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Conquering the LA Market: 5 Tips for Homebuyers

Pretty much every home on the market right now in LA’s Eastside is getting multiple offers. With a strong economy, good job growth, interest rates near-historical lows, and plenty of cash floating around there are simply more buyers looking for homes than there are sellers looking to sell. This can sound intimidating for buyers but it doesn’t need to be. With a great agent by your side (hi!) you can conquer this market like a champ as long as you’re properly prepared for what’s ahead.

1. Bidding Wars Aren’t Always About the Highest Price

It’s important to remember every home-seller has different needs. There’s no hard & fast rule for what a seller wants; cash isn’t always king and the absolute highest offer doesn’t always get the home. Maybe they’re transferring out of state next week and looking for a buyer who can close quickly with no contingencies. Maybe they need a buyer who will wait for them to find a replacement home before closing or one who will lease the home back to them after closing. All of these bargaining chips are the terms of the offer and are just as important as the price.

The majority of home sellers will accept whatever has the best combination of both price and terms. This means in a situation with multiples that are all at or near the same price a seller will choose the one offering the terms that best suit their needs. Finding out what a seller is looking for and customizing your offer with those terms is our first line of defense to stand out in the crowd. You’d be surprised how many home sales I’ve represented where we’ve gotten dozens of offers but only a few buyer’s agents bothered to call me to find out if my seller had any specific needs. I’ll let you guess which offers usually move to the top of the stack.

2. Competing Against Cash Offers When You Have a Loan

About 1/4 of home sales in Southern California right now are cash. With that stat in mind we can assume if there are multiple offers on the table there’s a good chance at least one is cash. If your offer is being funded with a loan it will inherently include more contingencies and a longer close than someone offering cash, which translates to a seller as more risk. It’s a tough pill to swallow but with 2 similarly-priced offers side-by-side the seller is going to pick the one with the least risk.

If you’re up against cash offers the most obvious way to compensate is by offering a higher purchase price – many sellers are happy to absorb a little more risk if it ultimately means more money in their pockets. It also helps to be as flexible as possible with things like your move-in date and requested repairs. Lastly we’ll work closely with your trusted local lender to get your loan on the fast-track, tightening your loan and appraisal contingencies and even removing them entirely in some cases. Now we’re cookin’!

3. Be Prepared

The Los Angeles market moves at lightening speeds – a character home in an up & coming area may get dozens of offers before the first open house and go off-market in less than a week. It can be overwhelming as a new buyer, but solidifying your finances ahead of time will put you at a huge advantage over the masses which aren’t as prepared. It’s fun to window shop, but there’s nothing more heartbreaking than seeing someone fall head-over-heels in love with a home they’ve decided is “the one” and then miss the boat on putting in an offer because they didn’t have their paperwork ready on the back-end.

Before you start browsing listings and visiting open houses you should have a pre-approval letter from a local lender and/or have your cash affairs in order, keeping funds needed for inspections, down payment, and closing costs in mind. If you still need to file taxes for this year or will be borrowing funds from a relative now is the time to explore doing so. Avoid online mortgage calculators – they’re fun but they don’t usually account for your credit score (which affects your interest rate), PMI, local property taxes, homeowners insurance, or a host of other things a real-life loan officer could better assist you with.

4. Be Patient:

I know it’s hard – you’ve got that pre-approval burning a hole in your pocket and rates feel like they’re going up by the hour. Your friend who bought a home last year already has $100k in equity because values are rising so fast. This is so exciting! Do yourself a favor . . . breathe. Our market tends to come in waves – you may not see a home within your price-range in a certain neighborhood for many weeks, then suddenly 5 pop up on the same day. Keep your eyes on the prize, don’t burn yourself out considering homes that aren’t what you really want just because that’s the only thing on the market today. Remember we’re looking for Mr. Right, not Mr. Right Now.

5. Be Realistic:

Keep in mind many homes are purposely underpriced to attract multiple offers quickly – don’t let yourself get hung-up chasing the dream of an unbelievably low asking price. Think of the LA real estate market like ebay and think of asking prices simply as starting bids. We’ll discuss your budget and must-haves, pulling comps so you can see what similar homes are currently selling for and what kind of jump to expect in asking price vs selling price. You can trustingly shop with these comps in mind – if recent sales tell us to expect to pay a certain price for a home in a certain neighborhood with a certain level of finishes, that’s what a home will end up selling for regardless of how low it’s been initially priced.

My goal is to arm you with an understanding of the market so you can purchase a home with confidence. While other buyers are getting into an emotional frenzy over their offer on a home that was comically underpriced and subsequently sold $100,000 over their budget, you will be cool as a cucumber because you walked into the situation with realistic expectations. You came in armed with your paperwork and a basic understanding of the home’s value, you tightened your terms wherever you could, and you offered accordingly. Pat yourself on the back, you are a soon-to-be home-owning badass!

