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I’m sure there is a lot of reason’s why you may feel you shouldn’t buy a home right now, but here are reasons you should.

1.  You are an investor with a long term view to acquire properties that should appreciate during the next cycle while cash flowing in the short term.   Great investors don’t buy in hot markets, they buy when no one else wants to.  In Denver, one of the best deals of this type are in close proximity to current and planned transit oriented developments all across the city. Check out the Overland neighborhood of Denver and the University Hills neighborhood.

2.  You are not a current home owner and have good credit.  You sir/or maam are a hot commodity.  You should take advantage of that.  The smart money may realize that the current low interest rates on mortgages + downward pressure on home values = A great deal.   You have a chance to ‘lock in’ a payment for your living space.  Your rent in many areas of Denver is expected to rise along with inflation and eventually demand.  Inflation when you own a home is a good thing.  In many ways, inflation can actually help the home owner.  The payments over time ’seem’ more affordable as competitive wages adjust to the cost of living changes.  In addition, home values traditionally keep pace with inflation over the long term.  By picking the right area, you can combine the gains from inflation with actual appreciation that comes when an area is revitalized (Gates redevelopment in Southeast Denver, Platte Park) or business moves into the area (Check out the Fitzsimmons area of Aurora).

3.  You need a place to live.  Sure you could rent a place, but you’ll soon be back in  the same situation again.  Many homeowners will now be open to leasing a home with the option to buy it.  This is rarely an option in a hot market.

4.  Your current home is inadequate.  Often, you just need to make a move.  In this case, the overall market just doesn’t matter.  When you sell a home and buy a home in a similar market, it’s likely that the value that you think you are losing is balanced when you consider both sides of the home equation.  The increased inventory can make it hard to sell but it can be also give you more choice when its your turn to buy.

5.  You just want a good deal.  Good deals are to be had if you know where to look.  If you want a good deal, buy a home in a market that is continuing to appreciate even now.  For example, Denver Highlands up 10%.  “But I thought this was a buyer’s market”.  Or buy in an area that you expect to recover first such as DU, Rosedale, Washington Park.  These are all close to the popular parks, nightlife, and of course Denver University while still having easy access to downtown and the Denver Tech Center.  Trying to locate a foreclosure deal in one of these neighborhoods is highly unlikely.  Rather than looking elsewhere at foreclosure in depreciating areas, buy the best VALUE in the best neighborhoods that you can afford.  Now that would be a good deal.

In case you didn’t catch the Today Show this morning.  A home buyer in San Diego is suing her Realtor since she discovered she paid $175k more than her neighbor did for their house.   She blames her Realtor for allowing her to ‘overpay’ for her home.  I’ll go out on a limb and say she doesn’t have a chance at proving the malicious intent that is required by law to prove this unless her agent really screwed it up by selling her his own house without disclosing it.  That being said, here’s a few things to remember when buying a house.

1.  Buying a house?  Do your own homework. Validate the comps the agent supplies to you with at least a drive-by.  Develop your comfort level with the price and learn to ask the right questions.   Your Realtor isn’t there to try to second guess your decision to purchase the home.  He’s going to provide you with information about whether the price can be supported or not.  Most of the time they may try to show you what else is available even though many buyers just get sick of looking and want to buy the house they think they fell in love with.   The more experienced agents aren’t going to talk you out of buying a home.  They are there to sell you one, remember?

 2.  The appraisal isn’t really what the home is worth.  There’s no absolute value for a home.  It’s simply an estimate of what the home could be worth on the open market at a particular moment in time when compared to other homes that have sold.  It just means that the price can be supported, at least theoretically….that’s it.   The only time there is an absolute value for a home is the moment it is sold.   At that very instance it has a value.  Ten minutes after you walk out of closing…things might have changed. 

3.  Trying to compare your home to another persons home just isn’t that easy.   It would be like trying to compare two similar women that were 5′6″, 115lbs with blond hair and saying they can both do the same job.  Upon further examination you discover that one is a the female executive of a Fortune 500 company and the other is the meth-head that lives in her alley.   Every home has unquantifiable characteristics that will make the home different from the neighbors house.  The wear of the carpet, the view from the yard, the smell as you enter.   Not to mention the motivations of the seller that may have influenced the final ‘value’.  All of this could easily turn into 100k or more on a million dollar home. 

4.  A home is worth what you pay for it assuming of course that you know what you’re paying for it,  how much that works out to a month, what similar homes have sold for in the past, and most importantly what other homes were available when you were shopping for a home. 

5.  Start asking questions when you don’t understand.  If you don’t trust the answers you get or don’t understand the answers you get, ask again.  Ask other people.  And most of all, ask yourself.  If you don’t know the answer, look it up. 

I don’t mean to be condescending to homebuyers.  On the contrary.  I simply want them to make sure they are awake to the truth that they are the ones that will be paying for the home.  So instead of just saying it’s the biggest investment of your life, act like it really is.  Otherwise, Caveat Emptor.   Finding the right Realtor for you and educating yourself as to the process (or even allowing yourself to be educated) are very important parts of the home buying process.   If you’re not ready to do the work, you probably aren’t quite ready for home ownership. 

 

A study released on October 31,2007 by S&P Case-Shiller shows Denver leading the country in price appreciation.  While the numbers are not staggering, Denver’s subtle growth marks a stark contrast from the drastic price drops of other cities across the United States.

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Selling a home has gotten a lot tougher over the last two years. The Denver real estate market has really started to slow down. Buyers are gaining the upper hand in negotiations because there are many more homes to choose from. This means home sellers are going to have to pay attention to the feedback they get from their agents and from the public and make changes that will help them sell the home. I hear all sorts of things when I start calling for feedback. It’s amazing how useless most of it is. I mean, it’s rarely anything the seller and I haven’t realized but I push on waiting, building support for whatever course of action will eventually need to happen. I’ve come to characterize feedback in three types.

