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How a Hot Denver Real Estate Market Hurts Sellers

Posted on: August 31st, 2016 by , No Comments

hot denver real estate market

In a Hot Denver Real Estate Market, homes are selling quicker than you can say “sold”, the grass may not be greener on the other side.

The Hot Denver Real Estate Market is a sellers dream come true. You can feel the sense of euphoria everywhere. Homes are selling at a faster rate in 2016 then in 2015 so it’s going up and up. Denver’s market leads the nation in home appreciation by the way.

To prepare your home for sale in a competitive market, it’s important to understand the definition of a “hot market.” A ‘Hot Denver Real Estate Market’ is one where most homes sell faster than two months which brings very low inventory. Inventory is a major factor in hot markets: Where there are fewer homes on the market, the demand rises, and homes typically stay on the market for a shorter amount of time. Go to any of the most popular neighborhoods in Denver like Highlands, Bonnie Brae, Wash Park, Park Hill and Rhino. You’ll see a “Hot Denver Real Estate Market”.

Yes this is your time to shine as a seller and must feel so much better than 2011. But here are some things to look out for before jumping for joy. (After reading and you’re still ready to sell, then jump for joy!)

1. It goes both ways in a hot Denver real estate market

In a Hot Denver Real Estate Market, it’s possible for your house to sell super fast — even while you’re still hunting for your new house. Unless you plan to become an road trip enthusiast and explore the country, you’ll probably need to buy another house. Sure, some smart sellers find the house they want before they list their current house for sale. But if you’re buying in a tough seller’s market, you’ll be competing with all those other buyers when you’re hunting for your next home.

“I always advise the sellers-turned-buyers to have a backup plan like a ‘post occupancy’,” says Adam Macias, a Denver, Colorado professional home buyer. “It’s better to be a year too early than a day too late.”

2. The appraisal doesn’t match the offer

The hot Denver real estate market is so hot that anybody can just sell anything for any price! At least that’s what it feels like after hearing the same old, “we got so much above asking price!” story from people at the local coffee shop. Each situation is different. Don’t believe the hype so quickly. As The Mortgage Report states, “When your home appraises for less than its purchase price, it affects your mortgage, and can affect your contract, too.”

This is probably one of the biggest reasons contracts fall through in Denver. 1/5 fell through in April 2016 alone.

3. Speculation is a crime

During a buying frenzy, some buyers make promises they can’t keep. “By not validating offers, sellers may sit in a contract just to have it terminate three weeks later” says any agent in Denver, CO. Then, when buyers see that your house has been sitting for several weeks in a hot market, they may think somethings wrong with the house and that someone could of been the right buyer. Avoid this problem by making it a must that all offers come with a mortgage pre-approval.

4. A “Like Kind Exchange”

Section 1031 of the U.S. tax code lets you sell one investment property and buy another investment property tax deferred. The catch? The clock is ticking. You need to identify a property to buy within 45 days during the hot Denver real estate market.

Sellers can find themselves in tough competition, during a hot Denver real estate market, to buy a like kind property in the time needed to qualify the exchange to defer taxes. You must act quick and this is not something to fly by the seat of your pants. Act smart as well and do it correctly. Tom Wheelwright, author of “Tax Free Wealth”, talks more about this here.

5. Your Arrogance

Yes I said it. Selling your home in a hot Denver real estate market doesn’t mean you’ll automatically get offers for more than your asking price. The biggest problem seen in a seller’s market is being overly optimistic about price.

The median income in Denver is $69,205.00 not including taxes on two earner households. Do you think they are shooting for sky high priced homes right now if they do get a decent interest rate? This is not even including the condition of your house. Remember, “speculation is a sin.” If a buyer over pays on a property because they need a place asap for their family does that still make it right cause you accept?

  • Cheaper homes sell faster.
  • Don’t include other debts with the value of the house (Credit cards, car loans, boat loans)
  • The market picks up in the spring and dies down between August and October, extending through the winter.
  • FHA loans, although expensive, allow people to buy a home with a down payment of as little as 3.5%.

 If you’ve had bad experiences selling a house in a hot market than just follow these 5 tips and you’ll be okay.

If you would like a free no-obligation offer for your house, call 303-558-5843 or visit Adam Buys Houses.

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