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The Teeny Tiny Big Fat Guide to Buying Your First Home

Thinking about buying your first home can be both exhilarating and maybe a little terrifying all at once – as it should be – it’s one of the biggest and most important purchases you’ll ever make. Though your agent will be there every step of the way making sure everything is running smoothly, it’s still a good idea to have a general understanding of the timeline and how the process works.

1. Before You Start Looking: Get Your Finances in Order

Mortgage calculators are a great starting point for a general idea of what you can likely afford BUT in the grand scheme of things you won’t really know where you stand until a bank or loan officer takes a look at your income, tax returns, expenses, credit report, and cash on hand and gives you a pre-approval letter stating how much home you’re approved to purchase. Having this letter is the first and most important step in the process since you can’t make an offer on a house without one (unless you’re buying with cash, in which case skip ahead to #2).

You can acquire said letter from a private Mortgage Broker or a major bank but be warned that big banks often come with big red tape, which has the potential for big delays and stalled transactions, which in turn can cause your offer to look less attractive to a seller. Since you want the strongest offer possible, your best bet is finding a loan officer who works with a reputable Mortgage Broker – this is a human being you can work with personally who will shop for a good rate and act as a liaison for you in the transaction. You probably can’t call your bank with a question at 9pm on a Sunday and speak to an actual human (or get an actual answer), but you could call your loan officer anytime and that is just one of many reasons why you want one. 

2. The Big Home Search

If you got your requested paperwork to your loan officer you would likely have your magic number ready to go within as little as 2 days. Yes, it can happen that fast! And now you’re ready to embark on the most fun part – the actual house hunt. The internet is a great starting point, obviously there are plenty of sites where you can search (which don’t need any link help from me) although my personal favorite way to find the most up-to-date Los Angeles listings is by using all the search links on this very site.

Searching online is a great starting place to get an idea of what’s out there and help set some realistic expectations for what kind of home you can afford now that you have  your fancy new pre-approval letter but ultimately you want to be working with a licensed real estate agent representing you from here on out and here’s why:

  • As a buyer it costs you nothing to have an agent (the commission is paid by the seller)
  • Agents have access to off-market listings that never show up online & often find out about listings before they’re on the MLS. This gives you a leg-up over anyone simply searching online.
  • An agent can preview homes for you in person so that you don’t waste your time looking at homes that may not be what you’re looking for (photos can be misleading)
  • An agent can keep you up to date on market conditions and trends, sales prices in the area, as well as what to expect with homes in that area
  • An agent has access to the home listing’s private remarks – maybe the property is distressed and can only be a cash sale, needs a new foundation, or has tenants which you would need to evict – these are all things that could affect your valuation of the property greatly and which are not usually found in the public description of the property
  • Your agent has your back – as a buyer your agent works diligently with the seller’s agent, your loan officer, and the escrow officer to makes sure everything is getting done and running smoothly in the transaction – all while you continue to live your life drama free

Ideally there are 2 agents in every transaction – one representing the home being sold (the seller) and one representing you, the home’s buyer. You could conceivably find a listing for a home, call the seller’s agent directly and make an offer yourself, but that agent has been hired by the seller to look out for the seller’s best interests, not yours, which why you want your very own agent representing you (again, it doesn’t cost you anything). You wouldn’t expect a fair trial in court if both parties had the same attorney representing them – the home buying process is of course a much happier place than court, but you get where I’m going with this.

3. From Opening Escrow to Closing the Deal

So you’ve got your magical pre-approval letter AND a fancy new agent of your very own (seriously, contact me). You’ve found the most perfect home ever and you’re ready to put an offer in. Fast-forward a couple of days, your offer has been accepted (sh*t just got real!) and you’re on your way to owning your own home. Congratulations! Here’s what to expect next:

