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Buyer Concerns & Market Research

[0:00] Over a third of people who bought a home during the pandemic now say that they overpaid. And currently over half of all buyers list affordability as their biggest concern when buying a house. You know, and after 15 years and hundreds of deals in the Denver market, I can tell you that the buyers who save the most money have done the opposite of what feels natural as painful as it might be. So, in this video, I'm going to share with you my top seven strategies that will keep more money in your pocket and have you sleeping better at night.

[0:25] Number seven, you're going to start studying neighborhoods like it's your job. Okay, you have to do your homework and understand what the specific neighborhood you're looking at is doing in the market. Cuz here in Denver, I can show you neighborhoods that are up 10 to 15% year-over-year. And I can show you others that are down 10 to 15%. As well, right? Same city, completely different markets. So once you've narrowed down where you want to be, and that's always the first biggest hurdle, going from, you know, the side of town, let's just say the west side of town, uh, to kind of a quadrant, the southwest part of town, uh, to a city, right, Littleton, down to specific neighborhoods within Littleton. You're going to study these areas, and maybe that's going to be a month for you. Maybe it's 3 months, 6 months, or more. You're going to want to understand when inventory is coming up, how long things are taking to sell, and what they're actually closing at compared to what sellers are asking for because they are two wildly different things in this market. And is the type of home you're looking for coming up once a quarter, once a month, right? It totally changes your strategy versus ones that are coming up, you know, a couple a week. Now, studying comps and what things have sold for is extremely important. But in a current market where there are more sellers than buyers, it's just as important to understand the competition. meaning the other active properties that are on the market at the same time you're looking because that directly affects how a seller responds to your offer. You know, if there's four other properties that would also work for you and then a fifth one hits the market, it happens to be the right one, you're in a much stronger negotiating position than that seller is. But if the specific bungalow you want in Wash Park doesn't exist for sale, and then one finally comes up in four or five months and everybody's going after it, well, that's a situation that kind of changes how you approach your offer. And a lot of people do tend to overpay in that situation. Number six, and I can hear the groans already, but get a good buyer agent. Okay, I'm not just saying that because I'm a real estate agent. Like, as cheesy as that might sound, uh, and it sounds totally obvious, but having a good buyer agent is going to save you a ton of money. And I'm not even going to say it's going to save you more than you'd spend on them because 99% of the time, we're getting paid by the seller.

Neighborhood Selection Strategy

Market Conditions & Inventory

Importance of a Good Agent

[2:28] Okay, let's just get that out of the way. 99% of the time you're not paying a buyer's agent because our commissions are worked into the contract to buy and sell. You're basically paying your lender's closing costs on the contract. So, if you're buying a place for a million dollars, like you might be spending 1 million8,000 out of pocket, okay? We're paid by the sellers in 99% of cases. But the truth is, you're just not a part of the club. Okay? That's actually why I got into real estate 15 years ago flipping houses because I wasn't licensed. I couldn't get agents to respond to me. I didn't know how to submit offers properly and because I wasn't part of the club, the listing agents on the seller side didn't take me seriously. So, yeah, that is a very real part of it. I'm just going to be honest with you there. You know, a good agent will not only help you find the right comps and decide what a strong offer looks like, but they're going to know how to position that offer and negotiate properly. Okay? And maybe the most valuable thing though is helping you avoid a bad house from the get-go. Okay?

[3:24] I have construction background. I flipped hundreds of homes and the first place I go in any house is straight to the mechanical room. Why? I want to look at the furnace and the water heater because if that room has been taken care of and it's clean, you know, it gives me a pretty good indication of how the rest of the house was treated. You know, you don't look at houses all the time, but we do. And when you know what you're buying, you can avoid a lot of the headaches and nightmares from the get-go and not even get involved in the situation. So, yes, having a great buyer agent is one of the biggest ways you're going to save the most amount of money from anything else on this list. And I would be remiss if I didn't have a shameless plug here cuz if you need a good buyer agent in Denver, I'd like to think I'm okay at it. Uh, just reach out, call me, text me, and if you're not ready to talk, you don't want to be stuck with a salesperson. I totally get it. Uh, download my relocation guide.

