How to Make an Offer on a House in Colorado
Evaluate the Property
You take the most important step in evaluating a property before you decide to make an offer. When you make the initial decision that you like a home, that it meets your wish list and your requirements, and it seems to be reasonably priced, you are on your way.
Once you’ve made the initial offer and it has been accepted, you will dive into the details, like a careful home inspection of the house’s structure and systems.
A well-written home purchase contract will give you as the buyer the right to evaluate the property as you see fit. A good contract also allows you to terminate the contract if you are not satisfied. See more on Colorado’s legally required real estate contracts.
Prepare to Write the Offer
Before Agents for Home Buyers helps buyers make an offer on a house, we’ll want to help you do an initial evaluation of the property. Our evaluation includes much more than just the physical layout and condition of the house. For most buyers, there are specific issues to consider.
Your intended use of the property is one of those things. Are there any HOA covenants that may prevent you from using the home as you like?
Schools may be another area of concern. You may want to verify what school district the property belongs to and learn about the specific schools your children would be attending. If the quality of the local schools is an issue, is open enrollment a possibility?
Obvious property defects are another reason to hesitate to make an offer on a house. For example, let’s say you notice a crack in the foundation. That could indicate a huge expense down the line so you may want to have a structural engineer look at the property. If the home is near a stream, you may need flood insurance. Or, you may not want to take that risk at all. In any case, you’ll want to look into the property’s flood plain status before putting together an offer.
Take a look at What to Consider Before Buying a Home in Colorado. That guide offers a deeper dive into the home evaluation and home inspection process.
Consider Contingencies
In most situations, it is best to go ahead and make an offer on a house, even if there are a few problems, as long as the contract includes language that is contingent on a satisfactory resolution of these issues. In other words, your home purchase contract offer should give you an out if you can’t resolve the problems later. Once you have a firm purchase contract in place, you can pursue a detailed evaluation of the property.
There are two risks to making an offer on a home that includes contingency clauses:
- In a seller’s market, you may lose the property while you are trying to get the information you need.
- You should know whether you and the seller are going to find common ground on price, closing date, and other issues beforehand. Then you will feel more comfortable spending time and money on investigations. Make it part of the inspection you carry out after you are under contract. Remember, if this is your plan, you need to make the contract contingent on a satisfactory resolution of these issues.
Set Your Purchase Price: How Much Should You Pay for the Home?
If you are getting a loan to purchase the property, your mortgage lender will require you to hire a professional appraiser to verify that the contract price is reasonable. This does provide some financial protection for home buyers.
But don’t just go with the appraiser’s number as validation of the purchase price you have offered in your contract. Appraisers are fallible. Sometimes they get the pricing wrong because they are looking at the home in the context of the neighborhood and based on the selling prices of comparable homes. There are some judgment calls in those evaluations and they can overlook key details that a closer inspection is more likely to capture.
Look at Comparable Properties
At Agents for Home Buyers, we typically look at several pieces of information before deciding on an offer price. First, we take a close look at sales in the same neighborhood over the past 3-12 months. In neighborhoods with 5 home models built by the same builder, we will have a very clear feel for the value of the home. In these neighborhoods, sales of comparable properties may differ by only $10,000 or so.
The process can be difficult in more heterogeneous neighborhoods where home styles and sizes vary greatly. In those neighborhoods, a formal market analysis may give us a much broader range of values to work with. However, if you have seen enough homes, including a drive-by of comparable homes sold in the previous year, you can still make good judgments on value. You will have a good idea how the home compares to the others in the neighborhood. If you know that comparable homes have sold between $225,000 and $275,000, it’s clear how reasonable an asking price of $250,000 might be.
Home Prices in a Hot Seller’s Market
For buyers looking in a hot seller’s market, prices tend to be higher than comparable sales would lead you to expect. If sellers of the better properties didn’t price their properties high and get these prices fairly regularly, prices wouldn’t go up the way they do. Because sellers in a hot seller’s market understand what is going on, they are unlikely to accept offers that are substantially less than their asking price. This is true for at least the first few weeks after a new listing hits the market and its why evaluating the property is so important.
It isn’t necessarily a bad idea to pay top dollar for a good property. If you are looking for a bargain in a hot market, you may find one in a property that nobody wants. But if the current owner is having a hard time selling the property in a hot market, imagine the fun you’ll have trying to sell it when things slow down.
Before You Write the Offer Contract
Once you’ve found a good home that meets your needs, you need to put together your best purchase offer. Agents for Home Buyers can help you with this.
Most buyers use the standard contract developed by the Colorado Real Estate Commission. In Colorado, the law requires real estate agents to use this form (and quite a few others), however, the Real Estate Commission allows us to delete irrelevant clauses or add additional provisions designed to protect our client’s interests.
Buyers, or any attorney they hire, can draft a purchase offer without using this form. In most cases though, if you hire an attorney, he or she will probably use the standard Colorado form as well.
That’s because the Colorado standard home purchase contract does a good job of covering most issues in a manner consistent with Colorado law and practice. When filled out properly, the contract includes many safeguards for both buyers and sellers. The standard form is familiar to agents and other professionals involved in real estate transactions. Its use simplifies the process for everyone. We’ll introduce the standardized Colorado real estate forms later in this guide.
Get a Good Buyer Agent!
