Over this past summer I had the pleasure of experiencing what it was like to finally close on a house here in the Denver Metro area. It was a beautiful July afternoon. I can still recall the smell of fresh baked cookies in the title office and the grin I was wearing from ear to ear. It was an amazing day, not because I closed on my house, but because the nightmare was finally over. You see, that day was a culmination of almost 18 months, 5 offers, and 6 real estate agents later. I learned a great deal that summer which lead me to where I am today as one of the co-founders of BlueMatch.
My goal is to prevent my experience from happening to others in this crazy market. Here are the 5 things I learned about real estate in Denver that I would like to share with you. Hopefully your home buying experience is a great one.
Real Estate has low barriers to entry
When it comes to obtaining a real estate license in Colorado, the only requirements you need to have is to be 18 years of age and not be a felon. Anyone who meets these requirements can sign up for the required 168-hour course and take a test. That’s it. In my personal experience with agents, I noticed a massive variance in the quality, professionalism, and experience in the market. Remember, just because someone has a real estate license does not mean they are qualified to assist you in buying or selling a home effectively.
Look at the agent’s transaction history, background, education, reputation, as well as other intangibles. A little due diligence goes a long way. Your agent is like an attorney. They are there to represent you, your best interests and are an extension of you. Always ask yourself, is this person someone I would want representing me in any other facet of my life? Are they articulate? Logical? Intelligent? If you hesitate, it may be time to interview other potential candidates.
Your agent might not be what they say they are
Fact check your agent’s claims. I am sure you have heard a fair share of the too good to be true claims out there. We sell your house for more money! We will sell your house in 60 days or less! We have a secret army of 10,000 buyers standing by that want to buy your home!
Don’t be afraid to ASK FOR THE DATA! Real Estate is like any other business. Great decisions are made by analyzing tons and tons of data. If an agent’s claim seems anecdotal, if they are trying to woo you with fluff, or beat around the bush, it is probably a good indicator of how they operate their business. Look for substance as well in the agents claims. This is the hottest market in the country. Is selling a home in 60 days really that great? In this market I would be worried if the home didn’t have multiple offers by day 6 if it is priced correctly in certain neighborhoods. Is 60 days really that great of a value proposition? Remember, most traditional agents are taking 2.8% to list your home. You have the right to dig, and dig deep!
A Plan/Strategy can make a world of difference
When I started my home search, I did what most people do. I scoured the web on sites like Realtor, Zillow, and Trulia and would reach out to my agent when I wanted to see a listing. My agent would meet me at the house, give me his/her thoughts, and we would move on to the next house. When I found a house I wanted, my agent would submit a bid (usually with an escalation clause), and we would lose to a higher bid or fall victim to stipulations we were uncomfortable with. My agent even added me to an automated MLS feed that would flood my inbox a couple times a day with homes I already looked at via Realtor.com. This vicious cycle lasted for months until I had extreme buyer’s fatigue and fired all my agents. I couldn’t understand the reactive nature of the business. I was doing all the work and my agents would show up when I was ready for a showing. It made ZERO sense to me.
I knew where I wanted to buy and I knew what I hated about the market. I developed a plan of my own to find the house that was perfect for me. I did what most people that work in tech do. I reverse engineered my problem using data. I pulled every home that sold in the last 12 months in the zip code I wanted to buy. I looked for homes that sold drastically undervalue (anything +20%< market). I knew that the potential for a flip was high in this price range. Once I collected a list, I went door knocking. My assumption was correct. The first house I approached, I ended up making an offer on. I knew I didn’t want to get into a bidding war and I also knew that by cutting out traditional agents, I could help the seller save 6%. I made the offer for asking and I paid an attorney to manage the transaction. It was painless and easy but it took some creative planning.
When hiring an agent in this market, look for one that will proactively push to get you into your dream home. Never be afraid to ask to speak with past clients. Even better, ask them to tell you about a time they were able to find a home for a client in an area that was highly competitive. What did they do to win the home? What was their strategy? Can you speak with that particular client about their experience? Remember, treat this like a job interview. You are hiring someone to work for you in what will most likely be one of the largest buying decisions of your life.
NEVER sign an “exclusive right to buy”. If asked, RUN
I remember the feeling I had after my agent told me that I could not fire him because I signed an “exclusive right to buy”. I had found my own home, set up my own showing, negotiated a fair price, then was told “I owed” almost 9K to him in commissions. Luckily I knew better and knew that I would have never signed an “exclusive right to buy”. I asked him for a copy of the document and that was the last I had heard from him.
Of all the agents I worked with, roughly 80% tried to push me into signing this document. I heard the justification over and over again. “I don’t work for free”. “I am committing a lot of work on my end and I need to make sure I can get a strong commitment from you”. Etc etc. The problem for me was that these arguments didn’t make logical sense. If I am serious about buying a house and you truly are working hard for me, there is no need to fire you because we are accomplishing a goal together where we both have a vested interest. In the end, I never signed any documents with any agents. I refused to be forced to work with someone that may be sub-par and potentially cost me a home through poor strategy planning.
A strong agent will fight and work hard for you regardless of what a piece of paper says. You should not ever be forced to work with an agent because you are contractually obligated to. A great working relationship is just that, a relationship. Find an agent that you work well with, that is proactive, and won’t forcefully hold you to work with them if it turns out you may not be a good fit.
Exclusive right to sell a listing contract
Unlike exclusive right to buy, exclusive right to sell listing contract is legally needed to sell your home. Again, these come in all shapes and sizes. A standard exclusive right to sell listing contract is usually good for 90 days but it is not uncommon to see 6 months. Ideally, 90 days is all that is really needed (especially in the Denver market). The terms in this document are negotiable. At BlueMatch for example, our clients have the right at anytime to walk away from us as listing agents with no questions asked. It can be 12 days in or 12 hours. Our personal philosophy is we never conduct business through contract enforcement.
Look for similar clauses in your exclusive right to sell listing contract. What happens if 15 days pass and you realize it isn’t a good fit? What happens after the 90 days and it doesn’t sell? Why is the exclusive right to sell listing contract 6 months or in some cases 1 year? Remember, your agent works for you. You have the right and responsibility to ask these questions.
Hopefully this advice can help you avoid some of the headache involved in home buying or selling. We are always available for questions and love feedback. Happy Selling and Buying!