Hi everyone, and welcome to this edition of Ask the Colorado Dream House Team. I’m Dan Polimino. Well, if you’re new to the show, welcome. We’re happy to have you. If you’ve been watching it now for a couple of weeks, you know that the show is really about asking the Colorado Dream House Team about real estate advice. Every week we take your questions, and we answer them right here on the show. We’re just here to help you navigate what can be sometimes a complicated real estate industry. It doesn’t matter if you’re in Denver Colorado where we are, or you’re in Topeka Kansas. This information works anywhere that you’re buying or selling in real estate.
Two things that we always want to accomplish in the show. Number one, is we want to give you good database driven information about what’s happening in the market right now, and we want to answer your questions. Let’s first get to the market update. Last night I am at my little girls gymnastics practice, and I’m sitting there watching her, and I’m doing some work. I’m noticing that the person to the right of me is talking about real estate, and they’re looking at homes online. Then I look to the left of me, and the people to the left of me are talking about new homes that they just went to go see. Then the people behind me are just talking about the home that they just purchased. I thought, “I’ve never seen anything like this as long as I’ve been selling real estate.” The buzz about real estate in this city is absolutely at a fever pitch.
I mean when I said, “I’ve never seen anything like it,” I’ve never seen anything like it. Now, if you’re in parts like Highlands Ranch, and you’re in Centennial, or Parker, or Castle Rock, and you’re that in that three, 400, up to 500,000 price range, you know that your home is selling in a matter of minutes or hours. I’ve got some clients that are trying to buy a home in the $400,000 price range, but every home we go look at has five offers, eight offers, seven offers. It’s absolutely crazy.
Again, we desperately need listings. Now, I want to make really a clear point here. This frenzy is not happening at all price ranges. In fact as I talk to lenders, as I talk to other real estate agents, I call it the, “Demarkation line.” It’s right at 500, that’s the number. If it’s 500 and below, it’s absolutely flying off the shelf in a matter of hours. If it’s 500 and above, it’s quite a different story. In fact, there’s a fair amount of luxury inventory on the market that’s not getting showings. It’s really a tale of two cities. I want to be clear, it’s about the 500 market.
I don’t want to put a perception out there that every house is flying off the market at every price range, cause it’s just not the case, all right? I don’t know if that’s helpful. The other piece of information that I want to pass along that I heard today as we had Steve Murray here at our office talking to a bunch of us about some statistics in the real estate market, and what to expect. Steve Murray has a company called, “Real Trends.” Where he consults many of the top brokerage firms across the country. I think he has 500 brokerage firms reporting to him, and about 12,000 agents where he’s gathering data about their information.
He had an interesting statistic, and it goes like this. In a calendar year right now, there’s about two million home formations going on across the United States. That’s about two million people wanting to buy a home. They call it, “Home formations,” right? However, we’re only producing homes including our builders, to the tune of about 1.1 a year. We’re in a shortage across the nation on a yearly basis of about 800,000 homes. He said, “This is going to continue. There’s going to be this continued demand of about two million homes a year.” Even if the builders cranked it up, even if the builders went at full capacity and produced 1.5 million homes, we would still be five, or 600,000 homes short. This is going to continue now for the next three or four years, that’s what everyone’s telling us.
I have another home builder who I talked to today, that said they met with the mayors of four cities in Colorado. Everybody asked the same thing to the builders, “Can’t you build more, or faster?” The builders comment was this, “We could, but we just don’t have the trades to do it. There are just not enough skilled laborers out there to build the homes any faster.” The short answer is for all of you that are waiting for the shortage to end, it’s probably not going to end for the next three or four years, okay?
Let’s get to today’s questions. “Dear Colorado Dream House Team, if I’m going to get multiple offers on my home, why do I need a real estate agent?” That’s a great question. Yes you could put a sign in the yard, and yes you could probably get multiple offer son your home. But negotiating the multiple offer scenario may be one of the most difficult things to do in real estate. If you do it wrong, you’ll have nothing. When I ask sellers, “Out of all the offers you get, which one would you select?” They say, “Oh that’s easy, I’d pick the highest offer.” That’s the wrong answer. You don’t want to pick the highest offer, you want to pick the offer of the buyer who is most likely to close. That’s really it.
You can take the highest offer, if they don’t close it doesn’t really matter. You want the person who gives you the best price, you notice I said, “The best price,” I didn’t say, “The highest price.” The best terms, and the person who is most likely to close. That’s the offer that we’re looking for. The question then becomes, “Well how do you determine that?” Well there’s a lot of factors that come into determining that. What are their terms on inspection, appraisal, loan contingency, cash, are they going to waive their appraisal? There’s lots of things that can be negotiated on the terms. That’s why you need a professional helping you on the multiple offer scenario. If you want to hear more about that, contact us at ColoradoDreamHouse.com.
Number two, “Dear Colorado Dream House Team, what is a post occupancy agreement and how does it work? Does it mean I can stay in my home after I sell it?” You absolutely can stay in your home after you sell it, if you have a post occupancy agreement. Basically what it says is, “I’m going to sell my home to the buyer, say in 45 days.” There’s going to be a closing, and that buyer has agreed to allow you to stay in it for up to an additional 60 days. Now, why do I say, “60 days?” The Colorado Real Estate Commission has already put together a neat little one page form that allows you to spell out the terms of you staying in it for up to 60 days. Now, if it’s aiming more than 60 days, you’re probably going to have to get a lease, maybe get an attorney involved, and do some type of lease agreement with them.
Now, over the 60 days can you stay there rent free? In some cases. Who knows? It all has to be negotiated at the time of contract. For all of those sellers out there that say, “I would sell, but I can’t find a place.” I would say to you, “What if I could give you 105 days to find a house?” Right? From the time we get your house under contract, we’ve got about 45 days to closing. If we negotiated a 60 day post occupancy agreement, we got another 60 days. Sounds like I might have bought you 105 days to find the right house. If you want to know more about this, contact us at the Colorado Dream House Team.
Question number three, “Dear Colorado Dream House Team, I heard you say last week that homes were flying off the shelf in Colorado. Is that true for all price ranges?” Well if you heard the beginning of this, it’s not true for all price ranges. Again, that mark is about 500,000 and below, those are flying off the shelf. 500,000 and above, not so much. In fact, just this week I had a whole bunch of alerts come across my email of agents doing price drops. Yeah, I said price drops, on homes that they have listed at 600, 650, 700,000. That is not moving like 500,000 and below.
All right, don’t forget out marketing guarantee. Remember what that was from a week ago? Which is, our marketing is so good, we’re going to put our money where our mouth is. Interview us to sell your home, and then interview our competition. If our marketing is not better than the competitions, you can hire them and we’ll give you 250 bucks. To learn more about that, remember, go to ColoradoDreamHouse.com/250. Don’t forget our home buying guide, “How to buy a home in Colorado, and how to sell a home in Colorado,” is coming. It’s going to be online, but if you want an advanced copy email us at Team@ColoradoDreamHouse.com.
That’s today’s show, look forward to more of your questions. You can post them here on Facebook, you can email them to us, or you can call us. We’ll talk to you again on Thursday. Have a great week