye on the marketplace as you prepare for your future purchase.

Conduct a home inspection – and ask a lot of questions. 

The home inspection is a chance to test drive your future home. Bring a notebook and a pen and don’t be afraid to ask the inspector questions or clarify anything he/she says during your inspection. Before the inspection, confirm whether the inspector will get up on the roof or go into the attic. Hire an experienced inspector, not a newbie and not the cheapest guy you can find. Home inspection is imperative for first time or 10th time buyers. Even if the seller is unlikely to make repairs, I wouldn’t recommend any buyer purchase a home (even new construction) without a detailed home inspection. Make notes about items you need to learn more about and improvements or repairs the inspector recommends, then follow through. You should receive a detailed report afterward; ask the inspector to include notes about recommendations he/she has made about systems within the home, landscaping concerns (such as improper soil grade away from the home for drainage), condition of electrical or plumbing, etc.

Purchasing a home is the most significant investment most people will make in a lifetime, and buying your first home is sure to be a meaningful transaction. Prepare thoughtfully for success and your diligence will pay off.

Jack Meyers

The Meyers Group
jackestate@aol.com 
303.263.3050
Twitter: @jackestate

Buyer Pre-Approval – Why Does it Matter?

Home Financing

This time of year, many of us can be found window shopping – strolling through shops online, at the mall or downtown. Window shopping is fun, it’s entertaining, and it can be a great way to narrow down your Christmas list. When you first begin thinking about purchasing a home, this is a fine way to dream about your next home. Once you are ready to begin your home search in real life, however, it is time to move beyond mere window shopping and to seek approval from a lender. Being pre-approved for a mortgage before you being your home search is vital, and here’s why:

  1. In a Seller’s market, you must behave like a serious buyer in order to be taken seriously. It’s not difficult to set up a showing, but going to the effort of gaining approval from a qualified lender before you begin the home search process proves you are in it to win it – not just a looky-loo. You definitely don’t want to be the only offer without an approval letter in a multiple offer situation; an offer without an approval letter attached feels like a shot in the dark to the Seller – and minimizes your chance of clinching the deal.
  2. Some Sellers require a pre-approval letter before accepting an offer. In a slower market, you may stand a better chance of proceeding with an offer without approved financing; in a busy marketplace, however, some Sellers will not even consider an offer without financing approval attached. If you able to secure financing, or it takes a significant amount of time for you to do so, the Seller is taking on a lot of risk on your behalf. In a Seller’s market, this is likely a level of risk they don’t have to accept in order to sell their home – so why should they?
  3. Negotiating power is on the side of the pre-approved Buyer. Experienced agents know, if there is a Financing Contingency attached to the Contract to Buy and Sell, there is more risk on the part of the Seller and the Buyer loses much of their power to negotiate price or consolations such as Closing Cost credits or extra inclusions like patio furniture or the deep freeze in the garage.
  4. Time is our most valuable and limited currency – and home shopping without approval might be a waste of your time and mine. It is tempting to use free online calculators to guesstimate a payment you think you can afford and launch right into your home search on a whim and a prayer. The best way to know how much home you qualify for, though, is to work with a lending professional to obtain a concrete answer to this question. You’ll avoid frustration and disappointment when you shop for a home in your price range.
  5. You can conduct your home search in earnest – and with peace of mind – knowing your financing is in place. Many factors will play into your next home purchase, and knowing how much home you can afford before you shop will help you focus on the location, amenities and property features of the homes you visit without worrying whether you can qualify for the mortgage you’ll need to buy in a particular neighborhood or style of home.

I am a Denver native with over 21 years in the Real Estate business and I’d be happy to put my experience to work for you whether you are buying your first home, investing in your next hot property, selling your current home or relocating to or from the great state of Colorado.

Jack Meyers

The Meyers Group
jackestate@aol.com
303.263.3050
Twitter: @jackestate

Alienate a Seller in 5 Easy Steps

Etiquette… in our fast paced, paperless, I-saw-it-online-in-real-time world, a “Post-Emily-Post” world, if you will, some people believe manners are a lost art. That the nuances of behavior we once treasured: thank you notes, the opening of doors, good old fashioned common courtesy – are a thing of the past. Call me old fashioned, but I want to believe that in an industry like Real Estate, where the commodity is property of all types but the parties to every transaction are feeling, thinking human beings, manners still matter.

Jerk Store

In an effort to encourage a state of civility among the patrons of this industry, I’d like to point out a few behaviors you can avoid as a home purchaser when dealing with a home seller. None of what I’m about to share is revolutionary; most of it is, in fact, the commonest of common sense. But sometimes, in the midst of one of the biggest potential purchases people can make, emotions get the better of us and we say or do things we’d never utter or enact under cooler circumstances. This information is designed to help you avoid being “that guy.”

