Buying a House in Denver - The Essential Guide
By Sean Creamer on February 12, 2024
One of the most expensive purchases a person makes in life is a home purchase, and if that home is in Denver, that investment can change your life. Once you step on the ladder of home ownership, it enables you to unlock a new level of equity from the real estate market.
Yet buying a home in Denver is no walk in the park, as buyers have to get their ducks in a row before they can search for open houses. The buying process can be daunting for first-time buyers, or even experienced homeowners who haven't bought a home in years.
That is why our team from Prevu Real Estate put together a guide to help Denver residents start their home buying journey.
How to start your search
First off, you have to ask yourself how you want to spend your time in Denver and how your home can augment your goals.
For instance, a condo in Capitol Hill is perfect if you love checking out art museums and bar hopping in the River North Arts District. On the other hand, a house with plenty of garage space in a place like Wheat Ridge or Westminster may make more sense if you need space for outdoor gear and an easy route out to the Rockies.
Beyond balancing the commute to work and the drive to resort towns like Breckinridge, you will want to think about your home ownership goals
How long do you plan to live in the home? Are you willing to pay a premium for a turn-key new construction home, or are you planning to take on a fixer-upper house? These essential questions shape your home buying journey in Colorado, so you will want to square them away early.
You should also use this time to figure out when is the best time to buy for you in the housing market. Denver gets many days of sunshine a year, but you have to follow trends like when the local school district lets out for the summer to learn when families might begin moving in or out of your target neighborhoods.
Build up your savings
Before kicking off a home search, you should consider if you have enough savings to make the investment. Even if you are financing the purchase of your Denver home with a mortgage loan, there are plenty of other fees you will have to cover, so start saving money early if you are a first-time home buyer.
First is the downpayment, which can total 20% or more of the cost of the home price, depending on what type of mortgage you use, not to mention the monthly payments from the loan. While the down payment usually encompasses the lion's share of the funds you need, buyers must consider loan origination, inspection, escrow, title, and broker fees, which can total thousands of dollars.
While it does take time to build a nest egg, there are ways buyers can boost their savings. You will want to get automatic deposits set up for your bank account, so you are saving with each pay period. From there, look at your monthly expenditures and see where you can cut down on frivolous spending.
But one of the best ways to save is by finding the right buyer's broker.
Find an agent who understands your search
Many people buying property in Denver and beyond end up working with one of the first real estate agents they meet, usually referred by a friend or family member.
You should speak with a few agents to get a well-rounded sense of the brokers in your area, so add your friend’s broker to the list and a few you find yourself. Ask about their experience selling and buying homes across Denver, what types of houses they usually sell, and how many deals they close a year.
Beyond helping you navigate the transaction process, your broker should be able to augment your home searching efforts. For instance, Prevu Real Estate offers homebuyers digital tools to enter your target neighborhood, price range, and home style into an automated search so you know first via an alert when a picture-perfect single-family home hits the market in Centennial
From there, you can connect with a Prevu agent who becomes your partner, helping you craft a plan to get you into the home of your dreams.
But one of the biggest boons of buying a home with Prevu is securing a commission rebate.
Ask for a commission rebate
As home buying evolves into a digital process, the role of the buyer's broker has changed.
Most homebuyers pride themselves on their research on Denver neighborhoods, often already knowing in what areas of the Mile High City they want to put their roots down. Since listings are easily accessible online, your broker can focus on your transaction and augment your home purchase in new ways, such as offering a commission rebate at closing.
Sometimes called a commission refund, this powerful tool allows your broker to provide you with a portion of their broker commission when you close a deal on a Denver home. Once you complete the purchase, your Prevu agent provides you a portion of their broker fee when you get the keys to your new house.
Get pre-approved for a mortgage
While you may have a budget in your mind for buying a Denver home, you will not know your price points until you get pre-approved for a home mortgage.
But not all mortgages are the same. Some loans like a 30-year fixed rate suit folks who plan to live in a home for over ten years. Other products like an adjustable-rate mortgage, are better for folks who will only live in a house for five years or so.
Speak with multiple banks and mortgage companies in Denver to get a well-rounded sense of what interest rates and mortgage products are available across lenders. Underwriters want to see several years' worth of your W-2 and a list of your assets and liabilities, so they can review your savings and debts.
This information tells underwriters how much you can afford in monthly mortgage payments. A clean credit score is imperative, so avoid taking on any new credit like buying a car or other big purchases.
How to submit offers on Denver homes
Once you choose a buyer’s agent and have a mortgage pre-approval letter, you can start making offers.
While the market is calmer than it was in 2021, buyers should still craft a solid bid to woo sellers. If you find a home that you think you can get a deal on, like one that has languished on the market for a while, your agent can help you negotiate the best price possible without a bidding war. When it comes to actually submitting the offer, you can do so quickly through Prevu.
Specifically, homebuyers can start offers via the Prevu portal, and finalize the offer with the advice of one of Prevu’s local experts. Once you submit an offer and it is accepted, you will need to move quickly to set up inspections.
Get inspections and appraisals ready
While you are not required to perform a home inspection in Colorado to purchase a home, buyers should order them to ensure there are no hidden surprises.
An inspector could find black mold in an otherwise pristine home, saving you thousands of dollars down the line.
When your inspector gives a satisfactory report, you can tell your lender that you want to move forward with the property. The lender will order an appraisal of the home during the underwriting process to ensure the home's actual value justifies the purchase price.
As you approach closing, you will secure homeowner insurance, as the mortgage lender typically requires it before they release the funds. Once the lender gets the appraisal back and underwriting is complete, it is time to close the transaction.
Your final walkthrough
Once you receive a clear to close, it is time for your final walkthrough.
During the walkthrough, you want to thoroughly look over the property. Make sure no major damage occurred during the seller’s move out, check that all appliances are in working order, and confirm that any agreed upon repairs were completed.
Final walkthroughs generally occur the day before or morning of closing.