[4:10] It'll answer so many of the questions you have without having to talk to anybody like me. Now, number five, this one sounds a little bit weird because we're talking about how to save as much money as possible. But you'd be surprised how many people out there are not willing to negotiate. So number five is just be willing to negotiate. Now I don't mean submitting lowball offers until someone accepts. Right? That's not the goal of buying a home. Uh your home in where you live is worth paying 25 50 grand more over the next decade. You know, your peace of mind is more important than saving a few extra bucks.

[4:38] Trust me, I've seen it done before and it's never worth it. Because at the end of the day, you know, an extra $25,000 on a mortgage is what? 10 to 20 bucks a month in your payment. that's no big deal whatsoever. Uh you should not be blocking at that. But even on the first weekend, right, I just literally had this scenario happen a few weeks ago. Property was listed at 1.125 million. We went in at 1.05, which is $75,000 below asking after 2 days on the market. Now, normally I'd probably say, "Hey, seller isn't there yet. You know, that's going to take them a few weeks or a few months before they're willing to accept that kind of offer. Uh they had good activity over the first weekend." But the reality is there just aren't as many real buyers in the market right now. They did counter back to us, right? Closer to our number than to theirs. And we ended up getting it for about 50 grand off the list price of the house. That's 4% off the top on the very first weekend. And you know, I was honestly pretty surprised at it. You know, we've reached a point in the market where a certain percentage of sellers absolutely need to sell. Uh and you don't know that until you put your hat in the ring. Now, you do have to do it the right way, and that's where communication is key. You know, there's a right way to put in an offer under asking price. Uh there's definitely a wrong way to do it. You have to have some facts in a position to back up your offer. And if your agent is any good, they're worth their weight in salt.

[5:57] They'll know exactly how to do it. Now, number four, this gets into a little bit bigger of a strategy, a little bit more of a life choice, and great for you younger folks. And I wish someone would have told me this at a younger age. Buy what you don't want where you don't want. Okay, sounds counterintuitive. Yes, it's a little bit painful. Uh, but this one is definitely for the people in the beginning of their housing career.

First-Time Buyer Investment

[6:18] You know, first-time home buyers, younger buyers, single buyers. Uh, this might be the top piece of advice I can give you if you're in your 20s or 30s. Okay? Once you have a family, that becomes a little bit more unrealistic to buy what you don't want, where you don't want. But if you can buy in the most inexpensive parts of town and have the ability over 5 to seven years to build up equity, pay down part of your mortgage, and realize some appreciation, then turn that into a rental. you will be in a much stronger position in your 40s than any of your friends. Trust me, I've seen it happen. I can promise you that. My number one piece of advice is if you can swing it, right? And if a property cash flows even a few hundred a month, never sell it. Okay? Now, there are certain price points where it no longer makes sense, right? North of about $700 to $800,000 in the Denver market. But if you've got a first-time home buyer type of property, that three-bedroom, two bath ranch, you know, that's 1,200,600 square feet, or a condo, two or three bedrooms, or a townhouse, you know, with very little exterior maintenance, and you can rent it out in cash flow, you know, after having owned it for a handful of years of living in it. Like, don't ever sell that property. It's going to be a retirement asset for you that will change your life in a couple of decades.

[7:29] Number three, don't be afraid to ask for stuff on the inspection. Okay, the inspection is generally round two of kind of negotiating, right? Round one is getting the property under contract for the price that you both agreed to. The inspection is where you can ask for, you know, furnaces to be repaired or replaced. Uh same thing with the roof, sewer lines, kitchen appliances. You know, you want to go through your inspection in detail and figure out what the deal killers are, right? These are the items that have to be fixed or you're not buying the house, right? What you can also do on the inspection objection is offer a seller concession in lie of repairs, which looks kind of like this, and it puts money back in your pocket at closing. Say the stove doesn't work properly, right? Two of the burners are out. Uh you can ask the seller to repair or replace the stove as needed or give you a $1,000 seller concession instead, you know, and a lot of sellers are going to go for this concession because it's easier than dealing with the headache of replacing an appliance, right? And maybe you already know that you don't like the stove and want to replace it anyways. So now they give you money and you pick exactly what you want. So that is totally an option. Now I do think the list should be narrowed down to about six items or less uh because of how a seller is going to interpret that information. It's going to give you the best chance of being successful. And here's kind of the trick, right? If you have a laundry list of items, condense it, right? If there are four electrical items, uh put them all on one line item, right? If there's three plumbing issues, put them all on one line item. then list the remaining items kind of separately.

