I read a great article in the Denver Post regarding Denver’s Real Estate Market. It addressed how frustrations are rising among buyers and sellers and rightfully so, with overbidding,sellers less willing to compromise, buyers backing out, as the Denver Post stated, “the gloves are on”. The article continues with stating that as many as 23 percent of contracts fell through this past April. Which means a number of listings returned to the market and many of them because the winning offer fell through and this is starting to happen at an alarming rate.
Buyers are more willing to accept whatever a seller asks in order to get their offer accepted, which could mean waiving inspections or appraisal contingencies, these are put there for a reason, which is normally standard procedures and are for buyers protection. On the other side, sellers are irritated by the growing number of buyers making high offers to lock in the property and then deciding to back out.
Appraisals determine the value of the home which is evaluated by the market which determines how much a bank will lend against the house. If an appraisal comes in lower than the asking price then the buyer will have to bring the difference to closing. Many buyers are unable to bring the difference and end up needing to back out of the purchase. After losing multiple bids buyers feel they have no choice but to overbid on a property.
After reading this all I was amazed, not by what was happening, but more on how too many buyers are not being educated with their lenders. There should be no reason for a buyer to overbid on a property without knowing the consequences if the property does not appraise and if they can qualify to bring the extra funds to closing. Not only being educated by their lender but also the communication and guidance with their realtor. Buying a home is a team effort, you have to surround yourself with a good support team, which is your lender and your realtor.
If you would like to discuss and/or have any questions please contact us. Make sure you are arming yourself with a great team in this market.