Without further adieu, here are 5 of my favorite ways Home Buyers can Alienate Sellers:

  1. Insult the Seller’s decor or personal property. It’s one thing to ask your agent to point out, tactfully, to the Seller’s agent that the decor is dated and you’ll be investing in updates to the home, and to make an offer reflecting this investment. It is quite another thing to point out the embarrassing proliferation of cat posters, grandma’s doilies or an egregious over-use of animal print fabrics. You aren’t buying the doilies – you’re buying the house. And if you make snarky comments about the decor that get back to the Seller – you might not be buying the house, after all.
  2. Assume your offer will be accepted because it’s all cash. A colleague of mine has a saying, “If it ain’t in writing – it ain’t.” I’ve had Sellers who accepted a lower offer on their property because a personal letter from the potential Buyer appealed to them and this extra tug on their heartstrings sealed the deal. No matter the terms of your offer or even the state of the market, don’t kid yourself. No offer is guaranteed to be accepted, and the posture you have when bringing an offer should be one of humility. Walking in with a big head and the belief you can bully a Seller into accepting your terms won’t bring you a win. It’ll just turn them off.
  3. Point out the competition in an effort to cast shade on the Seller’s property. Your agent should definitely point out comparable properties in the neighborhood that have sold for less than the Seller is asking when submitting your offer. That’s part of our job as your representative. It is not cool, however, to talk down the Seller’s property in a negative way. One house has a finished basement and one does not? A fair comparable to bring up. One house has stainless appliances and one house has a kitchen you, the potential Buyer, deem “disgusting” and unworthy of your high style? Keep it to yourself. There are ways to compare and contrast property listings without insulting the Seller.
  4. Move things around or leave messy footprints while on your Showing. Just ugh. You’d never track mud into a friend’s house if you were a guest – don’t do it in a Seller’s home. And if you do – clean up after yourself. Don’t move anything around, don’t open dresser drawers or medicine cabinets – this is not your house yet, and these are not your things. Side note – it is okay to use a Seller’s bathroom if you must – especially if you have small children in tow who simply can’t hold it – but make sure you leave the space tidy and looking like it did when you arrive.
  5. Show up at the Open House – with or without your Realtor – and talk smack. When you are in the market to buy a home, there IS such a thing as bad publicity – and spouting off a string of criticisms at an Open House will leave a bad taste in the agents mouth, and maybe even the Seller’s. Sometimes Sellers are present at the Open House – something I don’t recommend, but it happens. Some Sellers place a Nanny Cam on a bookshelf to record the action. A home owner may work from home or be home with a sick child and could be sequestered in a room where you don’t see them, but they may be able to hear every word you say. You are entitled to your opinions, but discussing your distaste about a particular property should wait until you are outside of the home – like in the car. Talking smack in the driveway while the neighbors listen in is not a good alternative.

You’ll come across many items worthy of comment while searching for your next home: avocado wallpaper circle 1971; stained carpets that appear to have played host to a Sasquatch; curb appeal that makes you want to head for the hills. These things and more will give you something to talk about in the car, back at the office or at home. Just don’t talk about them in the Seller’s house, in your offer or anywhere else in writing that will be presented to the Seller. Kindness and courtesy will contribute to successful negotiation over the course of your Real Estate transaction, and when you get to the closing table, you’ll be glad you played it fair and friendly.

Jack Meyers

The Meyers Group
jackestate@aol.com
303.263.3050
Twitter: @jackestate

Beating the Competition: A Street Smart Buyer’s Guide for Success in a Competitive Market

As you are probably aware, there is so much more to buying a home than deciding to buy a home; in a hot Seller’s Market like we are experiencing here in Denver, there simply aren’t enough homes to match the demand, and savvy, educated Buyers (with savvy Realtors who’ve got their back) are the ones winning the deals with so few properties to go around.

streetsmart

Buying your first home, next home, investment property, vacation home – all of these purchases can be exhilarating, and in this market snapping up the right home can be challenging, frustrating and, if you lose out to another bidder on a house you just love, even heartbreaking.

Consider these tips the cliff notes on being a Street Smart Buyer in Metro Denver – then call me to find out how I can help you snag a great Denver area property amidst the competition.

