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Looking to buy a home while in a competitive housing market can be a stressful undertaking, especially in housing markets like the Boulder area, where inventory is scarce.  When inventory is low, sellers typically receive multiple offers for their homes and buyers can feel increasingly frustrated if their offers are rejected.

But getting your offer rejected doesn’t have to mean “The End.”  An option that has been gaining popularity is the back-up offer.  If your offer was close to the one that was accepted by the seller, then yours could potentially become a back-up offer in the event that the first buyer’s offer falls through.

There are a variety of reasons why a real estate contract may fall through: an appraisal can be inaccurate, the buyer is missing crucial parts of their paperwork, the buyer may be too demanding of the seller for repairs or repair credits, problems with loan qualification, or changes in the buyer’s financial life.  Perhaps the buyer changes their mind about this house or finds another house that they like better; any of these could mean a canceled real estate contract.

If you have that back-up offer in place when a deal falls through, you automatically become the new buyer.  This means that the house won’t go back on the market and you avoid any other potential offers or bidding wars on the home.  The seller may feel a little more pressure to make your deal go through, considering their first attempt failed, and they might be more willing to offer repairs or repair credits if a problem is encountered during the home inspection phase.

However, there are also some important things to consider when making a back-up offer.  If the first buyer knows of this back-up plan, they may be more motivated to keep the sale on track because they know that they won’t get a second shot at purchasing the home.  Secondly, consider the reasons why the first sale fell through.  If the problem lay with the buyer, then it shouldn’t be too much of a concern.  But if there were problems with the seller or with the home itself, you may not wish to pursue this purchase after all.

The back-up offer is a legally binding contract.  If the primary deal falls through, you are now obligated to step in and purchase the home.  Of course, there can be language written into the offer that declares it void should you have an accepted offer with another seller.  This is very helpful as you can continue your home search instead of putting everything on hold to see if the primary deal will fall through.  Depending on the arrangement, you may not even need to put any earnest money down when making this back-up offer.  In theory, you could even have multiple back-up offers in place while still searching for a home elsewhere.

Each situation will be different depending on the home and seller in question.  I would love to discuss your back-up offer options and help make your home buying process as painless as possible. Please let me know how I can help.

Economic ups and downs continue to shape mortgage rates and prices of homes. Looking back several decades, you can comparatively see that we are currently are experiencing a strong real estate market and low mortgage costs but no one knows when and how much these rates will change. While these average rates remain low, it makes now a great time to make an investment before rates rise again. Here's an infographic to show you how rates have performed historically. Homeownership is now more affordable than ever.

  

Latino Community Essential in Today’s Real Estate Market

by Cory Dudley

The housing crash of 2007 nearly threw the United States into another depression; its reach and effect on American homeowners was that profound.  The Hispanic community was the hardest hit ethnicity in the 2007 crash, with an estimated 1.3 million either having lost their homes to foreclosure, or were at serious risk of losing their homes.

These Hispanic families are now experiencing opportunities to buy a home again, or are finally seeing equity return in their homes so that they can sell and move up.  The Hispanic community also represents a huge segment of the market today.  The number of Hispanic households has grown to 14.7 million in 2013 and today a Hispanic youth turns 18 every minute of every day,” according to the 2013 State of Hispanic Homeownership Report.  This means that about 4 out of every 10 new households are currently Hispanic.  This large of a group demands real and specialized attention. 

In the below infographic, we can project how the Hispanic community will continue to be an influence in the housing market by examining their school enrollment statistics.


However, despite the increasing home values and the still record-low interest rates, there are still barriers that exist that are keeping the Hispanic community from entering the housing market today.  According to a NAHREP report (National Association of Hispanic Real Estate Professionals) half of all Hispanic home buyers will be first time home buyers, but the FHA is coming under continued financial strain, which could tighten underwriting guidelines—having a profound impact on Hispanic first-time home ownership.

Another large barrier is a single-family home inventory shortage.  In fact, inventory is at its lowest in decades as more and more families are upside down on their mortgages, prohibiting them from being able to sell without substantial losses.

The number of Hispanic households has grown from 9.2 million in 2000 to 14.7 million in 2013, an increase of 5.5 million, representing a growth rate of 60 percent.  It is up to today’s real estate professionals to help the community eliminate these barriers where possible and help these families obtain their dream of homeownership.  

If you have more questions about becoming a first-time homeowner, or how to make the transition from your current home to purchasing a new one, please contact me.  I am an English/Spanish bi-lingual and NAHREP-authorized agent who has extensive experience working with Latinos to solve a multitude of housing needs.  I would love to work with you to solve your needs as well!

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