Wow! Has anybody noticed that the real estate market has been super insane in Los Angeles over the last 6 months or so??? I have!
Today rates are low - people are able to borrow money for almost nothing, It has been 7 odd years since the economic crash of 2008 and it seems to me like people have had enough time to recover after going through a period of frugality and humility. We had a season where it was a buyer's market - an INVESTORS market... Bank owned and "distressed" properties were plentiful and every smart investor who had put away money for a rainy day had the opportunity to buy properties in bulk - many to flip, some to hold but all who purchased in the last 6 years would see a good return in their investment.
Buyers became accustomed to the plethora of opportunities and demanded a "good deal". Agents were helping their sellers price their properties a little above market value knowing that buyers would want to get that discounted price. Seller's were nervous...
What a change in pace we have seen in the last 6 months! Multiple offer situations are everywhere and a lot of all cash buyers have popped up out of the woodwork. What happened you might ask!? Housing inventory is low, buyers are plenty and rates have ever so slowly been inching up.
All those buyers who so confidently said that they wanted to "just wait a little bit longer until the market bottoms out" are suddenly freaking out a little. Did they miss that "GREAT DEAL" they've been waiting for!?
So now you want to buy and you have some crazy competition. Not everyone has a couple of million bucks sitting in the bank ready for them to make an all cash offer on a property. Your average buyer qualifies for a conventional loan with 10% to 20% down. Some prefer to do 3% on an FHA loan but try convincing the seller that you are a better candidate than the all cash guy who is coming in with no contingencies and a quick close.
I have a few tips that has helped a recent buyer of mine get the deal that he wanted after we had made offers on various properties and lost out.
1. Make sure your lender has discussed all of the options out there for you. My buyer originally wanted to go with 10% down but the seller felt 'safer' having the buyer put more down - so we called the lender and learned all about 80/10/10 loans. This was a lifesaver for my client and a deal-saver for the seller.
2. Make sure your agent knows how to write a "clean offer". This means we remove as many contingencies as possible. Instead of the usual 17 day inspection go in with 5 to 10 days. If you feel confident with the property appraising at the purchase value remove that contingency as well. Don't request the seller pay for any of the traditional items like termite, transfer taxes, home warranty. Have the seller pay their half of the escrow fees and leave it at that.
3. Make sure your agent calls the listing agent to find out how many offers and where you will need to come in to be considered. Have your agent create a relationship with the listing agent - be tenacious it works!
4. Offer as high as you can go without feeling regret if your offer gets rejected for a higher bidder.
5. Find out what needs the seller has - are they planning on buying another property after sale and need a few months lease back? Are they behind on their HOA fees? ... find out and see if there's any way you can accommodate them.
Ok this is long! But it's an interesting subject learning how to navigate through this type of market. If you want more info or advice contact me via email, FB or phone and I will be glad to help.
Today rates are low - people are able to borrow money for almost nothing, It has been 7 odd years since the economic crash of 2008 and it seems to me like people have had enough time to recover after going through a period of frugality and humility. We had a season where it was a buyer's market - an INVESTORS market... Bank owned and "distressed" properties were plentiful and every smart investor who had put away money for a rainy day had the opportunity to buy properties in bulk - many to flip, some to hold but all who purchased in the last 6 years would see a good return in their investment.
Buyers became accustomed to the plethora of opportunities and demanded a "good deal". Agents were helping their sellers price their properties a little above market value knowing that buyers would want to get that discounted price. Seller's were nervous...
What a change in pace we have seen in the last 6 months! Multiple offer situations are everywhere and a lot of all cash buyers have popped up out of the woodwork. What happened you might ask!? Housing inventory is low, buyers are plenty and rates have ever so slowly been inching up.
All those buyers who so confidently said that they wanted to "just wait a little bit longer until the market bottoms out" are suddenly freaking out a little. Did they miss that "GREAT DEAL" they've been waiting for!?
So now you want to buy and you have some crazy competition. Not everyone has a couple of million bucks sitting in the bank ready for them to make an all cash offer on a property. Your average buyer qualifies for a conventional loan with 10% to 20% down. Some prefer to do 3% on an FHA loan but try convincing the seller that you are a better candidate than the all cash guy who is coming in with no contingencies and a quick close.
I have a few tips that has helped a recent buyer of mine get the deal that he wanted after we had made offers on various properties and lost out.
1. Make sure your lender has discussed all of the options out there for you. My buyer originally wanted to go with 10% down but the seller felt 'safer' having the buyer put more down - so we called the lender and learned all about 80/10/10 loans. This was a lifesaver for my client and a deal-saver for the seller.
2. Make sure your agent knows how to write a "clean offer". This means we remove as many contingencies as possible. Instead of the usual 17 day inspection go in with 5 to 10 days. If you feel confident with the property appraising at the purchase value remove that contingency as well. Don't request the seller pay for any of the traditional items like termite, transfer taxes, home warranty. Have the seller pay their half of the escrow fees and leave it at that.
3. Make sure your agent calls the listing agent to find out how many offers and where you will need to come in to be considered. Have your agent create a relationship with the listing agent - be tenacious it works!
4. Offer as high as you can go without feeling regret if your offer gets rejected for a higher bidder.
5. Find out what needs the seller has - are they planning on buying another property after sale and need a few months lease back? Are they behind on their HOA fees? ... find out and see if there's any way you can accommodate them.
Ok this is long! But it's an interesting subject learning how to navigate through this type of market. If you want more info or advice contact me via email, FB or phone and I will be glad to help.
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