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September 23, 2019

Our Top 3 Tips for Income-Qualified and Affordable Homes

Have you ever searched online for homes in Denver and found a home that seems priced unusually low? If so, the home you’re looking at may in fact be income qualified – meaning it’s part of a special City and County of Denver affordable housing program.

Denver’s affordable housing ownership program has been in the news quite a bit recently. The short story is that while there’s a large number of potential buyers for income-qualified units, as many sellers of these homes have experienced firsthand, it can sometimes be difficult finding a buyer who satisfies all the program’s criteria. For example, it’s not unusual for an income-qualified home in Stapleton to receive dozens of interested buyer inquiries. But finding someone who actually satisfies all of the program’s requirements? That’s not always easy.

An income qualified home in Stapleton recently listed by Focus

One of our specialties here at Focus Real Estate is helping buy and sell income-qualified units, and we routinely field questions from buyers and sellers about the program. For example:

Do you need to be a first time homebuyer to buy an affordable home? (Generally no).

Can your family help with your down payment? (Generally yes, subject to limitations).

Can you pre-qualify with the City of Denver so you know 100% whether you qualify? (Most buyers can work with their realtor and lender to understand the likelihood of qualifying. Once they’re under contract on a home, they can start the formal approval process with the City).

Given the level of interest in the program, I wanted to give you three of our top tips for selling or buying an affordable home. If you’d like to chat about whether you might qualify, or if you want the inside scoop on the best way to sell an income-qualified property, shoot me a note at Mariel@Focus-Realtors.com. We’d love to help!

Before we dive in, a quick caveat. Denver’s affordable housing program has and can change, and there are many, many details in addition to what I describe in this Scoop article. Every deal, buyer, and seller is unique, and this article and my tips may or may not apply to you. So please don’t rely on this article and instead work with your realtor and lender to get the advice you need for your deal.

1.  So I’m interested … where do I start?

I often recommend to Focus’ clients who are interested in learning whether they qualify to contact a lender who specializes in the program as one of their first steps. This may seem counterintuitive. After all, outside the affordable program buyers often start by casually searching for homes online and in person, and then once they’re further along in the process they’ll get a pre-qualification letter from a lender as they pin down their finances. But for income-qualified homes, one of the most important steps is determining whether you can even participate in the program.

Until you have perfect clarity over your financial, income, and asset posture, and you can translate all those numbers into the City’s affordable homes qualification framework, it can be difficult to know whether you potentially qualify. There are multiple moving pieces, too (e.g., down payments, interest rates, housing expenses, and so on), so even if you have a good feel for your finances, it could be hard to understand whether you’re good, or not. Long story short, if you don’t qualify from a financial perspective, there may be no need to even go past step 1.

An income qualified home in Stapleton recently listed by Focus

The good news is the City of Denver maintains a list of lenders who work with the affordable homes program. Shoot me an e-mail at mariel@focus-realtors.com and I’d be happy to send you the list or you can find the list online. I’d also be happy to share recommendations of lenders whom I’ve worked with and who have helped buyers before.

2.  Make your offer the best offer it can be

One interesting aspect of the affordable homes program is that sellers can only sell their homes for a pre-determined fixed price. This means that if you’re a seller and multiple qualified buyers are interested in your home, you could end up receiving two or more offers at the maximum sales price. This is great news if you’re a seller, but if you’re a buyer, how do you compete against others offers at the same price?

Well, it’s important to have an intimate understanding of Denver’s affordable homes program so that you know exactly what you can – and can’t – do to write the best offer possible when trying to purchase an affordable home. Obviously, if the City’s pre-determined sales price for a home is, for example, $300,000, you can’t offer the seller $302,000. So do your research and talk to your realtor and make sure you put your best foot forward when you make an offer!

3.  New Construction Affordable Homes

When researching affordable homes for sale, buyers often and understandably focus on the resale market. But did you know you can buy a brand new affordable unit in Stapleton’s Beeler Park, Bluff Lake, and North End neighborhoods? Several Stapleton builders have income-qualified lots and units that become available from time to time for various reasons. And this not only applies in Stapleton but in several other new construction communities around Denver. So when doing your research, don’t forget to do your research on the new construction front.

BONUS TIP: If you’re selling, your realtor doesn’t cost you anything

How about one more last bonus tip before we go? So I’m often asked how the City handles broker commissions on affordable homes transactions, given the City fixes the price sellers can sell their homes at. The short answer is that if you use a broker to list your home, Denver increases your maximum sales price to account for your listing broker’s commission. If you don’t use a broker, your maximum sales price is lower. So if you’re selling an affordable unit, you don’t have to worry about paying your broker, since you can increase the price of your home to account for the commission.

So there you have it – three of our best tips! If you’re interested in buying or selling an income-qualified home, or learning whether you might qualify, we’d love to help you here at Focus Real Estate. Shoot me a note at Mariel@Focus-Realtors.com and we’ll help you start the process!

Last but not least, this post is not comprehensive and is not legal or real estate advice and should not be relied upon.  You’re responsible for your own deal and determining the then-current affordable housing program rules and requirements – so get the necessary help you need!

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