When starting the search for your first home in Los Angeles, there is obviously a plethora of homes to choose from. However, what are the best first time home buyer areas in Los Angeles?
Which neighborhoods will allow you to find not only your perfect home but also have things to do while still falling within your price range?
The Average Home for First Time Home Buyers in Los Angeles (h1)
The term “first time home” doesn’t just speak to the purchase of your first home. It also references price, number of bedrooms, square feet, and style of home.
The average first-time home is:
$500,000 – $800,000
1000 – 2000 Square Feet
While building this list, I used the criteria above but I also made sure to list the neighborhoods that had a sense of community and access to activities and events. The 3 areas I want to focus on are; The Valley, Northeast Los Angeles, and South of the 10.
The Valley (H1)
The San Fernando Valley, or simply “The Valley”, is known for its great restaurants, movie studios, hiking trails and more. Unfortunately, it’s also known for its high home costs. But don’t fret, there are some areas of the Valley that are great for first time home buyers. These areas are:
Let’s get started.
First on the list of best first time home buyer areas in Los Angeles is Burbank. Burbank is home to California’s biggest movie studios including Warner Brothers and Walt Disney making it a very cool place to live. Hungry? There is a plethora of award-winning restaurants and cafes.
Because of its popularity, the median home price in Burbank has been going up, but the average price per home in Burbank still falls into our first time home buyer range at $789,000.
North Hollywood (h2)
Next up on my list for first time home buyers is North Hollywood. With the median home value coming in at $649,000, North Hollywood is one of the more affordable areas of the Valley.
Not only affordable, North Hollywood is also one of the more eclectic areas of Los Angeles housing the famous NoHo Arts District. With dozens of theatres, art galleries, cafes and shops, there is always something to do in the North Hollywood area.
Before moving on, if Burbank or North Hollywood are of interest to you, please click here and I will be in touch shortly.
Valley Village (h2)
North of Studio City, and West of North Hollywood, lies Valley Village. Nestled between the eclectic NoHo and the famous restaurants of Studio City, Valley Village is a great place for first time home buyers in Los Angeles.
The median home price is a little higher at $914,000 but being surrounded by so much to do, this is the perfect area for the more “social” first time home buyer.
Valley Glen (h2)
Valley Glen is one of the more diverse areas of San Fernando Valley, with roughly half of its residents being born outside of the US. Valley Glen is home to the Great Wall of Los Angeles which is a half-mile long mural which tells the history of California through the eyes of its minority residents. With a median listing price of $684,900, Valley Glen is slightly more affordable then Valley Village.
That brings our areas in this section to a close. If you are interested in the Valley please click the button below and I will put together a list of available homes that meet your needs! The next areas on the list of best first time home buyer areas in Los Angeles is NELA, or Northeast Los Angeles.
(SPEAK TO JAMES CTA)
Northeast Los Angeles (H1)
The second area on our list of best first time home buyer areas in Los Angeles is North of Chinatown and West of San Marino ; the neighborhood cluster known as Northeast LA or NELA.
Highland Park is one of the oldest settled areas in Los Angeles. While it has been through some transformations, today Highland Park is home to a large creative community. Whether it the beautifully crafted homes, the artsy shops, restaurants, or bars, Highland Park has become a very hot neighborhood for creatives and first time home buyers. Take a stroll down to Figueroa Street on a weekend and you will experience beautiful architecture, excellent coffee shops, and so much more. Definitely worth the look!
Besides the great community, the median listing price is $699,000 so it falls right into our first time home buyer price range! Come check out the area! Contact me here and we can go look at the NELA neighborhood and listings!
The cheapest place to live on our Northeast Los Angeles list, is Montecito Heights. The median listing price for homes in this neighborhood is $597,300. What’s nice about Montecito Heights is the fact it’s almost detached from the city life. The neighborhood is extremely green and trendy.
Like baseball? Montecito Heights is extremely close to the World Series Champion Dodgers. The Heights are also home to the Audubon Center.
Atwater Village (h2)
Atwater Village is one of the more vibrant area of NELA, making it a great choice for our list! Atwater Village has a more expensive median home price; coming in at $789,200.
Not only is Atwater Village a vibrant place to live, but it is also a great neighborhood overall. Some of LA’s best restaurants and bars are right in walking distance from Atwater Village. Like the outdoors? Atwater Village is adjacent to Griffith Park and Griffith Observatory!
