I am building a website for a realtor. It seems that if the domain contains the search words (e.g "homes" and "Denver" and "realtor" to denverrealtor.com or denverhomes.com) it would rank higher in search engines than those with those words only as metatags.

Is this true? What is the best way to get high on the list?

That is not necessarily true. Although it is smart to have your keywords in your domain name, its not proven either way if it helps you or not.

The best way to get good SEO is to maximize your top 5 keywords in:

Title
Alt Images
Keywords
Meta Tags

One of the biggest things Google looks at (besides PR) is Keywords in Title. Focus on generic broad keywords.

"homes" or "denver" will not get your listed. There are way to many websites that have good PR that will blow your website out of the water. Instead use

"Denver Relocation"
"Homes in the Denver area"
"Moving to Denver"
"Purchasing a home in Denver"

etc….