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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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Los Angeles Market Update: It’s a Scorcher!

How are Los Angeles real estate stats looking compared to last year? The Eastside is on fire, baby! Highland Park, Mt Washington, Montecito Heights, and Cypress Park are all showing an increase in sales volume of over 30% compared with 2014, with Silver Lake/Echo Park coming in close on the tail at 29%. Thinking of buying or selling in Hollywood? Volume is up in Hollywood and East Hollywood a whopping 176% but Mid-Wilshire is apparently where the party is at, up 322% from last year. This map covers the MLS primary areas, which don’t include Pasadena, Altadena, and Glendale so I pulled those stats for you myself: Pasadena (North of 210) volume is up 14%, Altadena is up 16%, and Glendale (South of 134) is up 5%.

Click here to see the current MLS Heat Map
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Getting Your Offer Accepted in A Tight Market

You found your dream home! No, seriously, this one is THE ONE. Only problem is there are 20 other people who feel the same way. Here’s a staggering statistic – 98% of California homes sold in 2013 had more than 5 offers. Submitting an offer on a house with multiples can feel daunting but it doesn’t have to – here are 3 top tips to make your offer strong so that it stands out above the rest:

Come in with your financial guns blazing.

Don’t wait until you’ve found your dream home to get your finances in order. All-cash offer? No problem, but make sure your cash is ready and you don’t have to jump through any hoops to pull it out of investments or transfer it to different accounts which may cause delays. If you’re planning on financing make sure to call a Mortgage Broker (it’s quick and free) to see what your options are for a loan – online calculators are a great tool but are no substitute for a real pre-approval letter from a lender. Homes in Los Angeles often get snatched up within a week after hitting the market so make sure you come out of the gates ready to pull the trigger.

Be Realistic.

The most perfect little remodeled bungalow just popped up in the trendiest neighborhood in town. This is not the house to go for if you’re trying to get a deal. This is the house everyone wants. If you want it, you can have it but you have to be ready to play the game. Money talks, and a house like this in a hot market will have multiple offers and go over asking – most likely way over asking, so be prepared to offer accordingly and don’t get hung up trying to “get a deal”. A good rule of thumb in this market is 10% over asking on an average house but if this house is highly coveted it could likely go even higher than that. If you’re looking for something turnkey (remodeled or flipped) it’s a good idea to shop for homes 10-20% under your budget so that you’ll have some wiggle room on your offer when you find one you love. Conversely if you have an artistic vision and don’t mind a home that needs a little TLC there are deals to be had with great square footage in great areas, even in this market.

Write the strongest offer possible & be easy to work with.

If you know you’re up against multiple offers there are a variety of things you can do to make your offer stand out. In general the less contingencies you have, the better because this leads to a faster and more seamless transaction for everyone. Make sure you have a reputable lender (this does not mean a big box bank) and ask them if there’s anything you can do to tighten your terms. Cash is king – if you have the ability to make an all-cash offer that also means you won’t have a loan contingency and can remove the appraisal contingency. But fret not if you’re getting financing and are up against other cash offers – in the end it’s the seller’s choice as to which offer they want but if your financed offer has great terms and is higher than a cash offer you have a fighting chance at getting it accepted. The sellers not only want the highest price they can get for their property, but having a quick and painless transaction is often equally as important so be easy to work with, find out what kind terms they’re looking out for in an offer and try to match those terms as closely as you can. If you truly love the home it doesn’t hurt to write them a letter letting them know a little about yourself, how much you love the home, and why. Just remember, this isn’t a game and you’re not guaranteed a counter just because you threw your hat into the ring. If you know there are multiple offers on a property prepare yourself for coming in strong on your initial offer.

Lastly, remember you win some, you lose some. If you’ve found yourself repeatedly giving your best terms possible and still not getting your offer accepted perhaps it is time to explore other neighborhoods or re-visit your “must-have” list of amenities. The good news is there are incredible homes popping up in areas all over Los Angeles every day and there are certainly many more opportunities around the corner. Good luck and be sure to contact me for useful more tips on finding and getting your dream home!

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The Cutest House in Echo Park is Calling You

Walking by this lovely home on my daily dog walks I’ve often marveled over it’s exterior finishes, wondered what it is like inside and what those views must look like from the many visible porches, verandas, and decks. Luckily it just hit the market and I finally got my opportunity to sneak a peek and can I just tell you, it does not disappoint.

1438 Mohawk St in Echo Park, asking $899,000
3bd, 2.75ba, 1,574sqf

I’m usually a purist when it comes to preserving the abundance of wood finishes so often found in Victorian and Craftsman era homes so I was initially disappointed to learn that much of the wood inside this home has been painted white but was delighted to see in person that it actually works really well in this particular house and makes the home feel that much more bright and spacious inside (in fact, I think it feels much larger than the listed 1,574 square feet).

The downstairs living space is large and open with a fireplace for those cool nights and access to the giant backyard and deck for the warmer ones. Upstairs you’ll find 3 bedrooms including a large master and equally spacious guest suite which both have a private deck and views for miles (bonus points for the sunset and Hollywood sign views from the front guest suite).

Listing courtesy of Joseph Lightfoot, Sotheby’s International Realty.

Call me at 323-989-3839 for a private tour of this home!