How to Negotiate When Buying a Home

In today’s fast-pass housing market, especially in Denver, going to buy a home can seem like an experience at an auction house. You know what I’m talking about right? Where the auctioneer (here being the home owner) has the ultimate say and you and a good dozen people stand around hoping to make the final offer and hear those magic words of “Sold!”.

So how can you best prepare when going in to negotiate? What is the best way to approach an initial offer, decide on a good price, and finally, sign on the dotted line for ownership to the house of your dreams?

Well first thing is first, you need to have help in your corner from day 1. Working with a REALTOR® is going to put you ahead of the curve because REALTORS know the industry inside and out. We know how to negotiate with sellers and buyers, we know the neighborhoods and what houses are worth, and finally, we know how to get down and creative if we need to in order to help negotiate the best price and outcome for you and your family.

First and foremost, when looking to buy or sell and when it comes to negotiations, find a good REALTOR® and even better a REALTOR® who is an MCNE ( Master Certified Negotiation Expert) (if you are looking currently feel free to give me a call, happy to talk with you).  But here are some other suggestions when it comes times to negotiate for the house of your dreams.

Denver is currently in a sellers’ market, meaning that there is a high demand for houses and sellers’ hold the power. In this type of market you need to move quick when it comes to a desirable house and make a good connection with the buyer. If a buyer doesn’t like your offer, they won’t spend a lot of time negotiating with you. So when working in this market, keep it very simple in the steps to make before negotiating and the steps during negotiation:

•  In any market, it is essential to get pre-approved right away for a loan. If a seller sees you have the means to purchase their house that always makes them more comfortable with negotiating.
• Go in strong with your offer, offer the asking price or something close to it.
• Consider writing a personal letter with your offer or even add a photo to let the seller see who the potential buyers are and an image of the new people who would enjoy the home just as much as the seller did.
• Ask only for the standard contingencies — financing, appraisal and inspection — to protect yourself down the road.
• If you really like the home, be prepared to move quickly, houses do not last long in this market.

With all of these negotiation tools in your back pocket, it is exciting to think about finding that perfect home to call your own. Always remember, REALTORS are here to help you through the processes and are your advocate and if you are looking to buy or sell, don’t hesitate to give me a call and chat about what you are looking for, I am more than happy to lend any and all master negotiation skills I have!

Photo by alengo/iStock / Getty Images

Paying Over List Price

Spring has sprung around the Denver area and with the changing of seasons and new life sprouting everywhere there also begins the new busy season in the housing market. Have you decided this spring might be the perfect time to start looking for that dream home of yours? There is no time like the present and as Denver continues to grow on the daily, if you are ready to purchase a home, start looking today but be prepared for what you might run into along the way.

 In the Denver market, many buyers are paying over the list price, which can be hard or uncomfortable when you are entering the market with a specific budget in mind. Due to this being a sellers market where homes sell quickly and sellers have a lot of pricing power often even the appropriately priced homes in the Denver metro region sell quickly and receive multiple offers and even cash on the spot offers. In the last month alone, 48 homes in Denver urban neighborhoods went under contract in 7 days or less and sold for 102% of their original list price. The seller and the listing agent determine the list price based on the current market and by comparing recent sales of similar homes. If priced well, the home will fall within a verifiable range based on those sales. Please understand this is a range and there is not set number.  To ensure the home is priced accordingly, ask your Realtor to look at sold and under contract comps in the neighborhood and to discuss those with you.

 With record low inventory and high buyer demand this is causing homes in the Denver metro region to appreciate rapidly. The rule of thumb is to look at comps within the last three months.  If you look back further than three months this can skew your price point and your mental willingness to aggressively pursue the home. Denver homes appreciated at an average of 17% over the last year. This means that the home you could have purchased 12 months ago for 400k is now worth 451k. This provides a solid case and can make you more comfortable when offering over list price. One thing not to do is wait to make an aggressive offer until you have searched for months and lost out on several homes due to being outbid because you could very well price yourself out of the market.  Here are some guidelines you and your agent can employ to help you get under contract and into your next home:

·       Pursue homes priced below the top of your price range. Giving yourself a 3-5% financial buffer will allow you to comfortably bid over list price, providing you a competitive edge and more leverage.  

·       Unless you are paying cash for the property, an appraisal will be required. The appraisal is an official report comparing similar properties (comps) to determine the value of the home you are purchasing. The lender will use this appraised value to determine how much money they will lend to you. If the offer you submitted on the property is higher than the appraised value, you will need to account for the difference.

·       As the buyer, be prepared to make up that difference by bringing cash to the closing table. If the seller is willing to negotiate, they may adjust the purchase price or look to find a compromise between the two. If you reviewed the comps with your Realtor prior to making an offer, you should have a realistic idea of the value of the property.

If your offer far exceeded the homes estimated value, in order to get under contract, there is a good chance the deal will crash at appraisal. Another buyer, the one with the solid and realistic backup offer, is waiting for this to happen. Moral of the story: Make sure you can follow through on your offer before submitting it.

·       Consider terms when writing a competitive offer. The highest offer is not always the deciding factor for sellers. In other words, those with the most money do not always win. A well-written contract with terms that address the seller’s needs is equally important. Does the seller need to find a replacement home? If so, your offer should allow them time to do just that. Will they consider making a concession for updates or closing costs? If not, don’t ask for them in your initial offer. Are there any other offers on the property? If so, you need to adjust your offer accordingly. An experienced Realtor will call the listing agent to ask questions specific to your purchase, allowing you to craft an offer that works well for both parties. The fact of the matter is: If multiple parties are imagining living in the home you love, you’ve got to move past the list price before putting out the welcome mat. Talk to your Realtor about thoughtful strategies to secure your next home.

 If you think you are ready to dive in and start looking, start your search here. I know how daunting it can be to begin looking for that dream house of yours and I am here to help you take those first and last steps to securing that special place. 

Photo by: Walnut Street Photography  Flour Mill Lofts - Denver 

Treat your mature business like a Startup.

Even though I have been in business since 2000 I still consider myself and my business like a startup.  Technology, people and new innovations are always changing and you have to make sure you always stay on top of them.  

I recently purchased a Colorado longboard company and found myself calling it a startup but It has been around since 2008.  It never got to really see the market and it had so much potential.  My husband, Jay Modglin and I decided to buy this company because we love business and new challenges.  We saw the potential to grow this company but we also saw that it is part of a cool creative culture and we were excited to be a part of it. 

We never longboarded but I been snowboarding for over 20 years, Jay used to surf and snowboard and we both skateboarded when we were kids.  So we thought how hard could it be!  So we decided to purchase the company and then started to learn how to longboard.  Surprisingly we jumped on and picked it up right away. 

So this brings me back to my post about treating your mature business like a startup.  Maybe you should always consider your business like a startup so you are always looking for what is new and innovative for your business.  If you keep doing the same thing the same way it may not get you infront of anyone new.  

Time is never wasted when absorbing, reading and learning about the world outside of your own market.  Remaining curious and devoting time weekly to expand your own perspective can pay off for your business.  You never innovate examining your own category and what your competitors are doing.  Push yourself outside your market comfort zone to inspire fresh thinking and new ideas. 

I sell and personally invest in real estate full time and I love what I do.  Purchasing this new Longboard company made me realize that I needed to look at my real estate business like a startup and make sure I am new and innovative all the time.  

So I have recently started this blog and looking to meet new and innovative people through it.

Go and be a startup again but don't forgot to also be a mature business and act like you've made it!