The first type of ‘feedback’ are things the homeowner already knows but the homeowner has refused to address. These are usually obvious and just a huge waste of time. These are things that should be addressed prior to sale. Either fix the problems or drop the price until the home you’re trying to sell is similar to the homes in the same price range, the homes your potential buyers are looking at. The huge waste of time comes in because these are things that are so obvious that I pointed them out as I walked through at the listing appointment. How many wasted opportunities to sell will you need before you take my advice and make changes?

1. Didn’t like the finishes. Paint colors, carpet, light fixtures, etc… This is pretty common and highly changeable. The problem is most sellers think that if the buyer doesn’t like it, they can change it. If you’re getting lots of showings and no offers, this could be the culprit. Usually it’s cheaper to make the changes than try to drop your price enough to get an offer. It’s the whole $2 will get you $10.

2. Home needs updating. If you haven’t remodeled recently and don’t have the latest and greatest finishes, you won’t compete anywhere near the same price of similar homes that do. Buyers usually don’t want to do any work. If your competition is nicer, don’t expect they’ll pick your home unless there is a significant price difference. Your only cheap options are staging the property well and making sure that it’s clean and bright for showings. Some paint usually goes a long way to help here too.

3. Home needs serious work - You can’t tell me the seller and the listing agent don’t already know this. Investors are your most likely buyer here and don’t expect to get more than 80% of what your home could be worth if it was fixed. Most savvy investors are looking for homes at about 70% of what they could sell it for fixed up.

4. Horrible smells - Many homeowners have an idea that their home smells but don’t know what to do about it. Others like to pretend they can’t smell anything. I know they know it smells though because they always ask. People whose homes don’t smell never ask visitors when they come in if they could smell the _____ (insert animal of your choice). People whose homes smell, usually do ask that silly question. Of what value is giving the feedback…”Yes, it’s horrible.” when the seller isn’t going to do anything about it. If it smells bad, don’t expect to get a fair price for your home. I’ve seen this knock $20,000 of the value of homes. Animal smells are the worst but food smells can be overpowering too. Suffer from hyposmia? Get professional help.

5. Home is overpriced - If you’re a seller, don’t expect helpful feedback from buyers when it comes to price. This is the most inaccurate feedback you will get. Most buyer’s agents will likely tell you it’s overpriced regardless of what the comparable sales are. Usually, the buyer’s agent has no idea about the home’s value; they only know if their clients liked it or not. Even if they liked it, they might say it’s overpriced. Who knows for sure? The only thing that is certain, the buyers didn’t want to pay the list price for the home. If all buyers that see your place would gladly pay your listing price, you’re probably listed too low. From an agent’s perspective, feedback on price is only useful for helping the seller feel comfortable about a price drop, unfortunate but often necessary. I , personally, don’t go by feedback; I start by looking at the competition and seeing how we compare. This dictates more than anything what your home should be listed at.

The second type of feedback we get are things that the home owner already knows about but can do very little to fix.

6. Poor location - Funny thing is everyone talks about location, location, location as being the most important factor in real estate. But to a seller, he can’t do anything about the location when it’s bad. You can expect that location alone will turn off many potential buyers even before they come in. Repeated canceled showings? They probably discovered the problem before they even went in. A seller can only try to divert attention to the property’s strong points while attempting to downplay the problems with the location. Backing up to a busy street? Play soft music inside and considering adding a water fountain outside. If you’ve got worse problems than road noise, you’re probably going to need to address it in the price of the home. These problems may include close proximity to factories, crack homes, shanty towns, tent cities, train stations, gang hangouts, prisons, public housing, or Rocky Flats; don’t act like your home is anything like the home that backs to a ‘green belt’ or fronts on Washington Park.

7. The home has a funky layout - Staging may help but If your home has a hodgepodge of additions over the last 80 years it’s going to effect the price.

8. Bad Neighbors - There’s very little you can do to get the neighbors to ‘get with the program’. I’ve seen homes where the neighbors had a junk yard in their back yard, rotted out cars and all. As you might guess, this is bad for the neighborhood. I once got a call from an agent that noticed there was an electric fence, the type used for horses, along the top of my client’s fence. The neighbor needed to keep the pit bulls from jumping the fence and getting into everyone else’s yard. Do the only thing you can do, file a complaint with the proper government agency and hope nobody finds out it was you.

Now for actual valuable feedback.

9. Doesn’t show well - This can mean anything really, but if you have dogs barking at the buyers as they walk through the home or they are stepping over underwear, I want to know. Homeowner doesn’t step out for the showing, laundry is everywhere and bread crumbs are all over the counters? I want to know how the seller is doing at keeping the place show-worthy. Trust me, these are things the seller doesn’t want to hear. They are at the root cause of why homes don’t sell even after they really are priced appropriately for what they are.
10. Home doesn’t show at all, the homeowner denied showing - As an agent, nothing is more frustrating than when you’re spending money to market a property and the homeowner turns down a showing.
In most cases, I know exactly why something isn’t selling. Feedback is an exercise to help educate the seller and build the seller’s confidence in what I’ve already said to them. I don’t try to get feedback so I’m better educated about the price or condition of the home. I’m an expert and if I need a second opinion, I’m not going to ask someone who has a motive to not tell me the truth. I get feedback to take to the seller and say ‘See, I’m not the only one that didn’t think blood red with a rag faux finish is a poor color choice for the bathrooms ceiling and walls.’

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