Whether or not you use the Colorado home offer contract form, you shouldn’t try to make a purchase offer on your own. Buyers who attempt this without a good buyer broker, a good real estate attorney, or both, are asking for trouble. There are just too many ways to run into issues that can cause delays or, worse, waste your hard-earned money.
There’s really no reason not to contract with a buyer agent to help you buy a home in Colorado. Buyer agents are invaluably helpful to buyers because we represent your best interest in helping you find a good home and making a fair offer on it. Working with most buyer agents does not cost you, the buyer, any money. Most buyer’s agents are paid by the seller in one way or another, even since the national real estate agency regulatory change that went into effect in spring 2024.
There are dozens of reasons not to go it alone. To get some ideas of the risks of buying a property without professional representation, take a look at the differences between buyer and seller agents, which also explores how to find a good, experienced real estate buyer agent like Agents for Home Buyers.
In an abundance of caution, be sure of your agent’s experience and training. If they don’t have substantial experience and training, or good backup in their office, they probably can’t do a good job for you either.
Do I Need an Attorney to Make an Offer on a Home in Colorado?
Probably not.
In Colorado, all but the most complicated real estate transactions close without the help of an attorney. And that’s one major reason that Colorado law requires real estate agents to use the Colorado real estate purchase contract; it does a good job covering the legal considerations of buyers and sellers without involving an attorney.
If you decide to consult with an attorney about your purchase contract, be sure he or she specializes in real estate law. If not, he or she may know little more about the Colorado real estate contract or practices than you do.
When you are ready to put together your best purchase offer, you need to work with someone who knows what they are doing and has a legal responsibility to protect your interests. We cannot emphasize that enough!
Details on How to Make an Offer on a House in Colorado
Review the standard Colorado real estate contract form to get a feel for some of the decisions regarding structuring your offer. Generally, the issues you need to think through concern dollars, dates, and conditions. The goal is to protect yourself while making the offer as attractive as possible to the seller. If looking at an excellent property that has just hit the market, you may need to give up some security for the seller to accept your offer. In this instance, you should understand what you are giving up and how important this is to the seller.
Set Your Purchase Price
The purchase price you offer on a home should consider quite a few factors:
- An understanding of the average home sales prices
- Good data on the recent sales history of comparable homes
- The specific situations of both you and the seller.
- How long the home has been on the market
To make a winning offer, you’ll need a clear understanding of real estate statistics for the Denver-Boulder real estate market. Agents for Home Buyers has been tracking real estate statistics for 10 communities in Colorado for over 20 years.<LINK>
If the property is new to the market and at a reasonable market value, it is unlikely a seller would compromise on price. There is likely to be more room for negotiation, if the property has been on the market for six months. And even more if the seller has already dropped the price three times.
Try to be realistic in evaluating your situation and that of the seller.If you have some pressing time concern, like enrolling kids in school soon, and you’ve been looking for a good home for six months, then make the best offer possible! Most buyers would be foolish to risk losing the right house over a few thousand dollars.
If you are seeing many acceptable properties and have no time restrictions, you risk less by trying to bargain hard with the seller.
Set Contract Dates and Deadlines
A Colorado home purchase contract has many dates and deadlines, which are often as important as price when structuring your offer.
The dates for closing and possession can create difficult negotiation issues.
If the seller is waiting for a new home to be built, this can extend the closing date longer than you want. It may also force you to accept risks of substantial interest rate changes. If the seller needs to have the sale completed within two weeks, you may lose money on your lease. Or if you haven’t started the loan process, you may not be able to close that quickly.
Most of the other dates in the contract put time limits on your right to evaluate the property. Typically, the seller will want this done quickly, while you need to make sure you have the time to gather and evaluate critical information.
Carefully Review the Condition of the Home and Property
You may need to verify that the property isn’t built over a coal mine or that the school system is good. Or you may need money from your parents or from a retirement fund to complete the purchase. In any of these scenarios, you need to make your offer contingent on these things happening in a satisfactory manner.
You also need to understand that these contingencies will generally make the offer less attractive to the seller. In a hot market, or with an outstanding property, contingencies can kill your offer.
To the extent you can address these issues prior to making an offer, or very quickly after the seller accepts the offer, you will increase your chances of getting the property at a price and terms you’re comfortable with.
Be Realistic About Inclusions
In our Denver-Boulder real estate market, sales typically include window coverings and some kitchen appliances. Sometimes they also include refrigerators, washer/dryers and hot tubs.
It almost never includes furniture and other personal property, in part because lenders will generally not provide a loan if it includes large amounts of personal property. We have heard of buyers losing a good property over the refrigerator — and then paying $5,000 more for a lesser property 2 months later.
Stay focused on the big picture and on what is truly important.
Next Steps in Buying a Home in Colorado
Contact Agents for Home Buyers! Lindsey and Danielle can help you navigate the home buying process to find a great home you will love. It’s what we have been doing as buyers agents for 25 years in Boulder County, Jefferson County, Broomfield, Larimer County, and nearby.
Step 1: Educate Yourself About the Home Buying Process
Step 2: Form Your Team of Real Estate Professionals: Mortgage Broker and Buyer Agent
Step 3: Set Realistic Goals for Your Home Search
Step 4: Beware the MLS and Online Real Estate Databases
Step 5: Begin a Focused Home Search
Step 6: Craft Your Home Purchase Offer
Step 7: Negotiate the Contract
Step 8: Colorado Real Estate Documents and Forms
Step 9: Home Loans and Financing
Resources: Home Buyer Assistance Programs