As first-time homeowners, they recognize just how frustrating the experience can be with regard to buying a home. From the busy downtown streets of Denver to the quiet suburban settings in Colorado Springs, the sheer strength and speed of the Colorado real estate market can be staggering, with things changing at breakneck speed. That is why they’re pulling back the curtain to share with you the “Dirty Little Secrets” about buying a home.
“It is a one-of-a-kind experience – it is a ‘behind the scenes’ look at things that you need to know about and be aware of when starting out on what is, without a doubt, an adventure of a lifetime.” “Buying a home is a complex process, and if it is the first one you are buying, it can be intimidating.” “Do not be alarmed, because trust me when I say that you are most definitely not alone in having what is, no doubt, a ‘once in a lifetime’ experience that most people certainly do when buying a home, as do most of the other first time home buyers found here in the Centennial State.”
Home buying questions are something we hear from our clients every day. We are accustomed to hearing from our clients about their concerns and specific home buying questions. That is why we are here to provide the answers to the most common inquiries we receive so you can become better informed and more reassured. The questions that may be swirling around in your mind are probably the same ones other buyers—just like you—are also wanting to ask.
And they are probably the same questions that buyers who came before you asked. We have heard it before, and even if we haven’t, no question is ever a “dumb question,” so ask away!
Home buying questions don’t always have one-size-fits-all answers. If you have questions that are not answered below, do not fear contacting me. Each set of circumstances will be different, and the information provided below will be able to inform you on what you can learn about what is best for you. Perhaps you will also be able to learn more about “you didn’t know you didn’t know.” Further reading will highlight this more.
1. How Do I Know the Property Value Will Increase?
This is one of the most frequent home buying questions we receive. Although there are no guarantees in real estate (or life!), there are clues and historical data that are indicative of future performance.
The Power of “Walkability” in Colorado
One factor that drives home values in the Colorado Front Range area more than almost anything else is the addition of “walkability” and commercial/retail space. In neighborhoods like LoHi in Denver, Old Colorado City in the Springs, or downtown Golden, we have seen values skyrocket as these areas became more pedestrian-friendlier.
If you know an area is changing and is going to increase in density or desirability, you are likely to see an increase in value over time, perhaps more than in other areas.
Look for Concrete Plans, Not Hearsay
Home buying questions often involve how future development can impact property value. We always advise our clients not to be basing their information on hearsay. Instead, look for developments which actually went through the planning and funding phases. For instance, noticing a new RTD light rail station or a massive mixed-use development beginning its construction in the vicinity is a good indicator of prospective development.
Living in a location with easy access to transportation is also a strong sign that your worth will escalate over the years. For those living in the Denver market, areas that are within a short walk to light rail routes have been shown to maintain value exceptionally well.
The Colorado Economic Advantage
The good news about the Colorado market in general is that our population is increasing, our unemployment is relatively low, and our economy is diverse and booming. That is a recipe for an increase in value over time.
However, you still need to buy smart. Each neighborhood, block, and even specific building can be different, and it is important to understand that you don’t overpay. There is an old saying that says you make money in real estate when you buy, so focus on that, and you will be fine when you sell.
2. Should I Put a Deadline on an Offer?
In our fast-paced market, this is a tough question to answer and really depends on the specific situation of the home you are bidding on.
Understanding Seller Motivations
In more competitive neighborhoods—think Washington Park, Highland, or the West Side of Colorado Springs—most sellers want to give their home full market exposure to get the highest price possible. That means sellers tend to have their own deadline for any and all offers. You might see a listing go live on Friday with a note that says, “All offers reviewed Monday at 5 PM.”
Conversely, if the selling party is not looking to receive multiple offers or perhaps just wants an easy sale and will sell quickly, having a quick chance to act on an offer may very well be an effective strategy.
The Sweet Spot for Deadlines
“If you’re going to specify a deadline, make sure to specify one long enough to give the other person time to respond to you, but not long enough for someone else to make an offer.”
Of course, this also depends upon the circumstances. “We find 8 to 12 hours quite often a suitable amount of time to specify for any sort of deadline.”
Why this works: It creates urgency without being disrespectful.
- The goal: Often times, this could mean avoiding a bidding war entirely.
But be warned: you will have to make it worth the seller’s while to want to take their home off the market quickly. This might mean offering a higher price than asking and favorable terms, such as no or short contingency periods. In some situations, a deadline will not make the seller respond, so be prepared for that outcome as well.
For more strategies on crafting winning offers, check out this guide on <a href=”https://www.investopedia.com/articles/mortgages-real-estate/08/make-an-offer-on-a-house.asp” target=”_blank” rel=”nofollow”>making an offer on a house</a>.
3. Is It Worth It to Find Something Faster When Interest Rates Are Low?
No! Don’t let interest rates dictate your timeline to buy a home. This is one of those home buying questions driven by fear, and we want to help you move past it.
Don’t Time the Market
We are still in a period where rates fluctuate, but we don’t expect them to spike permanently overnight. A slight increase in your interest rate is not going to make the home you want unaffordable.
Just like buying and selling other investments, such as stocks, timing the market is never a good idea. If you rush into a home you don’t love just to save 0.25% on a rate, you might end up with a house that doesn’t fit your lifestyle.
Focus on Your Timeline
Home buying questions often come up when deciding the right time to enter the market. Buy and sell when the time is right for you. Speak with an expert about which month is best—winter in Colorado can sometimes offer better deals due to less competition—but always go based on your own timeline and schedule.
