Nestled in the base of the Rockies, Denver, Colo. has often been touted as a great place to buy a home and raise a family. But, like elsewhere, the economy took its toll on Denver’s real estate market.
The state had the eighth highest foreclosure rate in the nation during the first six months of 2012, according to Heather Draper of the Denver Business Journal. Although it represents a 4 percent increase over the second quarter of this year, Denver’s foreclosure rate was down 14.6 percent over this time last year.
While the residential foreclosure market continues to swing like a pendulum, Denver home prices are poised to move upward. Low interest rates are driving demand from buyers, and supply is dwindling, according to the Denver Post.
Dawn Fabiszak, a Realtor® with Keller Williams Real Estate, LLC, concurs. “In some areas, prices have actually increased while inventory dropped,” she said.
Yet, careful shoppers with savvy real estate agents may still be able to find bargains. Here are a few tips from Fabiszak for bargain hunters in the Denver real estate market.
Tips for Denver Bargain Hunters
Find an agent specializing in the Denver market: Like most big cities, the real estate market varies from street to street and neighborhood to neighborhood. “You may cross the street and be in a totally different neighborhood,” Fabiszak said. Doing your research on individual areas is very important.
Get referrals from friends and family: Interview a few agents before choosing someone you like. Ask questions such as how long they have been in the business, if they are full-time real estate agents, and how well they understand real estate and contracts. Also, find someone who has a good team of inspectors, lenders and handymen they can refer you to.
Make a reasonable offer: Until recently, buyers were kings. But things are changing. You can no longer make a counter-offer at 88 percent of the listed price. Sellers are now listing more realistic prices, so haggling probably won’t get you anywhere.
If looking at foreclosed residential real estate, find a specialist: Short sales and foreclosures are complicated. Find an agent who specializes in those categories. There are many courses, such as Short Sales and Foreclosure Resources, designed for real estate agents in the field. Find out if your real estate agent has taken such a course. Also find out what percentage of the properties he or she works on actually get to the closing table.
Find the right neighborhoods and homes: Depending on your budget, a real estate agent can guide you to the right home. Bank-owned properties are cheaper, but those properties aren’t necessarily in mint condition and could be gutted inside. You need an experienced professional to tell you what’s a good deal.
“You may think $70,000 is a bargain when you look at a house, but in reality you may have to spend an additional $40,000 in replacing cabinets doors, light fixtures, etc.,” Fabiszak said. Know what you are getting into before sealing the deal.
Know in advance what kind of loan you want: Work with a qualified lender. If you are buying a short sale or foreclosed home, you need to know what kind of loan you want to opt for. You could have a loan that includes repair costs.
Search for a home depending on what your needs are: If you plan to fix and flip, find a home in a desirable neighborhood that would sell easily. Get your finances in order and find the right professionals to get all the renovations done. You would also want to know the current trend in the neighborhood. If you plan to live in the house, you need to find a home that has minimum or no repair or maintenance issues.
Instead of looking at current market trends, examine how the neighborhood has fared in the last three years. If you are planning to rent it out, location is key. You need to ensure that your rent will cover your mortgage and also bring you some income, unless of course you are looking for a tax break.
Your mantra should be patience: Most short sale transactions take an average of six months. So, if you are looking for bargain real estate, prepare to be in it for the long haul.
“Some short sale properties have more than two loans on them, and you end up having to negotiate with two banks,” Fabisjak said.