Negotiation & Inspection Strategy

[8:55] It makes that list much look much much smaller. Uh and you have a much higher success rate of getting everything you want in the inspection objection or at least the majority of it. Right? And one more thing, never offer to wave the inspection. Okay? Just don't do it. It's just not worth it. Number two, and this one's going to go against every instinct you're going to have, but will likely save you more money than anything else on this list. I told you it was going to be painful. I didn't lie to you. I release that information right to you at the beginning. So, when you're house hunting, right, avoid going after properties that have been on the market for less than two weeks. Okay? Now, of course, there's going to be some exceptions to that. If it's the perfect house and you've been looking for 6 months or a year, forget what I'm about to say. Just go after it. Pay their darn asking price, get it done with. But if you're finding that homes in your target area coming up pretty consistently, a few of them a month, you need to let those first two weeks pass completely.

[9:47] Here's why. In the first two weeks, the seller hasn't had any time to realize what the market is actually doing. Okay? They put their house up for 600,000. They think it's priced right, but they haven't been studying the market the way that most buyers have. [snorts] And their agent, depending on who they signed with, maybe they patted this number a little bit, promising them 600 uh when the house might only be worth 550, 575. You just never know what someone's being told. So, they list it and the first weekend goes by, they get one or two showings. Next weekend, maybe one more. By week three, it's kind of crickets out there. Okay, one showing maybe every other week. And now the seller is having uncomfortable conversations with their agent. Uh they're starting to feel like they missed the boat. They don't understand what's happening. And that's when you start your shopping. Okay. Now, here's one of my favorite strategies. A property has been on the market for, let's say, in two weeks going on week three, and then boom, they do a $25,000 price drop. Okay. Now, depending on your price point, of course, that could either be a big drop or not such a big drop. Uh but let's pretend for a moment that it is a good size drop, right? So they dropped it 25,000 in not even a month on the market. That's going to tell you that these folks are needing to sell. This is signaling motivation. Now you go in another 25 grand, 30 grand below that, see what they counter at, and all of a sudden the house that was listed at 700, right? Maybe now you're getting at 650. You know, that's 5 to 7% below the original asking price. the properties on the market the first weekend have the most buyer activity and the sellers in the strongest position.

[11:16] Right? That's when they're least willing to negotiate. And number one, if you can do this and time this right, all the stars are going to align. And yes, I'm going to tell you to time the market. Now, to be fair, you can't time the bottom. You can't time the top. That's not what I mean by timing it. I mean timing it seasonally. Okay? There is a pricing cycle in Denver. every single year. I can show you the exact numbers here. Look at this. Every year the peak is in May to June, right? And the bottom is in December to January. We adjust by 5 to 10% every single year. Okay? Peak month closed prices in June. Meaning people who got their house under contract in April and May are closing in June have paid the most throughout the entire year. Then we get to November, December, January, and the medium prices drop by 5 to 10% every single year. You can set your clock to it. Okay? So on paper, you could pay 5 to 10% less for the same exact house that someone just bought in May or June. Now there is a caveat to it and that is inventory also drops towards the fall and the winter months. But there is a sweet spot, right? August, September, and into October before the holidays hit, right?

Market Timing & Seasonal Trends

[12:26] That's when a lot of sellers decide to start pulling their properties off the market. And during that window, we still have a ton of inventory. days on market are increasing and buyers are decreasing as school starts back up. That's your real opportunity to jump in. Okay, offer 5% below asking price, maybe 10% below, see what they counter at, you know, and find out if they really want to sell their place. Then couple that with watching their pricing strategy while they've been on the market. Have they dropped the price massively? How many times? Uh that can really tune you into how motivated a seller actually is. And if you can time it to buy in the fall, you will save yourself more money than any other time of year. But knowing how much and when to offer on a house is one thing, but how do you avoid the bad houses altogether? Well, that's why I put together this video, which will teach you how to spot a bad house immediately to save you time and money on your house hunt.