VIDEO: Earnest Money and The Low Inventory Problem

 

Transcription below

Hi, everybody, and welcome to today’s episode of Ask the Colorado Dream House Team. I’m Dan Polimino coming to you live from Denver, Colorado, and thanks for being with us. If you’re new to the show, we answer all of your questions that are real estate. And as I’ve said over and over again, you don’t have to be in Denver to benefit from this information. You can live in Scranton, Pennsylvania and a lot of what we talk about applies there too.

Two objectives of the show each week is to give you good database-driven information about what’s happening in the market, and to answer your questions. We also like to talk about some of our featured properties each week, so that’s all coming up in today’s episode.

First, market update. We’ve been hearing a lot of stories about people who are upset, frustrated over the bidding wars for homes. The low inventory problem, we’ve talked a lot about it on this show, and what you’re seeing is that couples are going out weekend after weekend in the lower price ranges and typically, there is five, 10, 15, 20 offers on a property and the buyers are losing out, right?

And they’re having to do some outrageous things, waiving appraisals, $20,000 over asking price, giving post-occupancy agreements, and they’re getting really frustrated and worn out. I have hope for all of you today. Why don’t you consider new construction? I just did this with some clients of mine who were worn out and tired, and we went and we looked at new construction.

Now it’s not an ideal scenario, right? These people are going to start from the dirt, and they’re going to have a new home in 12 months. But at least the bidding war and the out every weekend and putting earnest money at risk, and paying $20,000 over asking price, at least that’s all gone away. And now they can just, for the next 12 months, enjoy the process of going to see their new home be built. So that’s my market update and my tip. If you want to know about new construction, where can you buy? At what price range? How long will it take? What questions do I ask? Contact us at the Colorado Dream House Team and we’ll help you through that.

All right, let’s get to some of the questions. Dear Colorado Dream House Team, is earnest money negotiable in the contract?

You bet it’s negotiable. Everything in the contract is negotiable. The price, the terms, so just because somebody’s asking for $15,000 in earnest money doesn’t necessarily mean you need to give it in the contract. You could give, say, $7,000 in earnest money. Everything’s negotiable. Remember, the seller is looking at your offer in totality, everything in there, the price, the earnest money. Is it conventional versus FHA financing? How much are they putting down? What’s the closing date? What are the terms? Everything has to be taken into account, and the earnest money is negotiable, all right?

Number two, Dear Colorado Dream House Team, with the multiple offer scenario going on, can we write a contract on more than one house at the same time?

Great question. The answer is, you could. However, I wouldn’t suggest it because the obvious could happen. You could make offers on two homes and get them both, right? If the seller accepts them both, you’re potentially on the hook for both homes. Now you may have some unscrupulous agents say something to the effect of, “Hey, don’t worry. I’ll get you out of one of them. I’ll get you out on inspection, or I’ll get you out on another contingency.” However, in that case, you would be breaking the good faith clause in the contract, meaning you didn’t enter into that contract in good faith, right? And you could end up losing your earnest money, so I don’t suggest that. I know it’s tempting, but don’t try that, all right?

Dear Colorado Dream House Team, will the low inventory problem be long-term?

Yes, it will. It’s not going away anytime soon. I really think that our active inventory here in Denver is really only going to get to about 8,000 homes, maybe. And that would be at the peak of the summer, maybe around June, July, all right? So the low inventory problem’s not going away. However, for those of you that still want to compete in the resale market and not go to new construction, I would point you to the months of August, when it’s a little bit slower, meaning that everybody who had to move because of school already did so, right?

Could be slower, families are trying to get their kids in school. You might have a better shot in August. I would also point you to December. Listen, not a lot of people want to buy a house in the middle of the holidays, so if there’s some homes on the market, that might be another opportunity. Don’t know if that’s a solution, but I’m happy to talk about it with you. You can call me at 720-446-6325.

All right, let’s talk about the featured property of the week, ColoradoDreamHouse.com/Heather. The property is 9983 N. Heather Drive. It’s in the Surrey Ridge subdivision which is right between Lone Tree and Castle Rock, okay? And it’s a great house. It’s a five bed, six bath, it’s over 11,000 square feet. It’s a classic walkout ranch, and I just happen to have the brochure here, so this is what it looks like on the website when you go, but classic walkout ranch, it’s on six acres with just majestic mountain views. I mean, full range front range views. It’s really, really incredible. You need to check it out. And again, it’s 9983 N. Heather Drive. On the ColoradoDreamHouse website, all right? Check it out. You’ll definitely like it.

Well that’s today’s show. Thanks for being with us. We’ll talk to you again on Thursday right about the same time.

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