Everyone will likely agree that the real estate market here has shown excellent signs of recovery. The return back to a thriving market in Colorado has not come without some challenges, and there are several on the horizon that could impact both the industry and consumers wishing to buy or sell real estate.
The first challenge is the inventory shortage we are seeing in many areas of Colorado. It is widespread and the cause is easy to identify, savvy homeowners have, up to this point, seen signs of recovery and as a result, are holding out for the highest price they can get for their homes. The pricing issue itself here has many obstacles, including the fact that buyers are observing over-bidding practices which have recently been featured in the media; as a result, many are asking too much for their homes. Certain specific areas and properties are very high demand, however, outside of those areas, prices remain either on a slight increase or decrease and are appraising very close to their actual value. This is an obstacle not only for the listing agent, but for a new potential buyer because if they will require financing, the bank will only consider the loan up to the appraised value. Any difference over and beyond the actual appraisal will be up to the buyer to produce, and buyers who require financing often are challenged to meet down payments financially, much less pricing overage differences. With regard to the inventory shortage, it is not expected to recover to the levels that would be considered sustaining and healthy during this years’ selling season. Many brokers are reporting that the amount of activity they are currently trying to manage has far exceeded what they saw pre-2006 and expect that pace will continue through the summer selling season. Their challenge is ferreting out the perfect property for their eager buyers. A recent top city ranking shows Denver in the top five cities across the United States for actual time a property stays on the market before it is sold. Denver ranks 4th with an average of 29 days – beat out only by 3 cities in California, San Francisco, San Jose and Oakland. This April Housing Summary from Realtor.com also shows Denver in 15th place, up from 18th place in overall activity and median price changes year over year from 2012. Bottom line on the inventory and pricing is, demand is driving prices up, and inventory shortages are expected to continue as homeowners, predominantly in the single-family home sector, are trying to wait to get as much as they can for their properties.
The next challenge is where the ‘rubber meets the road’. And that is the interest rate. In a much anticipated move, the Federal Reserve has mapped out changes to their monetary policy, May/2013, and will now begin easing back from measures the took to try to enhance the economy recovery, which ultimately created the historically low interest rates. As a result, leading economists and financial experts expect these interest rates to begin climbing as early as the 4th quarter of this year. Those either in the mortgage and finance industry as well as those closely connected in real estate know this could potentially lead to disappointed buyers that waited or couldn’t find a property and for sellers that waited to long. Understanding why buyers might qualify right now, based on the low interest rate, is easy. Understanding why sellers might be affected is a bit more complex; sellers whose homes are likely to attract buyers that require financing may be disappointed that the buyers are no longer able to qualify for a home at their price point after interest rates begin to rise. Even a tiny, fractional change upward can affect buyers and may make it impossible for them to qualify as their income will not rise to meet the new ratio figures after rates go up, along with median prices being driven higher in the hotter markets due to the inventory shortage and demand for housing.
You need a buyers agent in this market. It takes an extensive amount of time, in many cases, to thoroughly research a property and show it to a perspective buyer. If you are a buyer researching several properties at once, which is often the case, you may loose several properties in the time it takes you to research just one. This is happening to many buyers who check the current availabilities first thing in the morning and get there by 9 or 10 only to find that multiple offers have already been made on the property. A buyers agent has the current, most up to date information and can save you a great deal of time in your research and sometimes many thousands of dollars in the end-game, the price negotiations. A buyers agent represents you only, and has no potential conflicts with the seller or their agent, as the seller’s agent would be working to get as much money as possible for the seller.
Buyers Agents will help you all the way through the home buying process – click below to watch our video!
Using a professional buyers agent to assist you with the search, purchase and actual real estate transaction is always a prudent decision, however, there are some circumstances in which a buyers agent is particularly useful.
When A Buyers Agent Can Be A Critical Asset
Many companies across the country are engaged in formal restructuring. This may include employee relocation and in that circumstance, a buyers agent who is a specialist in the target community would be critical. An experienced buyer agent can quickly assemble all the research necessary for a new inbound resident. In one such instance, Money Magazine featured a Sprint internal study that queried their employees and found that over 200 employees had company-related relocations used exclusive buyers agents to assist them in the moves and paid an average of 91% of the listing price on their homes. That’s a substantial savings.
Think about it. Will you really get the lowest possible price on a piece of property if the person you are dealing with is showing you a property that is listed inside their firm? While the majority of real estate agents make every effort to carefully protect both buyer and seller interests, only an exclusive buyers agent can ensure that you are getting the best possible price on property. They have no ‘skin in the game’, so to speak – no seller to protect – only your personal interests and goals.
