Colorado's real estate market is fierce! We have never
seen a market so heavily-weighted in a seller's favor than the past
three years. I'll walk you through the anatomy of what we're seeing in
the current marketplace as of March 2021 - then I'll share my thoughts on why Veterans
remain at a competitive disadvantage.
Anatomy of the
Current Denver Real Estate Market
As of January 2022, we're still experiencing a perfect storm...or
not-so-perfect if you're a potential buyer. You see, the severe lack of
homes available for sale (see
latest market trends report) - combined with historically low
mortgage interest rates is causing prices to rise sharply with no end in
sight. As we look at a typical home that comes on the market, you can
safely assume that it's priced right or maybe even at the top of the
market. Once it goes live in the MLS, real estate agents scramble to
book a 15-minute showing appointment on a specific day. As a
buyer rushes through the home, they will have to
decide if they want to write an offer within a matter of hours. Oh sure,
the MLS notes say offers will be accepted through 8pm Sunday, but that's
not always the case, so take it with a grain of salt and be prepared to
act quickly or it will be under contract while you "think it over".
Rest-assured if the property is in reasonably good condition, in a good
location and within your price-point, it's most definitely going to
attract multiple offers ranging from a half dozen to several dozen
offers. What that means to you is you'd better have the stomach and
wallet to write an amazing offer that can separate you from the pack and
that usually includes things like x-dollars over the list/asking price +
limiting your inspection to health/safety or structural issues (or
waiving the inspection contingency altogether - which I don't recommend)
+ adding an appraisal gap - which means you will guarantee to come up
with the extra cash if the appraisal comes in lower than your
offer. Be prepared to close in less than days as well as providing a
post-occupancy up to 60-days for the seller to move. Oh...and if you're
not already pre-approved with a
mortgage lender - forgetaboutit - your offer won't even be
considered!
In a nutshell, that's what the Denver market looks and
feels like. I am happy to walk you through a number of scenarios in much
greater detail. Keep in mind, the market is dynamic and ever-changing
and there are also opportunities as well - you just have to know where
to look and how to negotiate them. For example, I closed
on a home a few months ago that was listed over $500,000, we offered $475,000 and closed at
$485,000 with the seller paying $3000+ of my buyer's closing costs. So
it's not impossible! I'm also happy to say that my last two closings
in 2021 and first closing of 2022 were with VA buyers!

How are Veterans at a competitive disadvantage?
This is a touchy subject for me because it makes my blood boil to see
how VA buyer offers are not taken seriously. Many listing agents and
sellers simply do not fully
understand VA Loans. They've unfairly become stigmatized in the current
market because (amongst other things) many believe that a $0 Money Down
Payment loan somehow means that the Veteran either doesn't have a down
payment or sufficient funds to close. Neither of these is safe to
assume. I have been working with Veterans and VA loans for 16 years and
have never (ever) had a pre-approved VA loan that failed to close - yet
cash and conventional deals fall through all the time. Just because a
Vet decides not to put any money down doesn't mean he/she doesn't have
it, quite honestly in many cases, it's quite the opposite. Let's say you
had $10k/$20k/$30k or $100k to put down on a property, but the loan you
qualify for doesn't require a down payment - would you? No freakin' way!
Not only do VA loans not require a down payment, they also don't require
expensive monthly mortgage insurance and the interest rate is always
just a little lower than anything in the marketplace. Again, would you
pass that up if given the chance? No freakin' way!
So, on a very basic level, if you were selling a
$400,000 home and had a handful of offers assuming $10,000 over list
price and none with sale contingencies: Buyer#1 $80,000 down; Buyer#2
$100,000 down; Buyer#3 $200,000 down; Buyer#4 Cash; Buyer#5 $0 down. We
haven't even begun to discuss inspections or appraisals yet, but you
think a seller might be leaning in one direction already? Maybe...maybe
not. Some sellers have mentioned
reading about strict VA inspections, appraisal and deadlines - all
contributing to hassles they'd rather not deal with. Fair enough...if it
wasn't inaccurate. In my experience, inspections that are blatant
health/safety issues will be called out, but they really just want to
ensure the place is habitable with working appliances, running water and
a working furnace. Is that really too much to ask?
Moving onto appraisals and deadlines. It's absolutely true that VA
appraisals have no deadlines. Whoa...whoa...whoa. No deadline means a
seller is at the mercy of a deadline that has no actual date of
completion. Yeah, so what! In my experience, VA appraisals are getting
done sooner than conventional appraisals anyway (my last VA appraisal
was completed in eight business days). Many fear that VA appraisers tend
to come in low. Once again, I've seen more conventional appraisals some
in "soft" than I have VA appraisals. So you say, that's why I would just
take the cash offer because most of these won't require an appraisal.
True, but sometimes cash buyers will decide to bail on the transaction
because they find something better. Of course, they won't use that as an
excuse to terminate the contract, but it happens all the time.
So let's move on to appraisal gaps. I don't like the
practice, but understand the need to offer them in order to separate
your offer from the rest you are competing with.
Seller's love appraisal
guarantees...and if you were selling, I can assure you would too. So
let's assume all of the buyers in the scenario above, guaranteed most if
not all it. How would you rate the offers now? Did the way you felt when
we started change at all up to this point?
Of course, I am not able to drill into every single
detail of a typical transaction like this because a purchase contract is
a living, breathing document that can be modified and not all purchase
contracts are written identically. I'm simply trying to point out the
potential tripping hazards or roadblocks VA buyers tend to experience in
our market. The intention of this article is to help educate
sellers so they might consider giving
serious consideration to Veteran buyers. At the end of the day, the
money a cash buyer brings to the closing table is identical to the money
a VA buyer brings. Besides maximizing their equity, the only thing a
seller should be focused on is getting to the closing table and I can
think of no better way to get there than accepting a VA loan. The
opinions expressed here are solely mine and not that of RE/MAX Alliance.
-------
As an experienced
VA/Military-friendly Denver Realtor with RE/MAX, Anthony Rael is fortunate to
recommend local VA Mortgage Lenders who understand the VA mortgage loan
process and will work hard to secure the best VA loan possible. Since VA
guarantees a portion of the loan, this enables the mortgage lender to
provide you with more favorable terms (saving you thousands of
dollars!). Anthony Rael, your
VA Military-friendly Realtor with RE/MAX Alliance - 303-520-3179
Get Pre-Qualified for a
VA Home Loan
Today!
Preferred VA Mortgage Lenders for
Anthony Rael, RE/MAX Alliance - Denver Realtor
* Caliber
Home Loans - Tiffany
Swisher - 303.884.4137
* CMG
Home Loans - Mike
Wilcox @ 303.525.3568 or Deana
Hollstein @ (303) 300-8910
* Peak
Lending Team - Tenby
Dahman @ 303.478.9126
I would like to personally thank ALL of our Service Members, Veterans and
eligible surviving spouses for your sacrifice to our country! I'm
always grateful for the opportunity to help military families buy & sell
homes in the Denver Metropolitan area. I work with retired military
buyers and sellers & assist military families who are relocating or transitioning from active-service to various civilian
employment with defense contractors such as Lockheed Martin, General
Dynamics, Northrop Grumman, Boeing & Raytheon. I consider it an
honor and a privilege to provide expert, professional real estate services
to military families and I look forward to help you buy or sell a home.
If you have any questions relating to
pre-qualifying for VA Home Mortgage and finding a great home in the Denver
metro area, call Anthony Rael at (303) 520-3179

Other VA Resources:
VA Office in Denver, Colorado
United States
Department of Veterans Affairs
Federal Benefits for Veterans Booklet
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