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Reasonable Interest
Rates and a Healthy Inventory Have Created a Great Home Buying Opportunity!
A 7-Insights Report
written by Mike Cooke
What
are 7-Insights Reports?
Two
forces have come together to create an excellent buying opportunity in the
Denver real estate market.
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Interest rates are very reasonable and,
in some cases, have dipped down to 40 year lows.
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There is a healthy inventory of homes on the market right now and
this gives you a good selection of properties from which to choose.
Here are seven things I think that you should
know that will help you
take advantage of this favorable situation:
No.
1 - Find a buyer's agent. The law governing the ways in which real
estate agents can work with consumers in Colorado just changed again on January 1st,
2003. An agent may act in three different capacities: seller’s agent, buyer’s agent or
transaction broker.
The agent whose name appears on the "For Sale" sign in front
of a house is typically a seller’s agent and is obligated to try to get the highest
possible price for the seller. Obviously, you don’t want to work with this person if
you are a buyer.
Transaction brokers merely facilitate the transaction and are legally
prohibited from acting as an advocate for either party. For example, a transaction broker
must remain neutral
in price negotiations.
Therefore, smart buyers want what most sellers have – an agent
to represent them and to protect their best interests. This is extremely popular because the
buyer can get the benefit of a buyer agent’s expertise without directly paying for
it. The seller almost always pays the buyer agent’s fee. Using
a buyer's agent just makes sense.
When working with buyers, I have been
offering buyer brokerage services since 1988 -- long before it was popular
in the real estate business.
No.
2 - Arrange financing before you find a house.
You can make an application for a home
loan before you have found a house that you want to purchase. The lender can process your
application – check credit, verify employment, etc. – and get you pre-approved
for a mortgage. This greatly increases your appeal to a seller.
 Since most purchase
agreements are contingent on the buyer being able to obtain loan approval, having this
done in advance gives reassurance to the seller that you will be able to complete the
purchase. This may cause your offer to be considered over other
offers where the buyers have not yet consulted a lender. And, you may end
up getting a lower price on the house because the seller has a higher level of
confidence that the deal will actually close.
No.
3 - Make sure you are one of the first
to know about homes that meet your needs. Desirable homes will sell
quickly in any market. New listings are coming on the market every hour of
every day. While most agents have access to the MLS where resale homes are
listed, they have to manually enter searches to find the houses that are
new to the market.
To make sure that
we do not miss out of your dream home, I subscribe to a special service
that automatically  searches
the MLS every night for properties that have come on the market during the
day. The system notifies me by email about any new listings that meet your
search criteria. In this way, we are one of the first to know about newly
listed homes. This minimizes the chances of missing out on a good deal.
Other sources are available for
us to consult
– sources like the Internet or newspaper and magazine ads. However,
none of these sources provides a complete list of available properties. Also, since there can be a
significant lag time before houses appear in newspaper ads or on the
internet, they tend to be less desirable
properties that other buyers have already passed up.
No.
4 - Have realistic expectations about homes that are for
sale directly by the owner. Even though most sellers hire an agent, a few sellers
attempt to go it alone. We will not overlook these properties, but
it will help if you have some realistic expectations about these houses.
First of all,
there is no complete list of By Owner houses and no systematic way to find them. So,
we generally will not want to consider them until you have narrowed your search to a very
specific area.
Also, be aware that sellers who attempt to sell their homes without
an agent can be less motivated. Consequently, they tend to overprice their homes.
In addition, most of these sellers aren’t
sure what to do when they get an interested prospect and may be unaware of full disclosure
laws that require them to tell a prospective buyer about material defects.
Despite these
drawbacks, I occasionally find a By Owner property that works well for
my clients. We won't overlook them but we will also have unrealistic expectations -- and
we will not expect them to be "bargain priced".
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