5 Tips for anyone Buying or Selling Real Estate in 2015
5. Translating Real Estate Predictions for 2015
Every year experts make predictions on what the future has in store, based on the many predictions I’ve seen, here’s what I see in the crystal ball most likely to affect the Denver Real Estate market. Interest rates on the rise, rates have remained in the low 4’s for the past several years and many experts predict rates will reach 5 by the end of 2015. What this means is affordability will decrease when rates increase, likely causing home values to stabilize. Record high home sales in Denver, with the combination of first time millennial buyers, growing population in Denver, move up buyers who have been waiting for their homes value to provide the equity needed for their next stage in life, empty nesters looking to downsize or move to a warmer climate, and the large number of boomerang buyers who went through a short sale or foreclosure when the market fell approximately 5 years ago – Denver will have extremely high home buyer demand in 2015 and I suspect we will see a record high number of homes sold in 2015. Increase home prices in Denver, values will likely see modest increases this year as values slow from the double digit increases we’ve seen for the past 2 years. We are still in a sellers market with more demand than availability inventory – demand is expected to stay strong in 2015 but when interest rates increase, buyers affordability will counter balance the jumps we’ve been seeing in price. Bottom line, now is a great time to buy or sell property in Colorado. Often times you move because of a life altering event and it’s a necessity, if you’ve been waiting for the right time to move there may not be a better year than 2015!
- Understanding Market Value vs Appraised Value
As a buyer or seller, it’s important to understand value is driven by a variety of factors in the market. Market value is the amount a buyer is willing to pay for a property, this is sometimes higher and sometimes less than the appraised value. In a perfect world, an appraiser will come up with a value equal or slightly higher than the purchase price. Why might a buyer be willing to pay more than similar homes recently sold for? Perhaps it’s the only house that check’s every box off your list or the house has a unique feature or desirable location that is difficult for an appraiser to justify an adjustment, or perhaps this is your favorite house and you’re up agains fierce competition with other buyers who have offers on the table. We are still in a strong sellers market, exceptional houses in certain price ranges may attract buyers who either offer more or are willing to pay more than the appraised value. This is a complicated matter that as a buyer or seller you may find yourself in and need to have a realistic idea of an estimated “appraised” value before making an offer or countering/accepting an offer.
- Strategize a Door to Door Move
No one wants to move into temporary housing. With realistic expectations paired with a smooth real estate transaction, more often than not you should be able to move directly from your current property to your desired new home. Here are several things that can assist you with a successful door to door move. 1) Have broad search criteria with a realistic price range, be looking in a several mile radius or in multiple neighborhoods with a price range that is within the “average sales price” for the area. The “average sales price” varies across the Denver Metro in some areas you can find a detached single family for $200,000-$250,000 and other areas you’ll need at least $400,000. 2) Have a realistic timeline, from contract to close you’ll typically need 4-6 weeks. In certain circumstances you can close in 2 weeks but that is not the norm. Even with a 4 week close you should plan a little buffer time to plan and prepare. 3) Work with a team of professionals. On your team it’s imperative you have an experienced REALTOR and lender (unless you’re a cash buyer). This is likely one of the largest purchases of your lifetime, do not underestimate the complexity of details involved and the unexpected turns that could happen. Your lender is just as important as your REALTOR, especially if you’ve had a credit event in recent years such as a short sale, foreclosure, NED or bankruptcy – you may be able to qualify but DO NOT take that risk with anyone other than an trusted expert in purchase loans.
- How to handle a competitive offer situation
In Denver’s currently strong sellers market, as a buyer or seller you need to be prepared for multiple offers. For a Seller, the highest offer is quite possibly not the best – let your REALTOR advise you on the various factors to evaluate to determine which Buyer is most likely to successfully close on your property. For a Buyer, first and foremost, you need to be pre-approved with a reputable local lender to be competitive. I stress pre-approved as this means your financial background has been seen and verified by your lender and you’ve gone beyond simply completing an online loan application. As mentioned previously, working with a trusted expert in purchase loans will greatly benefit you, a good listing agent will vet your lender before discussing offers with their client and be more comfortable advising the Seller to work with a lender they have a positive track record with. While there are many lenders out there, few have a highly esteemed reputation that will increase your competitiveness. Other considerations as a buyer is having tight deadlines; no contingency if possible; increasing your earnest money; making your offer stick out; and having a clean offer, you’d be surprised at the number of individuals who have a Colorado Real Estate License but do not professionally complete the Contract to Buy and Sell.
- Talking through your real estate needs and expectations
Buying or selling a house is a big decision. It’s important to understand what is motivating you to make the move, set your goals and prioritize your wish list. If you are a current homeowner, be sure your REALTOR provides you with your estimated net proceeds – based on a realistic market value for your home, this will be needed to help determine a realistic budget for your next home. Whether you’re a seasoned homeowner or a first time homebuyer be sure to work with someone who is there to understand your needs and work hard to serve YOU.
If you’ve been thinking of buying or selling a home in the Denver Metro contact me to discuss your situation and develop a plan customized to your needs. Find out the services I offer to assist my sellers earn more money in less time and my buyers increase their odds of having their offer accepted in multiple offer situations.
-Jennifer Blake, Denver REALTOR
Home buyers across the Denver Metro may qualify for a down payment and closing cost grant of up to 4% of your loan through the Metro Mortgage Assistance Plus program. Participating municipalities including but not limited to Denver, Littleton, Centennial and Englewood are sharing a pool of $15 Million available to home buyers who qualify, to bring home ownership within reach. This program is expected to last through 2014; however it’s available on a first-come, first-served basis until the funds run out.
