Denver home buying is anything but “typical.” Whether it’s buying your first home or your fourth, you’re in for a surprise when it comes time to start the process these days. I want to provide a better idea of what to expect when buying in today’s hot Denver real estate market. It certainly is different than it used to be.
The number one rule still applies to home prices. It’s Location, Location and Location! Some areas and price ranges are “hotter” than others and if you’re trying to get into one of the many popular areas, such as Berkley, Sunnyside, Hilltop, LoHi, Highlands, Sloan’s Lake, Edgewater, Washington Park, Uptown, etc., expect to go above list price; bring your highest and best offer. Determining the locale of your new home is half the battle. But first, you need to figure out your price range. If you’re going to need a home loan, and aren’t paying all in cash, you need to talk to a lender. Check out this blog article about lenders.
Mortgage: Prequalify Or Pre-Approve?
First, your lender will pre-qualify you. That means you’ve told them your credit score, income and debts and they’ve given you a purchase price number based on what you said. It’s always better to get pre-approved so there are no surprises later. When you’re pre-approved the lender has verified all your information such as income to debt ratio, credit score, liquid funds for down payment and work history.
Once your lender has given a pre-qualification or pre-approval letter, you’re ready to start searching! Many sellers will not accept an offer without a lender letter. Certainly, it will be a positive factor if you are in competition with other offers. Once you start with the lending process do not open any new lines of credit, make any large purchases, change jobs or refinance anything without speaking to your lender first.
Interview For A Denver Realtor
You will also need a reliable and reputable Denver Realtor to assist in your home search and home-buying process. It’s always smart to have someone in your corner that is walking you through this process and protecting your best interest , including the earnest money you post with your offer. Also, in this market you’re going to need a very knowledgeable Realtor to ensure your offer will get accepted. Then, a good Denver Realtor can guide the transaction to a successful closing. Your Realtor’s fee will get paid by the seller, in most cases, but always make sure to ask about their fees to you as the buyer.
Most importantly, talk to more than Realtor and ask questions to find out how good they are. Ask the same questions of each Denver Realtor you interview. Of course, the answers are most important but you also want o find a Denver Realtor with who you have good rapport and communication.
Denver Home Buying Offers
You’ve found it, the perfect house and it’s priced right for your budget. Now it’s time for your Realtor to write up an offer. Depending on your competition, you should be prepared for a few things. 1. You may need to offer above asking price. 100% of homes in Arapahoe and Denver Counties are going for asking price, on average. 2. In 99.9% of cases, the sellers will no longer pay your closing costs. Most of the time, expect that you will need to pay of all transfer fees and recording fees. This will increase the amount of cash you may have to bring to closing so make sure to talk to your lender about all the cash you will need to have.
If you’re lucky enough to get under contract on the very first Denver home buying offer, the next step will be to get your earnest money to the title company or designated holder, before the Alternative Earnest Money Deadline. A good Realtor will do this for you. But, be sure to follow-up. You should be working with your Realtor to make sure all the Dates and Deadlines are met. Missing only one of those could lead to losing your earnest money or being injured by a condition of the home or the land. Make sure these dates are met!
Clear Real Estate Title
|Record Title Deadline – The closing company will produce the Title (ownership records) of the house that are recorded with the county.|
|Record Title Objection Deadline – This is your chance to object if there is anything fishy on the title, such as a lien or easement. Your Realtor and the Title Company can help you with this.|
|Off-Record Title Deadline – The seller has a chance to let you know about any non-recorded Title issues.|
|Off-Record Title Objection Deadline – (similar to Record Title Objection Deadline)|
|Title Resolution Deadline – By this day, all issues with the title need to be reconciled.|
|Right of First Refusal Deadline – If another party, besides the immediate seller, such as an HOA, has a first right of refusal then the seller must submit the contract according to the contract.|
Home Owners’ Association Diligence
|Association Documents Deadline – If there’s an HOA, they have until this date to get you the documents about the HOA, including covenants.|
|Association Documents Objection Deadline – If you realized something about the HOA that you don’t like, you can get out of the contract at this point for that reason. For example, some HOAs require you to paint your house every 5 years and the sellers painted it 4 years ago; you don’t have it in your budget to paint the house and the sellers aren’t willing to do it either.|
Sellers’ Home and Property Disclosure
|Seller’s Property Disclosure Deadline – This is a sheet you’ll receive that states EVERYTHING the seller knows about the home, to their current knowledge. (There’s a chance that someone would have no idea their home has an issue – this is called a latent defect.) Seller disclosures are important part of Denver home buying.|
Mortgage Loan Deadlines
|Loan Application Deadline – You have until this date to get your application to your lender. You should have already done this.|
