Denver Real Estate Market 2016: Winning Strategies in a Competitive Market

Posted by Trevor Sholders on Friday, June 24th, 2016 at 10:22pm.

Denver's real estate market is hot, so hot, homes go under contract within days, the good ones that are priced well that is. Being in a market where there's a high likelihood you'll be competing with many other interested Buyers, you need to make your offer standout from all the rest of the competition. Some of our clients have run into as many as 25 competing offers so far in 2016! You need to have all the tools to not only differentiate your offer from others but ensure that you're in the #1 position, make the offer so attractive that it's a no brainer for the Seller. Here's a list of the different ways you can make your offer become the winning offer:

1) Price & Escalation Clause

Provided the market analysis on the property allows for room to increase your price without going considerably over what the highest comp provides, increase your price to a comfortable amount and ask the lender how that price difference will affect you. You can also use an escalation clause to increase your offer without going over your comfort level. As example, the listing price is $350k, you want to offer more but not more than $375k. In the additional provisions, a clause would take the effect as something like this, "In the event of a competing offer, the purchase price of this contract shall increase by $1,100 over any competing offer, not to exceed $375,000. Seller must provide a copy to the Buyer of the competing offer for this escalation clause to take effect."

2) Concessions

If you are requesting concessions (money for closing costs, a home warranty, additional requests regarding the home or the transfer, etc), consider the importance of these items and withdraw those that will make your offer less attractive compared to one that isn't requesting those items. We may or may not be told if there are concessions in other offers so assume there isn't. 

3) Earnest Money

You can increase the amount of EM in your offer. As this is the Seller's only recourse for your default on a contract, increasing this benefit to them in your offer shows how serious you are. It can be a good way to set you apart from other offers. You have great agents that will make sure you're always prepared for an upcoming deadline well before it's here and the purchase contract allows you to terminate in many ways while retaining these funds. In short, we'll do everything to ensure that these funds are not delivered to the Seller unless you close on the home.

4) Loan

If you're capable of doing a conventional loan, write the offer that way even if your plan is to go FHA or VA. Check any boxes of financing you are capable of doing. This will show that with a conventional loan, the appraisal requirements will be less than that of FHA or VA and put you alongside any other conventional offers. Plain and simple, a Conventional loan will almost always be accepted over a FHA or VA.

5) Down Payment

Include as much down as you have in the bank or other savings. You are not obligated to close with this dollar amount but it shows you have "more skin in the game" alongside other offers and will be evaluated when comparing offers. The Seller only cares that you close on closing day, not how much you're actually putting down so put as your down payment all that you have. 

6) Title Insurance & Other Costs

Consider taking the cost of the title insurance policy yourself as well as choosing the company. Costs are almost always less than $2k and we can get a very close estimate on what those fees would be for your price range prior to offer writing. You can also cover misc. HOA fees, closing fees, survey fees and other costs to show how you're capable and willing to cover these other costs and will make a difference in the evaluation of your offer to others.

7) Appraisal

Should you elect to increase your price over the highest comparable sale, you can offer to cover any gap between the appraised value and your offer price, thus showing your seriousness and willingness to bring money to the table in the event the home doesn't appraise at the offered price. An example would be, "Buyer agrees to cover up to $5000 over any appraised value less than the purchase price of this contract, not to exceed the purchase price." Yes, you are risking bringing more money to the table if the home doesn't appraise at your offer price but only that which you're comfortable with and will be more attractive than a competing offer whose offer price is higher than yours but with no "parachute" for the seller should the appraisal come in low. Brokers wouldn't price their listings so far beyond what the comps allow otherwise they would be risking the transaction all together so both the Seller and their agent are already familiar with what the sales comps are and this practice gives you and edge over a higher offer that is unrealistic.

8) Inspection

This is the last recommendation we would ever make but is also a tactic that can make the difference between you getting the home or not. Clients have waived their inspection objection/resolution yet still performed their inspection to know the true condition of the home. If the home is in great shape and you feel comfortable with some issues arising and assuming those costs, this will definitely put your offer above many others (provided your price and other terms are also competitive) but again, can put you at risk. Additionally, you can remove the resolution but keep the objection, and state the property is AS-IS. You're still protected in this situation to ask for expensive repairs or health concerns of the Seller or terminate; they'll have to disclose these issues to all other potential Buyer so chances are they will work with you on them.

9) Timing

We'll find out what the most ideal timing to close and inspect the property is for the Seller and if you and your lender can accommodate it, do it! This is a no brainer if the timing works and gives the Seller exactly what they are wanting without any or few costs/issues for you. 

10) Personal Letter

Sharing info about you and your desire to purchase a Seller's property can have an effect on the Seller choosing your offer over another. Pulling at the heart strings as it were should be done with only positivity (not talking about your hardships as much as possible) and provide some insight into why they would like working with you, what you're about, etc. It doesn't always have an effect but when it does, it makes all the difference. Also, identify where you and the Seller are similar (they like dogs, you like dogs, they like cats, you like cats. Customize your letter so that you're in-line with things you noticed about them through their home and don't list any disimilarities.

11) Cash Purchase

If you or your family are with considerable savings, purchasing the home in cash and then refinancing into a loan after the purchase will trump almost 90% of the time in a multiple offer situations. In a cash purchase, there is no requirement for a loan objection or an appraisal where in financing, you need these protections if something should go wrong. These are big contingencies to remove in the Seller's eyes and a cash purchase will likely trump any financed offer, depending on the price offered and the other contract offerings.

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