  1. Get pre-approved for financing. Not prequalified. Prequalification is a jaunty layout of the details of your potential to borrow, but it is not the bank’s seal of approval on a future loan. Sellers in the know (and their Realtor), will choose a pre-approved Buyer over a “prequalified” Buyer 9 times out of 10. If you really want to buy a house, really get approved for financing. 
  2. Try to find out why the Seller is selling the property. Moving cross country? Can’t afford the payment? Upsizing to a dream home or downsizing now that the nest is empty? You probably won’t be able to ferret out the reason for the sale yourself, but your trusty Realtor may. And knowing how emotionally tied to the sale a Seller is can make a difference in your offer strategy. If Chuck and Suzy raised the kids and the family dog in this house, you may want to write a personal letter sharing your family’s interest in the home, and painting a picture of your plans to love their home long term. This kind of information can give you a warm-and-fuzzy edge over a less personal buying approach.
  3. Be flexible. We’re talking about a smokin’ hot market in Denver right now, but this tip extends to any Real Estate market. When you can offer grace – do it. If the Seller asks you to move up an Inspection date, or to clarify details of financing, do it without a fuss. If they aren’t willing to include the custom window treatments you just love in the dining room – you’ll have to wave goodbye to that fabric and make other plans. Sellers have the edge in this market, and you don’t want to risk losing the deal over curtains, dates or other such details.
  4. Add a little honey to the pot. If the Current Market Analysis (CMA) supports the asking price of the house, consider offering above asking price – even by a few hundred dollars. This sends a message to the Seller that your offer is serious and you’ve come to play. Discuss strategy with your Realtor and buying partner(s) before you end up in a bidding war, but don’t be surprised if offering above asking is an option your Realtor recommends. If the house you have your eye on is dreamy at $365k, chances are it will be just as attractive at, say, $368. No the value of the house, know your ceiling, and don’t be afraid to offer above asking within your limits.
  5. Don’t be a cheapskate. While you may not be the type of Buyer willing to throw a little extra cash above asking into the ring, you definitely don’t want to fall too far on the other end of the spectrum. This is not the market for lowball offers, and Sellers will not take your offer seriously if it is not within a realistic range. There are deals to be had in this market, but insultingly low offers are not the way to get them.
  6. Slow and steady won’t win this race! Technology has quickened the pace of our personal lives and our business lives, and Real Estate is no exception. Real Estate transactions move quickly, especially in a hot market, and if you’ve done your homework, been pre-approved for financing, and you’ve settled on a community or neighborhood you like, be prepared to make a reasonable offer on a home and move forward. Your home is likely to be the biggest purchase you’ll ever make, and you don’t want to feel rushed, but this is not the time to ponder. Think it all over before you start your house hunt – then be ready to pounce.
  7. Serve the Seller as you would an honored guest. Sound crazy? In this market, Seller’s wear the crown – and Buyers are the wandering serfs looking for a place to crash. Work with your Realtor to ensure all deadlines are met, be courteous, helpful and complimentary (and genuine!) at every turn, and ensure that the Seller is pleased to negotiate and work with you. After all – if your offer falls through, they probably already have backup offers in place. Make the Seller want YOU to be the new owner of this house. And talk to your Realtor about how you can help make that happen.

Ready to make a move and not sure where to start? Do you know a friend who is thinking about relocating to sunny Colorado who could use some expert advice? I have the experience and know-how to help you land a fair deal in this hyper-paced market. Pick up the phone or drop me a line.

Jack Meyers
jackestate@aol.com
303.263.3050
Twitter: @jackestate 

Bidding Wars and Backup Offers – How to Win the Real Estate Battle

If you’ve picked up a newspaper, watched the nightly news, perused the internet, know anyone who has bought or sold a home recently, or rubbed elbows with Realtors anytime over the past 18 months or so, you know that the Denver area Real Estate market (and many other markets across the country) is thriving. Multiple offers are a happy reality for many sellers, and if you are in the market to purchase a home, you should be prepared for the possibility of – da-da-daaaaaaaaa – a Bidding War!

This situation is a dream for most sellers, but can quickly become a tricky situation for the buyer. This is one of the many reasons I recommend bringing an experienced Realtor to the table; before you hit the ground running on your next purchase, I’ve got a few tips to help you prepare for the possibility of a bidding war on your next property transaction.

If you refuse to get all hot-and-bothered when a bidding war starts to heat up, you can keep a cool head and make wiser decisions about your purchase in the long run. Chill out! Let the seller get hot under the collar – and let your Realtor help you navigate the negotiations drama free. Know your price ceiling, and communicate your desires clearly before the back-and-forth begins.

If you lose the deal to another buyer, get your second chance in writing in the form of a Backup Offer. Until the sale closes, the deal is not a guarantee. There are several factors that could send someone else’s deal on “your house” down the drain:

  • Financing may fail. Loan qualifications have tightened up considerably since the last recession, and the initial buyer’s loan may fall through before closing. Enter you – and your backup offer.
  • The home inspection may send the initial buyer packing, in which case you’ll have an opportunity to negotiate further with the seller with a more thorough knowledge of the condition of the property. Legally, sellers are beholden to disclose major issues with the property that they may have been made aware of through the home inspection.
  • No matter what causes the initial buyer to move on from the property you are also interested in, once the deal has moved forward with one buyer, sellers are often anxious to keep their property under contract. You’ll have the edge in moving forward with your offer.

The key to success on a Backup Offer (if you don’t win the deal initially) is to get it in writing – and to have a Realtor on your side to ensure all of the details of your Backup Offer are handled with the same professionalism as any other offer you would put forth. Ideally, your Backup Offer will be the contract that closes the deal on your chosen property, and the details matter.

Ready to start your search? Or maybe you’ve already got your eye on a gem of an investment property or your dream home? Give me a call or drop a line. I’m happy to talk shop with you any time, and autumn is a great time to hunt for your next house.

Jack Meyers
jackestate@aol.com
303.263.3050
Twitter: @jackestate