Like many other places in the country, the LA housing market is hot. The median home price in Los Angeles is nearly $1 million, an 8% increase from the median price just a year ago.
Not only are homes pricey, but the inventory also is small and is shrinking. Fewer houses mean potential buyers are making offers well above asking price. In some areas of LA, houses are going for 50% or more above the asking price.
If you’re planning to buy, you’ll need a hefty down payment or even cash to offer and a whole lot of patience. Keep reading for some tips on buying a house in Los Angeles without going crazy.
Buying a House in Los Angeles: Everything You Need to Know
Buying a home anywhere can often be overwhelming. Add into that a seller’s market where you have to make decisions fast and hope your bid is good enough, and you’ve got a recipe for stress and frustration.
To save your sanity, there are a few things you should do to prepare yourself and a few things you should be aware of as you begin to navigate the LA real estate market. Let’s take a look.
Know What You Want
Know what you want before you start looking. Do you want a single-family home? A condo or townhouse? Do you want a yard? What you want (and where you want to live) will play a huge role in the cost as well.
Beyond the type of home, decide on what features you want, from the home style to the neighborhood. If you have non-negotiables, identify those from the beginning.
Don’t settle for a home if it doesn’t have what you want. Purchasing a home is a huge financial commitment, and you don’t want to regret it later if it’s not what you really wanted.
Related to the tip above, you do need to be realistic. Tons of square footage, updated fixtures, and a pool might not be realistic in your budget. Or, you might need to broaden where you are looking to find something that fits into your budget.
The first home you purchase in LA might not be your dream home, but buying any home in LA is a big deal, given the high cost and competitive market.
Shop Around and Have Options
Because the market is so competitive, homes aren’t on the market very long. As a result, you have to be ready to put in a bid right away. You’ll also want to make sure you have backup choices.
Bidding wars are becoming more and more normal, so you can’t assume that you’re going to get the house. Make sure you have other options that you like in the event that your bid is not selected. Keep a list of several properties that have what you want so you can move down the list quickly if necessary.
If you want to sweeten your offer, you should make a cash offer. A cash offer is more attractive to a seller because they don’t have to worry about dealing with your mortgage lender or appraisals.
Cash offers can usually close quicker as well, making it much more likely that a seller will choose a cash offer over one where the buyer is financing the home purchase.
Consider Buying a Fixer-Upper
If you are really tied to a certain location but can’t find an updated home with everything you want, consider buying a fixer-upper and put in the work to get it to what you want.
This is a great way to get a home in a pricier neighborhood and give you a home that has exactly what you want, as you get to decide on any renovations.
Check out the lists of foreclosures and auctions in an area and keep an open mind when looking at the homes. Envision what they could look like, rather than focusing on what they look like currently.
Get Pre-Approved for a Mortgage
Before you even go look at a house, get your finances in order. Decide on your budget, how much you can put down, and get pre-approved for a mortgage. A pre-approval doesn’t guarantee that you’ll get the mortgage, but it does mean that the bank has determined that you’re a good borrower and they make a commitment to finance your home once you find one.
In a market as competitive as LA, there’s a good chance that sellers won’t even consider an offer if a buyer can’t provide a pre-approval letter from their lender.
Compromise on the Area
If you want a home less than $1 million in LA, you might have to look outside of the more upscale neighborhoods.
You can explore outside of the greater LA area, but still stay in Los Angeles County, and find homes for much less money. The median home price in Los Angeles County is less than $500,000, making it much more affordable for you if you’re willing to be flexible with the area where you are looking for homes.
Outlying communities still give you a close proximity to the city, but at a much lower cost.
The Bottom Line
Buying a house in Los Angeles requires you to do some work ahead of time to get your finances in order and will also require you to have patience and the ability to move quickly if you find a home that you like.
With the right agent helping you navigate the real estate market, you can make it out of the process with your sanity intact.
When you’re ready to buy, contact us and see how our agents can help you find the home that you are looking for.
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