Denver Real Estate Blog

I’m working with a lot of First-Time Homebuyers right now - not surprising since the $8,000 tax credit for first-time homebuyers is getting ready to expire, and even those that probably would have sat on the fence a bit longer otherwise have decided that $8K goes a long way when buying your First Place.

There are a couple of different kinds of First Time homebuyers:

1. The Recovering Renters - this is a long-term Renter who has moved a lot, who is used to managing their own finances and who knows a good deal when they see it.  This type of Buyer usually calls me already pre-qualified, with a list of potential homes that they have found and researched online, and they are ready to unlock some doors and make a decent offer when a home meeting most of their wish-list items comes along.   The Recovering Renters realize that they won’t live here forever, and they aren’t looking for perfect - they are usually just happy to stop throwing money away on rent and not have to ask a landlord permission to paint the walls!

2. The Determined - These Buyers have been thinking about buying a home for so long, they are determined to find THE ONE.  They are timing the market, waiting for bottom, and are determined to get the deal of the century - and sometimes they do.  They look at dozens of homes.  They want to see everything on the market, and they write really low offers with the hope of getting 10% or more off the list price.  Every once in a while, the Determined turn into Dreamers…

3. The Dreamer - The Dreamers are looking for their dream home.  They practically move their furniture into every house they look at.  They spend hours figuring out where they would place the flat-screen TV, where the nursery would go if they ever had a baby, where their future grandkids would sleep on overnight visits…you get the picture.  The Dreamers are looking for their Forever house on their Today budget, which isn’t always easy to find, and it’s not very realistic, or even necessary.

In fact, most first-time buyers only keep that first place only 4 or 5 years, if that long, before a major life change persuades them to move up the property ladder - relocating for a new job, getting married, having a baby, getting divorced…you get the picture. 

So, instead of looking for your long-term, forever, perfect-for-retirement place, look for a house that suits your lifestyle right now.  As long as you buy in a neighborhood that is going to go up in value, and as long as you don’t make changes that are going to ultimately reduce the resale value (like turning a 2-bedroom into a 1-bedroom or cementing in the entire backyard) you will benefit from all of the advantages of home ownership and be able to build enough equity to have a decent down payment on your Next Place - and then, someday, that Dream Home will be yours.

There are still a few days left to get a home Under Contract, close by November 30th, and get your $8,000 tax credit as a First Time Homebuyer!  This would be a perfect fit…a home thoughtfully updated with designer colors and materials - this house is move-in ready, perfect for entertaining, and in a gorgeous setting.

3 Bedrooms, 2 Bathrooms, 1392 Finished SF…great open layout with updated EVERYTHING!

Slate and Travertine Tile, Hardwood Floors, New Carpet and Paint, Updated Kitchen cabinets with new hardware and countertops.

Great location close to the new Children’s Hospital complex, shopping, and the airport, as well as Downtown and the mountains!

Have you found the house of your dreams, but are sitting back waiting for the price to drop?  In Metro Denver, where price deductions are small and listings are selling relatively fast, you might be out of luck.  According to today’s Inman News, some cities, Denver included, are showing not only average price increases, but also less price cuts, and less than 4% average between list price and sale price.  So, if you are in the market, don’t go house hunting way above your price range only to be disappointed when you can’t low-ball your way into a deal.  Ask your realtor for a solid net sheet and look at homes that are priced in your comfort zone! 

The whole story…

The percentage of listings with price reductions declined slightly from July to August, and when sellers did slash their asking price they made smaller reductions, according to an analysis of 27 markets by real estate brokerage ZipRealty.

While nearly half of homes on the market in August — 44.2 percent — had seen at least one price reduction, that’s down from 45.7 percent in July. The raw number of homes with price reductions, 281,765, was down 4.3 percent, as inventory in markets tracked by ZipRealty fell 10.5 percent to 637,313.

The average price reduction was 9.6 percent of list price, down from 11.3 percent in July, while the the median reduction amount ($24,494) was down 2 percent.

There was considerable variation by market, with the highest percentage of homes with price reductions in Orlando (51 percent), Jacksonville (50 percent) and Chicago (49 percent).

The markets with the lowest percentage of listings with reduced asking prices were Denver (31 percent), Los Angeles (35 percent) and San Francisco (37 percent).

Sellers slashing asking prices in Las Vegas made the biggest reductions (21.7 percent), followed by several markets in Florida: Miami-Ft. Lauderdale-Palm Beach (19.5 percent), Orlando (17.3 percent), Naples (14.9 percent), and Tampa (14.1 percent).

Sellers reducing their asking price in Raleigh-Durham, N.C., made the smallest adjustment (5 percent), followed by Richmond, Va. (5.15 percent), Denver (5.3 percent) and Houston (5.3 percent).

In another comparison of listing price and selling price during July, listing and valuation site Zillow.com found U.S. homebuyers paid 3.3 percent less than list price on average, down from 3.5 percent in June and 4.6 percent in January.

I showed homes all day yesterday to first-time buyers looking to get the tax credit that is about to expire.  I love first-timers - they are so enthusiastic and excited about their purchase, and they love the challenge of the search.  And it is definitely a challenge - I don’t want to show them short sales, because if they don’t close before November 30th they won’t get the credit.  But there is a serious pricing situation in Denver’s popular neighborhoods, making it really hard to predict what the heck we are going to find when we pull up to each curb. 

For example, I have a buyer who would love to live in Northwest Denver, and he has a firm price limit in mind.  He also wants to be able to rent out some rooms to subsidize the rent, and he wants to be near the action - restaurants, bars, and the city within walking distance.  The first house we saw was a nightmare - a pre-foreclosure situation that had 10 people living in it - and they were all there during the showing.  Yuck.  I thought my byuyer would walk away right then, but he hung in there - I think he was more curious than hopeful.  Surprise, for the exact same price, 3 blocks away, we walked into a gorgeous remodel - granite countertops, stainless steel appliances, staged to perfection.  Hmmm.   Same square footage, same lot size, same price, same neighborhood, and a world of difference.

So which pricing was off?  The third house we saw was in a bit rougher hood, was a little bit bigger, and was a lot more expensive than either one.  I’m pretty sure my buyer thought that I was crazy at this point, but he hung in there.  10 houses and 10 TOTALLY different situations later, I still didn’t have an answer - all I can say is this is the way the Real Estate game is going right now.  There is no Scientific Equation that can be used to pop out the perfect price for each home.  I wish there were!

It would go something like this:  $/square foot X neighborhood + granite counters - pink bedroom + garage - small yard = PERFECT PRICE

Do you see what I mean?  My best advice is always the same:  You have to figure out what the property and everything it has to offer is worth to you.  You have to write your own equation, and then make an offer based on your perfect price.  It’s different for everyone, but eventually the market does determine the price.

What I do know is this.  If you are a first-time buyer and you want the $8,000 tax credit that the government is offering right now, find it quick, make an offer, and get it under contract so that it will close before November 30!