  • Escrow: Assuming you’re in California, within 1 business day your offer is accepted escrow will be opened. Escrow is a neutral 3rd party to the transaction put into place to hold your funds and handle the legal documents of both sides of the sale (which includes making sure the title is clear). The escrow officer will contact you with instructions on where to wire your earnest money (this is the first part of your money down on the home – you’ll usually have 3 business days to get this money in, starting with the date your offer was accepted). The escrow officer will be in close contact with you with more documents to sign and instructions over the course of the sale, and will also assist you with wiring the remainder of the deposit at the end of the transaction.
  • Inspections: You’ll have anywhere from a few days to a couple of weeks to conduct inspections of the property (time allotted depends on the amount of time your offer states) – start as soon as you possibly can because you never know what could turn up in one inspection that would cause you to want to investigate something further. You can inspect everything from the soil below to the roof above and everything in between but a “General Inspection” provides an overview of the property and is a great place to start. This will cost you anywhere from $300 to over a thousand, depending on the size of the property and the inspector you choose. You can always ask your agent to suggest a few inspectors but I also suggest doing your own investigation on Yelp or other review sites to find one you feel comfortable with. Some inspectors schedule a few days to a week out so you want to start calling to get the ball rolling on this as soon as you have your offer accepted.
  • Loan Funding/Appraisal: This will sound crazy but even though you got your pre-approval letter your loan officer still needs to jump through some hoops to actually get you the loan. PLEASE do not purchase a new car, quit your job or do anything crazy that affects your finances in between the time you have acquired said pre-approval letter and the time you close on your new home as this will affect you actually getting your loan, regardless of any pre-approval. Next is appraisal – the bank who is backing the loan will want to send someone out to make sure the home is valued at the loan amount. Assuming your loan officer has all of the paperwork they need from you, the funding of the loan and the appraisal are pretty hands-off for you so try not to lose any sleep over them.
  • Request for Repairs/Removing Contingencies: Maybe some little things came up in inspections which you would like repaired – it’s ok, it happens all the time. Your agent will put together a request for repairs and negotiate with the seller as to what they’re willing to take care of. Once you’ve come to an agreement on that, funded the loan, and the home has appraised you are ready to remove contingencies on your offer. Those contingencies were all tiny little doors that you could have used to get out with your deposit in hand had you become uncomfortable with any part of the process or your loan fell through but removing them means you are in this for real and your deposit is at risk if you back out now. Removing contingencies means you’ve gotten over all of the major foreseeable humps  so congratulations – YOU’RE ALMOST THERE!
  • Closing Costs: Outside of your deposit and any money you may have set aside for moving expenses, you’ll also need to be prepared to have cash on hand for closing costs. This is usually about 2.5% of the sale price and includes loan origination and underwriting fees, escrow fees, appraisal fees, document preparation and processing, and so on (your escrow officer will provide you with a complete list for your transaction). If cash on hand is tight ask your loan officer about options for rolling your closing costs into your loan.

The rest of the process is pretty painless (not that anything should have been painful thus far, because remember you have a wonderful agent handling all of this for you) – your agent and escrow officer will be hard at work behind the scenes to make sure the T’s are crossed and I’s are dotted and you’ll be busy going about your life (and maybe driving by your soon-to-be-new-home at all hours and obsessing over it). You’ll do a final walk-through a few days before closing is scheduled and make sure that the property condition is as agreed upon and you’ll likely be ready to close on your totally amazing new home within a few days after.

So maybe buying your first home really isn’t that daunting after all. If you started the pre-approval process tomorrow you could be planning your housewarming party by next month – and who doesn’t love an excuse for a good party? Call me and lets do this! 323-989-3839 or [email protected].

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Four Great California Craftsman Homes Under $700k

1025 East Rio Grande Street in Pasadena
3bd, 1.5ba, 1,606 square feet and a 6,853 lot size. Built in 1921, this Craftsman sits on a corner lot and is asking $685,000.

Listing provided courtesy of Cariy Hernandez,  Keller Williams Realty. 

With 3bd, 1.5ba in the main house and an additional bed and full bath (plus a kitchenette) in the guest house, you’ve got plenty of room to spread out. 1,596 square feet and asking $675,000

Ok lets preface this one below by saying yes I am aware it is located on extremely busy York Blvd. That is likely why it is priced the way it is. It sits high up off the street which would hopefully help with some of the noise. Either way – super cute character details, space, and a great neighborhood for the price.

Listing provided courtesy of Robert Carey, Partners Trust Pasadena

This 1920 Craftsman Bungalow has 1,228 square feet and 2bd and 1ba in the main house, plus an additional bathroom in the detached casita. Sitting on a 6,308 square foot corner lot, this home is asking $629,000.

Listing provided courtesy of Veronica Lee,  Realty National

1642 North Los Robles in Pasadena
2bds, 1.5ba, 1,178 square feet on a 6,584 square foot lot and one of the cutest (though trafficked) tree-lined thoroughfares in Pasadena. This home (and all that great arroyo stonework on the front porch) is from 1911. Needs a little work, but only asking $589,000

Want to see any of these homes in person? Call/text me: 323-989-3839 or email me: [email protected]

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Run Don’t Skip to This Highland Park Flip

Flips are a dime a dozen these days, but finding a flip under $700k that has managed to retain some character or soul can be a bit of a challenge so its pretty rare that one gets me as excited as 5724 Buchanan St in Highland Park. Great location (2 blocks off York Blvd), good lot size, and decent curb appeal – although the inside of the home is where it really shines. Click through the slideshow below for details:

If you’d like to tour this home in person contact me right away as offers are being reviewed this week and it will be gone gone gone.

Listing provided by Ryan H. Sarkissian, Re/Max Elite