Under Contract: My Experience as a First Time Buyer

[emm74]

Congrats!! Hope your closing is quick and easy!

[Claire S.]

Originally Posted by Lafleur

Well, it finally happened. My fourth offer on a home was accepted. It's a nice 2BR/2BA in SE Denver.

I just wanted to share my experience with home shopping in Denver with other first time and non-first time buyers alike.

• Be prepared for the long haul. It may take several offers before one is accepted. I had a friend put in eight offers before one was accepted. Stay the course, don't give up with frustration, be optimistic and persistent.

• Cash is king! I had at least one offer rejected because someone came in with a cash offer. More than likely, you won't win that bid. Help yourself out and get pre-approved.

• It's not what it seems. Oh, you say the asking price is $170k on REColorado and that perfectly fits your budget? Think again! Be prepared for people to offer anywhere from $10-$20k over the asking price in the bidding wars that are taking place throughout Denver. Sometimes they are selling for much more than that. Just keep that in mind for your budget, that you'll likely be paying more than the asking price in this market.

• Know your mortgage options. 20% is not required as a downpayment today. You can go as low as 3% down. They have several types of loan options for first time buyers. Work with a broker who specializes in loans for first time buyers. My loan is a conventional loan with 5% down and no PMI. My interest rate is about a quarter of a percent higher than the conventional loan with PMI, but my payment is actually about $50/mo cheaper without the PMI.

• Keep your options open. Location is great, but sometimes I don't think the additional cost is worth it to live in a high demand area (think Baker, Uptown, Wash Park, etc.). Those places are saturated with interest and you'll end up paying for it big time. Areas like SE Denver, SW Denver, Greenwood Village, Englewood, Centennial, and Aurora offer some good options that are in better condition, are newer, are much bigger, offer more modern amenities like central air, and are far more affordable. Most are also located by solid public transit and better retail options than the inner city rings.

• You really don't have much bargaining power it seems. I've had people tell me that, in the past, they've had the seller help them out with their closing costs. My realtor and I have kept that financial assistance to a minimal when we've put in our offers, because we knew we were up against a bunch of competition.

• If you really like a place and want to put an offer on it, tell your realtor to put in a stipulation that you would like to review the best offer and have the option to offer X amount more if you want to. This is how I won out on this latest bidding war.

• A co-worker of mine, who recently sold her house, told me that one potential buyer ended up writing a nice, heartfelt letter to them when they put in their offer because they really liked the house. She said that was ultimately the determining factor for going with that offer. If you really like a place, perhaps you can use that as a resource that will ultimately put you at the top of the list of other bidders.

I'll try to add more items to the list as I think of them. I just wanted to share my experience with other people who are considering buying in this market. It's a tough nut to crack, but hopefully it will be worth your while in the long run. Best of luck!

Congrats on getting under contract! This is all good advice for any buyers out there right now. You definitely want to have all of your loan information ready to go in order to compete with cash buyers. Even better if you can find a lender that is able to close quickly.

[himain]

Good for you. Enjoy

[Katarina Witt]

Originally Posted by Lafleur

Well, it finally happened. My fourth offer on a home was accepted. It's a nice 2BR/2BA in SE Denver.

Congrats! Enjoy being a homeowner!

[zenkonami]

Overall, great advice. Great move working with biking and public transit, too. Opens up possibilities on location by quite a bit. Biking / Running / Walking to transit or work also helps pack in exercise in to your commute...leaving you more free time later on for other activities.

We had a terrible time with writing those magic letters, and some people even said they were great and moving, BUT, cash was king.

Escalating clauses are valuable, but exercise them carefully. Once you get to your third or fourth offer, you'll see what I mean. There is definitely a time to use them, but sometimes it's best to hold them back and look strong on your offer.

Completely agree about budgeting. If you can do $190k, look for houses at $150k to $180k. You WILL NOT get $190k, and if you do, I would worry something is wrong with the house. Free markets aren't perfect barometers, but under conditions like these, they give you a pretty strong indication of what's going on. Remember, other people probably spent money to discover what you are about to discover.

Totally agree about location. Don't neglect Denver's west side and Lakewood / Wheat Ridge. These are great areas for lower income buyers right now. There WILL BE sacrifices, for sure, but it's still an available market for lower-middle class buyers, and elbow grease...though a lot of work, can get you in the door. You will WORK on these houses, but you will learn, and I think it's a fair trade for a good roof and a good future. If you really don't need a yard, look for condos...if you want a garden, look at community gardening...they are really starting to open up out there. Dog parks and regular parks everywhere...take that into account when looking for outdoor space but not having a lot to spend on acreage. Less to maintain and frankly the commons are actually FUN places to meet people and enjoy the outdoors. Also, great places to engage your new community.

THINK OF WHERE YOU WORK! Almost everyone I know wishes they lived closer to work. Denver traffic and commutes are certainly not the worst in the country (not yet, anyway), but wouldn't you rather spend more free time ENJOYING IT?

If the best interest rate you can get is under 5%, TAKE IT. Trust me. We can penny pinch all we want, but at least as far as interest rates are concerned, IT'S NEVER BEEN THIS GOOD, and more importantly, IT WILL PROBABLY NEVER GET *MUCH* BETTER.

Great post. I support this message.

[Lafleur]

Originally Posted by zenkonami

If the best interest rate you can get is under 5%, TAKE IT. Trust me. We can penny pinch all we want, but at least as far as interest rates are concerned, IT'S NEVER BEEN THIS GOOD, and more importantly, IT WILL PROBABLY NEVER GET *MUCH* BETTER.

Great post. I support this message.

I just locked in a 4.5% rate yesterday for a 30-year fixed, no PMI for my condo. Also shaved off about $2000 in origination fees and buydown pts. from my closing costs. All that by switching from the broker my realtor suggested to shopping around for a lower rate. Definitely shop around for rates if you can.