The front page headlines of a recent Denver Post article screamed “Through the roof,” and the subject matter was Colorado’s Front Range real estate markets. Specifically, the article stated that “of the 12 counties in the U.S. most out of line with historic levels of home affordability, seven are in northern Colorado, including the top four: Adams, Arapahoe, Denver and Weld.” In addition to these 4 counties, Jefferson County ranked seventh, Larimer County ranked 10th and Boulder County ranked 12th. In short: in many Front Range communities, mortgage payments have become a heavier burden on incomes. For example, historically, home buyers in Adams County committed 35.9% of their paychecks to afford payments on a median-priced home. In today’s market, that level has increased to 45.4%.
Despite the fact that some markets are taking a larger chunk of a paycheck, sales along the Front Range are brisk. In fact, it isn’t unusual for a bidding war to drive prices up higher than the asking price.
With these kinds of conditions, there are things buyers and sellers can do to give themselves the competitive edge in achieving their real estate goals. Here are a few simple strategies for a complex market:
Strategies for Sellers:
• A bidding war may result in a higher sales price than the appraised market value. Due to potential issues, consult with an attorney or real estate specialist about covering this scenario in the contract, such as asking the buyer to pay the difference in cash, or negotiate the difference.
• Your home could sell and close faster than anticipated. Have a plan that includes backups such as renting the home from the buyer for a period of time, or identifying someplace to live temporarily while waiting to move into your replacement home.
Strategies for Buyers:
• To increase your buying power, keep your debt-to-income ratio as low as possible by curtailing your spending.
• Check your credit report now for possible mistakes that could increase your credit risk and take months to fix.
• Consider joining the trend toward “sharing buyers,” by co-owning the house with a relative or friend.
With our unique market, those who are fully prepared will have a much greater chance of success. Consequently, I encourage you to give me a call so we can discuss your needs, what you can do to prepare, and what I can do to help you the most.