(Dennis Martin: Once again my friend and “go-to mortgage lender” Jimmy Kinley has totally relevant advice for would-be home buyers and Denver Realtors)
Why not, it’s awesome!! The Mountains, The Weather, The Dining, The Sports and Entertainment, Wow! Are we having fun yet or what? It may be “OR WHAT” if you are trying to buy a house in the Denver Metro Area. There is nothing fun about it. This real estate market has been crazy competitive for 2 years now. It’s a sellers’ market.
Denver Real Estate Market
I am told, there is less than half the inventory than there has been over the last few years. We need people to sell, builders to build, and investors to invest somewhere else other than Denver to right this ship. Denver is one of the fastest growing metro’s in the country and I think that has been thrust into high gear this year. I have seen a First Time Home Buyer boom, investor boom, and companies relocating their employees here like crazy. I am pretty sure Lockheed Martin alone is moving 500 families into the area. That alone could eat up 10% of the available housing we have. Something has to give!!
You may be wondering why your favorite mortgage guy is talking about real estate. Well, I believe I can help. There are a multitude of things I can do to help your offer stand out in what is truly a crowd. (It is not uncommon that we are competing against 20 other offers on a 300K single family home in the Denver Metro right now) Although I don’t want to give away all my trade secrets, some of these things include the following.
Tips for Competing Offers
- I am calling the listing agent myself since they are typically not calling me anymore.
- This one really amazes me. If I was a listing agent I would want to make sure the lender is as solid as the offer. Without that call, how do you know that your best offer isn’t from some lender working out of the basement or, even worse, an online lender? If you are seriously considering online lenders because there offer is strong, you really should think again. It’s a huge gamble. Furthermore, there simply can be bad originators working for good companies. It’s the 10% rule and I doubt it will ever change.
- I am taking the time to restructure the home loan mortgage and educate the borrowers on what the loan would look like of the property doesn’t appraise and they need to make up the difference between appraised value and purchase price. (For those of you reading this that haven’t tried to buy a house this year, this clause is written into half of the contracts I see getting accepted.)
- By restructuring the loan with a smaller down payment (when possible) the buyer has the extra cash to write in a clause like the following. “Buyer will make up the difference between sales price and appraised value up to “X” amount”. When you have offers that are all above list price the listing agents should be telling the sellers that at some point these numbers are not real. Just because it’s on the contract for 330K on a 300K home doesn’t mean that this is the end game. At least they know that the buyer is willing to go above and beyond to separate themselves. This may be what it takes to get a home before the prices increase another 10% over the next year.
- I am giving the listing agent an offer letter from one of the most reputable company’s in Colorado. Cherry Creek Mortgage Company is the largest independent lender in Colorado and year over year does more purchase business (working with agents and buyers to buy a home) than any lender in Colorado. Not to mention, we have a reputation of closing!!
- Our logo “Tradition of Trust” isn’t just a logo. It’s an earned reputation from a company that believes in following thru on our promises. I will not name names, but when you get an approval letter from these well know companies that sound like Hells Cargo or some US Auto A company you should really question their ability to close. I hear the horror stories daily and it makes my skin crawl. Sometimes I can save it, but many times they should have never been pre-approved in the first place. Many buyers ask me why my pre-approval is so much more complicated than others. I assume it’s simply because I make sure we didn’t miss something up front instead of letting the underwriter find it later. This isn’t just nonsense for the buyer. Its nonsense for the buyers, the sellers, the agents, and anyone else in this domino of buying and selling. Some companies simply don’t imagine their clients having their whole life in boxes and then needing to unpack. I will get off my soapbox now.
I may have some other tricks up my sleeve, but I will keep some of the competitive edge to myself so my buyers can benefit more than others. It is a competitive market after all!
Some may say, I will just rent because this market is going to crash. Have you looked at what rental prices have done. In many cases it may be hundreds of dollars a month cheaper to own when compared to renting. Even with FHA and only 3.5% down. That is simply straight dollars and not taking into account the tax benefits and future increase in value. The rental increase year over year is exceeding the increase on home prices. Why is that? Denver is growing so fast! This isn’t some scam that will crash next year. It is simply supply and demand. I personally believe this will keep up for a few more years as we continue to grow and then simply level off.
With all the crazy mortgage guidelines not allowing anyone to buy a home, we simply don’t have the risk levels we had before with foreclosures in Denver. People can’t keep cashing out their homes and getting all the equity out hoping values continue to rise. I truly believe that we will just enjoy great appreciation until the Denver boom settles and then simply go back to normal. Like any good investment, the sooner you get in on the boom the better. In addition, the rental market is just as crazy and competitive as the real estate market. Homes are renting in a day with 5 – 15 applications submitted. Simply put, housing supply is low and the demand for places to live in Denver is high, and expected to increase.
Mortgage Interest Rates
Finally there are the rates. Denver mortgage rates are great and seem to be somewhat stable these days. Although I get multiple rate changes a day in this volatile market, the bigger picture is they really haven’t moved in a while. If you go back to a year ago rates where about .375% higher than they are now. (For every .125% of a rate difference on a 300K loan that is less than $22 a month. Not really as dramatic as most people think) There have been valleys and peaks in the last year, but really rates are still fantastic and within .5% of the lowest they have ever been. For a change I believe this may hang around awhile. I believe it will take a strong economy in the US and overseas before we will really see a big change. Don’ wait any longer. Call me now and let’s get rolling!
Senior Mortgage Originator
License# MB100020560, NMLS 287498
To apply online please visit my website at www.KinleyLendingGroup.com