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With an ocean breeze, sunshine and some of the world's most exquisite real estate, it's no wonder Los Angeles is one of the most competitive markets to buy a home.
You've probably already heard how very few homes are on the market across all price points, but real estate in Los Angeles is especially competitive in the $1-3 million range. Cash buyers have been making major waves here as well, leaving some luxury home seekers who plan to finance their purchase to pause or step out of the game entirely.
Don’t Let the Competitive Los Angeles Real Estate Market Deter You
If you find yourself in this category, don't let the competition deter you from dipping your toes into the market. Partnering with a knowledgeable agent and creating a list of "can't-live-withouts" is just one of ways that you gain the advantage to score your dream home. Here are three more simple tips for buying real estate in Los Angeles.
Pre-approval is the first real step - no exceptions.
The most important step if you're planning to finance your purchase, is to get "pre-approved" - not just "pre-qualified." By definition, the words seem to be interchangeable. However, their true meanings as they pertain to real estate are vastly different and will impact your ability to quickly submit an offer or even attend a showing.
So, what's the big deal? Think of getting pre-qualified as the conversation starter. You're not making any type of commitment. You're only gauging based on your current debt, income and assets the mortgage for which you could possibly qualify. It's often called the first step because it facilitates a discussion with your mortgage lender about your specific goals. Since the process is fairly informal, it doesn't provide you with any certainty that the lender will, in fact, provide you with a loan at that amount - just yet.
The pre-approval process is a much deeper dive into your financials.
This process involves completing an official mortgage application and supplying the lender with as much documentation as possible (think credit report, banking statements, etc.) so they can accurately assess your financial standing. Afterwards, they'll provide you the specific loan amount for which you are approved.
With pre-approval, you're already in a position to place an offer that won't be contingent upon obtaining financing, which saves you time and possibly the chance to own the house of your dreams.
Think like a yogi and be flexible (breathing deeply).
The Highest Offer Doesn't Always Beat Flexibility
The highest price doesn't always trump. In this market, it can come down to your flexibility and the amount of contingencies you're adding to the equation.
While it is important that you keep certain items on the table to protect your offer, your competitive advantage over a cash buyer will come down to how flexible you can be with the seller's requests. Communicating with the listing agent to find out the seller's wish list in advance will only further increase your competitive edge.
It also helps to think of the process as more than a business transaction. A family may be living in the home that you're already fantasizing about building yours in. They may need time to find their next abode, so offering a leaseback or a period of time for them to move out of the house after escrow closes will go a long way in negotiation.
Simply put, make a list of dealbreakers and then leave everything else on the table. Period.
Leave the flea market negotiations in the car.
Only Put in Serious Offers to Avoid Getting Outbid
Playing the low-ball offer game may work in other markets, but you'll get out-bid quickly in LA. If you're feeling a deep connection to that particular home, it's best to put your most serious offer on the table first or you may lose it.
Often, the cash buyers you're competing with are looking to score a deal on that property. By demonstrating to the seller that your interest in purchasing is serious, your offer will immediately stand out from others.
Buying a home can be an intimidating process, but you should never feel like you're going at it alone.
We've compiled a video series on everything you need to know before you buy so you can feel confident in taking the next step. Also, take some time to get to know the team at Mercer Vine. Each of our real estate agents are here to support you throughout the home buying process.