Frequently, exclusive buyers agents are paid out of the commission at closing. That being the case, the buyer agent would not receive payment for their services if the home buyer does not find a home to purchase. This creates a huge incentive on the part of the buyers agent to provide the most complete, up-to-date information and services to the perspective buyer. It is a win-win, especially for an inbound resident with limited knowledge about a new area they are moving to. Information and research is essential in approaching a move outside an existing city, state or sometimes, even out of the country. Any move can be stressful. A relocation move can be particularly stressful and a huge drain on time as the employee is expected to maintain a full schedule at work while preparing to move, during the move and has clear cut deadlines to meet, in many cases, on the other end of the move regarding ‘report to work’ dates.
Take the first step in your move. Hiring a professional buyers agent to assist you in getting the critical information you need is not only an excellent business decision, it will likely save you many thousands of dollars in the end.
If you are considering an exclusive buyers agent for your real estate search and purchase, here are some things you won’t have to worry about. The fact that a real estate agent may assume a limited ‘dual agency’ role has long been a topic of heated debate in real estate circles. What is the cutoff point for loyalty between a seller and a buyer? There have been thousands of transactions closed successfully where an agent has shown property that they listed or someone in their brokerage listed. And many thousands of satisfied consumers have closed successfully with this strategy, however, in a seller’s market, like what we are in now with record-low inventory levels, will this be the preferred strategy for the buyer?
Definitely not, if you as a buyer require someone to really get in there and help you find the right property at the right price.
Open Houses – A Great Opportunity For the Agent
There may be consequences for the buyer in an open house setting if the buyer engages in conversation with the agent. Be careful in information exchanges with any agent who does not 100% represent your interests exclusively.
Fees
The seller’s agent fees may be negotiable but you will have no way of knowing this unless your exclusive buyer’s agent gleans this and other critical information.
Information
If you happen to disclose to a real estate agent that represents a listing that you would be willing to pay $200,000 for a listing but you would like to pay $175,000, they are obligated to give the seller this information. Without an exclusive buyers agent on your side, you may to loose in the negotiation stages of an offer.
Zoning and Other Critical Information
It may not be intentional, but in the discovery portion of your property search, you may be given inaccurate or outdated information about the potential development, upgrade or addition made to a property. Get this information correct and from your buyer’s agent who can help you with the research. Not from the source trying to sell you the property.
These are no longer the ‘sleeping giant lays’ days in the real estate market. A property might hit the MLS at 7:00AM that’s perfect for you and unless you have a top rated exclusive buyers agent you may never hear about it in the type of fast-paced market we are currently in. An exclusive buyer’s agent greatly increases your chance of purchase success in today’s real estate market.
Colorado is considered one of the top destinations in the United States real estate market for ranch property and acreage and still has a great supply of these wide open spaces. There are a couple of strong drivers in the marketplace right now – investor’s and second home and luxury real estate purchases. This trend will continue in the market until it is completely depleted of inventory, according to many real estate news sources. So where is there still ‘real estate gold’ left? Land – wide open space still for sale, and by all accounts, plenty of it in many parts of Colorado. Land is an excellent investment and compared to other types of investments, seems to be the preferred investment of choice for many for a couple of reasons. The 2013 is still seeing lower than average market prices for acreages.
Top considerations for purchases of acreages are pointing towards location when evaluating homesites in master planned communities. Next in preferences were views from the homesite – (waterfront, mountain, golf & wooded), amenities, price and actual size of home site.
The Value and Benefits of Acreage Compared to Other or Traditional Investments
Acreage is considered a safe, stable long term investment nationwide, according to and informal survey by landthink.com. This is really no surprise, as the economy is not considered either stable or certain and both are premier considerations in evaluating paper investments such as stocks. One of the biggest advantages to purchasing land is not just the investment, but the recreational enjoyment of the land during ownership. Those in the city or suburbs in communities with average size lots enjoy the opportunity to escape the city heat and congestion by taking family time weekends to the high county in more secluded, scenic mountain lands.
Enjoy Your Acreage Now As You Grow Your Investment
Acreages offer unspoiled opportunities to get close to nature, enjoy the views and the wildlife that aren’t readily available in the city. There aren’t too many camping experiences that can top taking a drive to your own land and pitching up a tent for the family and enjoying that type of fellowship over the weekend.
There are a great number of incentives for acreage purchase – desire to own forested land, to hunt and fish, to ride ATV’s – Colorado acreage offers it all! Searches across the state show an excellent selection of properties that may be used for various purposes, can be built upon in many cases, nearby to utility services, and in all types of shapes, sizes and locations.
Let your qualified buyers agent identify what you find most attractive in a piece of land and consider buying while land prices are still at all time lows in many areas.
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