Known for the friendliness of its residents, Atwater Village is ready to welcome more first time home buyers into their neighborhood. So, while the home price is a little higher than the rest, for what is has to offer, Atwater Village is a top choice when it comes to areas for first time home buyers in LA.
Mount Washington (h2)
The neighborhood of Mount Washington is a peaceful neighborhood with incredible views. With just the hills separating downtown Los Angeles and this quiet residential community, Mount Washington offers a quaint, suburb experience while have all downtown has to offer just a few minutes away.
Similar to Atwater Village, the average listing price for a home in Mount Washington is $789,000. If you’re looking to start a family this could be a good area to look. Besides the windy roads and beautiful views, Mount Washington is home to one of the best elementary schools in all of Los Angeles.
This brings NELA to a close. I encourage you to finish the list to see what’s best, but if you have an area you would like further in to, please click the button below and I will be in touch soon.
Up next is our third and final area, the neighborhood “South of the 10”.
South of the 10 (h1)
Below the 10, or South LA, is another neighborhood that is great for first time home buyers in Los Angeles. Home to USC and former host of the Summer Olympics, South LA is a diverse and exciting neighborhood to buy your first home.
The 3 areas that are best for first time home buyers are:
View Park – Windsor Hills
Let’s begin with Crenshaw Manor.
Crenshaw Manor (h2)
The Crenshaw district has been a very hot area for first time home buyers as of late. According to Zillow, home prices in this area have gone up 18.7% over the last year.
Crenshaw Manor is a small neighborhood bordering Baldwin Hills. With the new, 2 billion dollar LAX / Crenshaw line now open, the community can expect to see new businesses and residential developments. The new project is certainly related to the spike in home prices, but the median listing price still falls in our range at $737,600.
Leimert Park (h2)
Another beneficiary of the LAX / Crenshaw Line, we have the historic Leimert Park. Staying in this price range the average listing price in Leimert Park comes in at $741,400. This area is an extremely family oriented neighborhood with a very strong sense of community. Leimert Park was Curbed’s Neighborhood of the Year in 2016 (https://la.curbed.com/2017/1/11/14206888/leimert-park-neighborhood-guide), so it is safe to say it has a lot to offer. If you take a moment to see what residents are saying in this interview, you will definitely want to take a look for yourself.
View Park – Windsor Hills (h2)
Last but certainly not least one our list of Best First Time Home Buyer Areas in Los Angeles is View Park – Windsor Hills. This area has a deep-rooted sense of culture and community; View Park – Windsor Hills is also known as one of the wealthiest, primarily African American communities. The median listing price in View Park Windsor Hill is slightly higher than the other 2 beneficiaries of the LAX / Crenshaw Line, with a median price of $829,000.
All 3 areas of South LA on this list are going to see an uptick in development and home price due to the new metro line previously mentioned. With all 3 neighborhoods being close to one another, it will be easy to show you all listings that meet your needs!
That brings out list to an end. I hope this was a good introduction to all my favorite areas for first time home buyers. If you have any questions or would like to explore any neighborhoods, please call (310) 388-7332 or click the button below. I look forward to speaking with you!
Owning your own home is a smart investment. Prices go up. Over the long term, your home will increase in value. Meanwhile, you have to live somewhere, and why pay your landlord’s mortgage when you can pay your own? If you rent for 30 years, at the end of the 30 years you will have nothing. If you own a home for 30 years, at the end of the 30 years you will own the home free and clear and it will have doubled or tripled in value. That’s a retirement plan.
Owing a home is a big responsibility. When you are renting you can pick up and move at the drop of a hat. As a homeowner, your living situation is not as flexible. It’s a big hassle to sell and the transaction fees are costly. Before you purchase I recommend to be certain you are going to be staying in the area for at least 3 years. You will also be responsible for property maintenance.
Make sure your finances are in order. If you are carrying a lot of credit card debt or student loans, it may be better to pay off your debt before buying a house. Check your credit score, if its below 680 you will need to work with a credit repair company to raise your credit score in order qualify for a loan. How much money do you have in the bank? For most first time home buyers saving up the down payment is the biggest hurdle. Thankfully there are a lot of low down payment loan programs that make buying your first home easier. Some good loans to be aware of are 10% down, 5% down, and FHA 3.5% down loans– keep in mind that if you are putting less than the traditional 20% down you will have the extra cost for PMI.
