It is no secret that Denver is a hot real estate market. As the population of metro Denver increases, we don’t have enough homes to satisfy the amount of people. Ultimately, supply is low and demand is high for homes. Therefore, listings typically receive multiple offers and a higher price as homebuyers compete for a house. Each year, it seems homebuyers up the ante with what can keep them relevant and competitive. Buyers often send “love letters” to the seller pleading for the home and to play to the seller’s emotional side. Homebuyers end up waiving an inspection and sometimes even bring money above appraised value. In this competitive environment, it is useful to understand the psychology of these homebuyers.
- They love shiny objects. Homebuyers all seem to clamor around the homes that look nice: the ones that have professional pictures, neutral colors, popular upgrades and are staged nicely. Issues with the home often get overlooked if it looks nice. Homes like this typically get bid up.
- Short Attention Span: Since the market is so competitive, homes go under contract very quickly. If a home doesn’t go under contract in the first weekend, homebuyers lose interest and they will move on to the next round of new homes that come on the market the next week.
- They seem to be more open to competing for a home versus negotiating. Maybe it is the energy of a good competition but buyers seem to want the gratification of winning the home. In the last 6 months, I have had two examples of this while representing a seller. In both cases, once we dropped the price slightly, we received multiple offers, getting the price back to close to the original list price.
- Fatigue is a real thing and a major concern. Buyers seem to come out earlier each year while sellers do not. This makes the most competitive time of the year in real estate March to June. Buyers come out in full force in the winter while sellers don’t seem to list a home until the summer. Often, Homebuyers find themselves bidding on multiple homes and not getting any of them. This takes a toll and some decide to sit out the rest of the year.
Now that we can see inside the psyche of a homebuyer in Denver, how can buyers and sellers use this information?
Buyers need to stay open to homes that may not be perfect. Paint, carpet and tile go a very long way to make a house a home. Also, take rests when needed but don’t stop.
Sellers need to remember that we are a very visual population and prior to listing their home, they need to make it look nice. Professional pictures and video will not only get more people through the door but more offers. Pricing is crucial and buyers seem to respond better to the milestone prices such as 400k or 550k and will raise the price, if needed. Additionally, to catch the most number of buyers, sellers need to consider listing their home between March and June.
We have lived through five consecutive years of rapid appreciation in the real estate market in Denver and more buyer’s continue to join the ranks and compete for a home. As in any cause of supply and demand, if supply is low and demand is high, the buyers will raise the price of the good. By understanding the psychology of current homebuyers, both home sellers and buyers can use the psychology of Denver homebuyers to win in this market.
Liz is broker and owner of Liz Daigle Realty.