In such a competitive environment, knowledge is your best friend and knowing what you’re getting into will help you avoid common mistakes.
Here are five tips to help ensure success when buying a home.
1. Meet with a loan officer and get pre-approved early
There’s no such thing as too early when it comes to thinking about buying a home, according to Marni McMillan at VIP Mortgage. McMillan said one of the worst mistakes you can make is getting excited about a home only to realize that it won’t work out because you didn’t do your due diligence ahead of time.
Meeting with a loan officer will help you understand where you stand in the process. If you’re not ready to start looking or you don’t qualify for a loan yet, meeting with someone will help you figure out your obstacles and what you can do to improve your situation (and you might even find out you’re in a better position to buy than you thought).
Getting pre-approved for a loan gives you a good idea of how much home you can actually afford, so you know exactly what to look for.
2. Be prepared (and be ready to move fast)
With inventory so low and demand so high, properties in Denver and the surrounding area sell quickly and attract bidding wars, especially at lower price points. You’ll have to act quickly to nab the home of your dreams because there could be dozens of others clamoring to put in competing bids.
McMillan said one side effect of Denver’s crazy market conditions is buyers putting in an offer without having an appraisal done first because they want to wrap things up quickly. If a home ends up being appraised for less than the contract price, the buyer then has to pay the difference. McMillan said it’s important to be aware of this ahead of time so you’re not caught off-guard if such a situation presents itself.
3. Bring something extra to the table
“It’s not always about money,” McMillan said. A seller might be inclined to accept an offer from someone offering cash and they may be skeptical about someone using a low down payment or FHA loan, but there are things you can do to bolster your position.
Sometimes that means offering more than the asking price, or including an escalation clause in your offer, meaning you will automatically raise your bid if someone else comes in with a higher offer. Many buyers also write letters or produce videos to introduce their families to a seller and explain their personal circumstances. Such a personal touch can be all it takes to stand out from the crowd.
Above all, communication is key. It’s important to be in contact with a seller and the listing agent to let them know that you mean business.
“One of the biggest things I find that helps my clients get contracts accepted is really communicating directly with the listing agent and assuring them that this transaction’s going to close,” McMillan said.
4. Find the right lender and real estate agent
Another way to ensure you beat out the competition is to find a lender and real estate agent who will work together as a team on your behalf. With communication being so important, having the right professionals working with you can go a long way in keeping those communication lines open and ensuring a smooth transaction.
5. Don’t get discouraged
Buying a home can be difficult and time-consuming, especially in the Denver area, but hang in there. It can feel like it’s hard to compete, especially when bidders are coming in with offers over asking price and paying cash. But it’s all about the long game. McMillan said that sometimes it’s all about finding the right fit – for you and the seller – and that can take time. Persistence pays off in the long run and ultimately, the investment is worth the effort.
“Just be patient and stick with it,” McMillan said.