|Loan Objection Deadline – This is the last day that you can get out of the contract, without losing your earnest money, if you can’t get approved for your home loan.|
|Buyer’s Credit Information Deadline – This is for when the seller decides to carry your financing (very rare) and this is their last chance to get your credit information to the seller.|
|Disapproval of Buyer’s Credit Information Deadline – Again, for when the seller is providing financing (very rare) and this is their last chance to deny the buyer based on their credit information.|
|Existing Loan Documents Deadline – This is for when a buyer is assuming a seller’s loan. This isn’t very typical in today’s market. The seller must provide all current loan documents to the buyer|
|Existing Loan Documents Objection Deadline – Again, for when the buyer is assuming the seller’s loan. This is the buyer’s opportunity to walk away if they don’t like what they saw in the loan documents.|
|Loan Transfer Approval Deadline – For assuming a seller’s loan only. This is the last day the lender can give approval for the loan to be transferred from the seller to the buyer.|
|Seller or Private Financing Deadline – If any part of the financing will be by private financing or seller financing then this deadline applies. The buyer must decide by this date if the financing being offered is sufficient to their standards. If not, the buyer may walk away from the transaction and get their earnest money back.|
|Appraisal Deadline – When getting financing, the bank won’t loan you the money for a house for more than its market value. An appraiser will be sent out to the house (at a cost to you) and determine its market value.|
|Appraisal Objection Deadline – If the appraisal comes back lower than market value, this is your opportunity to: 1. Walk away from the transaction 2. You can go back to the seller and ask them to lower the purchase price (not common in this market) 3. Bring the extra cash to make up the difference. For example, if your potential home appraised at $290,000 and you are under contract for a purchase price of $300,000 – you have the option to bring $10,000 extra in cash to closing.|
|Appraisal Resolution Deadline – You and your seller will need to come to an agreement by this date. Only applicable if there was a LOW appraisal. You pay for the appraisal and you do not have to tell the seller what it apprised for.|
|New ILC or New Survey Deadline – (ILC = Improvement Location Certificate) If you choose to get a survey or an ILC (or your lender or title company requires you to get one) this is the deadline to get it done by. The improvement location certificate is a method of describing and approximately locating a property. It is often required by lenders and title companies and offers certain reasonable assurances regarding potential boundary or encroachment problems that may affect their interests.|
|New ILC or New Survey Objection Deadline – If you find something you don’t like on the survey (for example, the neighbor’s fence is on your property) you have until this date to object in writing to it.|
|New ILC or New Survey Resolution Deadline – All issues with the ILC or Survey must be remedied by this date.|
Home Inspection Deadlines
|Inspection Objection Deadline – Denver home buying definitely includes having a professional inspect the home for defect. You will want to have the house inspected by a professional. It’s an unregulated industry, so there are home inspector that are just former Denver Realtors. After the inspection you can ask the sellers to fix things. In this market, you can only really ask for health and safety hazards because the next person in line may take the house with any cosmetic issues.)|
|Inspection Resolution Deadline – You and the seller need to come to an agreement by this date.|
|Property Insurance Objection Deadline – You have until this date to get the home approved for property insurance. If the property is un-insurable for any reason, you could ask for that to be remedied or walk away.|
|Due Diligence Documents Delivery Deadline – If there are additional documents that would help you in their examination of the property, such as determining the use of the property with zoning matters, historical value, Source of Water, the Seller will give you these documents by this date.|
|Due Diligence Documents Objection Deadline – If you have an issue with any of the due diligence documents the seller gave you, this is a chance to negotiate or walk away.|
|Due Diligence Documents Resolution Deadline – All issues with Due Diligence Documents must be resolved by today.|
|Conditional Sale Deadline – If you have a property that you need to sell in order to purchase your new home, you would have the deadline for selling that property here.|
Closing and Possession
|Closing Date – This is the day you finally get to buy your Denver home. Typically closings are 30-45 days after you go under contract, depends on if you are paying cash and if you’re financing, how long it will take the appraisal to come back (right now, they’re about 3-4 weeks out.)|
|Possession Date – This is the day you get keys to the house and physical possession of a house. If your sellers are staying in the home over 24 hours after closing, I’d highly suggest your Realtor draft a Post Closing Occupancy Agreement, for your protection.|
|Possession Time – The time will you get possession on the possession date.|
So, here is you guide for a successful Denver home buying purchase in a competitive real estate market. Remember, a good, full-service Realtor will take care of these dates and conditions for you. Still, it is your ultimate responsibility to make sure all dates are met. In this competitive market, failure to do so could cost you the amount of your earnest money deposit. The best idea is to interview and choose the best Denver Realtor you can find.