One thing that is certain is that there are going to be homes that are going to be bought. And, strangely, when the rates of interest go up, there is a tendency, actually a slight cooling of prices, and that is to your advantage.
For current rate trends, you can look at reliable sources like <a href=”https://www.bankrate.com/mortgages/mortgage-rates/” target=”_blank”>Bankrate</a>.
4. How Do I Get a Good Deal?
The question is, in fact, outstanding, and something that we all focus on for each and every one of our clients. We always say: you make money when you buy in real estate, so making sure you buy right is HUGE.
Comparable Sales are Key
The one and only way to make sure you are getting a good deal is to look at the specific neighborhood, building, or block you are buying in and compare your home to what has sold over the last six months to a year.
In Colorado, pricing can vary wildly even on the same street.
- Location: A unit with a mountain view might sell for significantly more than one facing the parking lot.
- Level: A basement unit will generally sell for less than a second-floor unit.
- Condition: A home that was just renovated will sell for a premium.
Market Conditions Matter
Make comparisons between the house you are buying and the ones sold recently, making sure you are not overpaying. Second, ask your real estate agent for data about the conditions of the real estate market, if it is a seller’s or buyer’s market, and base your offer on this.
Tip: Generally, the longer the house is for sale, the better your chances of getting it for a lower price.
And please keep this in mind-just because something is “cheap” doesn’t mean it’s a good deal. A cheap home with structural issues in a foundation that shifts with Colorado’s expansive soils can cost you a fortune later. Be sure not to make this crucial mistake!
5. If the House I Want is $20k Over My Price Range, Does That Mean I Can’t Afford It?
Maybe, maybe not…. That is one of the most mis-asked questions about buying a home.
Focus on Monthly Payments
We tell our clients to focus on your monthly payments, not just on a purchase price. By doing this, you’ll know what you may or may not be comfortable paying for a home every month.
In other words, focus on the fact that you want to pay, say, $2,500 per month on your new home and NOT on a somewhat arbitrary price point like $500,000.
The Math Behind the Price Tag
Why is this? Because for every $10,000 change in price, the monthly payments will only go up by $50 (depending upon the current rate of interest).
So when you put it that way, you now might have been able to afford that dream home or the one that you have fallen in love with.
- Scenario: The additional cost of $20,000 will amount to an additional $100 monthly expense.
- Question: Is that something you can handle?
If that $100 is something you can afford (through maybe cutting back here and there on some brewery stops or streaming services), and it’s a place that comes along with everything you’ve ever wanted, then overall, yes, I’d say go for it! Just as long as it doesn’t put you in the red or require you to have to live differently in any way that makes you uneasy.
But if you end up purchasing something that is “cheaper” but not as good, you might end up having to pay for some repairs or replacements as well. This all has to be considered when you are weighing the options to decide what is really within your budget.
Bonus Insight: Is the “Paradox of Choice” Derailing Your Search?
We wanted to touch on a concept that often plagues homebuyers: the Paradox of Choice. This is a topic we discuss in our upcoming articles, but it is relevant right now.
In a market like Colorado, where you might be choosing between a condo in the city, a townhome in the suburbs, or a single-family home near the foothills, the options can be paralyzing. We tell you the secrets from the book The Paradox of Choice that can help you focus on making a decision and not being overwhelmed by too many choices.
Simplify Your Criteria
Too many options leave you making no choice at all. To fix this, you could read books and discover new bands that you might enjoy. You could also ask
- Prioritize Needs vs. Wants: Do you want a garage to store your ski equipment? That would be a need. Do you want a hot tub? That would be a want.
- Stop Looking Once You Find “The One”: It is so easy to continue searching “just in case,” but this is simply causing discontent with the amazing home you found.
You won’t want to miss our follow-on deep dives on this topic!
Frequently Asked Questions (FAQ)
Q: What is the first step in the home buying process in Colorado?
A: The absolute first step is getting pre-approved for a mortgage. This tells you exactly how much you can borrow and shows sellers that you are a serious buyer.
Q: How much down payment do I really need?
A: While 20% is what’s traditionally considered necessary to avoid Private Mortgage Insurance, many first-time buyer programs in Colorado allow as little as 3%, or even 0% down, such as VA or USDA loans.
Q: What are closing costs?
A: Closing costs are the fees that are paid at the close of a transaction that include the title insurance, appraisal fees, and loan origination costs. These usually vary from 1% to 3% of the purchase price in Colorado.
Q: Should I waive the inspection to get my offer accepted?
A: We rarely recommend waiving the inspection entirely. In Colorado, you want to check for specific issues like radon, sewer line integrity, and roof damage from hail. Instead of waiving it, you can limit your inspection objection to “health and safety” items only.
Q: How long does it take to close on a house?
A: On average, it takes about 30 to 45 days from the time your offer is accepted to the time you get the keys.
Conclusion
Hopefully, we are able to answer enough of the questions that you have with regards to purchasing a home so that it is easier for you. Occasionally, answering a number of questions, such as those pertaining to the purchase of a home within CO, can be greatly beneficial to someone finding themselves in a situation such as yours.
Just remember, although this is quite the process, you do not have to go about it by yourself. Whether it is property valuations or deadlines for making your offer or even how much you want to pay for the property, I’ll be with you every step of the way. If you have found this information confusing or if you’re ready to begin your search for your dream home, I’m here for you.