In Los Angeles, real estate prices are higher than other parts of the country. For the price you can buy a 1 bedroom condo in Los Angeles, you could buy a new construction two story house in the Midwest. Because prices are high, it is not uncommon for parents to give downpayment help to first time home buyers here. One trend I am seeing with Millennials, is Parents are giving their kids the inheritance early- so they can use it to buy a home. This makes a lot of financial sense, because you can put that money to good use working for you instead of laying dormant in a checking account for ten plus years. I always recommend for first time buyers to talk with their family and ask for help.
Tips for First Time Home Buyers:
If you are like me you want everything right now and hate waiting. The last thing you want to hear when you are trying to buy your first house is that you need to be patient. From my experience, it takes on average three to five years to buy your first house in Los Angeles, from initial planning stages to final purchase. Los Angeles is a big city and has big city prices that are higher than the US national average. Higher prices make home purchase more difficult. Zillow says the average age of first time homebuyer is 31, but in LA I think it’s a little higher because the prices are higher. Another factor, is that in a big city prices fluctuate wildly. Depending on where the market is in the real estate cycle, prices can go up or down as much as 15%-20% in a year. Saving a down payment takes time.
Don’t be Afraid to ask questions
When it’s your first time everything is new. You will have a bazillion questions rolling around in your head. Don’t be afraid to ask, ask, ask. That’s the best way to learn. Don’t just ask your real estate agent or lender either. Ask your friends and family. Watch HGTV. This is an important decision. It’s a good idea to rally the wagons and confer with your trusted circle of advisers.
Buying a house can be SCARY! It is a big commitment and the biggest purchase you’ve ever made in your life. At least one meltdown when buying a home is not unheard of. Even when you feel overwhelmed and stressed out, stick with it, you won’t regret it. I hear way more often from people regret of not buying when they could, then working a little harder, or saving a little more.
Your first home is not your dream home, it’s a stepping stone. Your third or fourth home will be your dream home. Be ready to make some compromises with your first home in order to keep it within your budget. Maybe choose a condo instead of a single family house to keep cost down- if you do decided on a condo you can usually get a better location and security than comparably priced homes but lose privacy and yard. Or: pick a neighborhood that is in transition and up and coming, instead of a neighborhood that is well established. You will get more bang for your buck in a transition neighborhood. Remember you aren’t going to live in your first home forever. Most buyers are very excited to finally buy their first home they forget about all this stuff and just can’t wait to move in.
Stretch Armstrong Toy 1976
Owning a home is always more expensive then renting. So your monthly living expenses will be going up if you are coming from a rental. Buying your first home can be a stretch sometimes. But trust me, it’s a good stretch! When you are young you can afford take more risks, and as you get established in your career you will make more money. It’s ok to be ‘mortgage poor’ when you are young because you are willing to rough it. You may feel like you are in college again, surviving on Ramen noodles and Peanut butter (ok maybe that’s stretching too tight!). LA is expensive, I usually recommend for first time buyers to ask a family member(s) for help with down payment when it comes time to buy. Saving up the down payment is usually first time buyer’s biggest challenge. Most of the time, but not always, family members are happy to help their children and nephews buy their first property if they have been responsible. Their Parents probably helped them when they were buying their first house! Another thing to keep in mind when you are stretching, if you feel like you are stretching too tight, you can always rent a room to a friend for some extra income. Many of my clients have done that.
First Time Home Buyer? Hire a Great Realtor
Final piece of advice: hire a great realtor. When you are buying your first home, you don’t necessarily need the biggest most successful realtor in your neighborhood either. As a first time buyer, you need a lot of time and attention, and very busy realtors may not have the time to devote to you. Look for someone who is hardworking, and does real estate full time, who you get along with.
First Time Home Buyer FAQs
Do I have to pay a realtor commission?
No, as the buyer in Los Angeles you do not pay any real estate commissions. The seller pays the real estate commissions. Check out this article you’d like to see a breakdown of your buyer closing costs.
Do I need a home inspection?
Emphatically YES. Always get a home inspection. The last thing you need as a first time home buyer when you are stretching is to have some large unexpected expense.
As a first time home buyer, should I get preapproved?
Yes, I recommend talking to a lender and getting preapproved right away. They will be able to talk with you about different loan programs as I mentioned earlier, and give you an idea of your monthly cost so you know how high you are comfortable looking.
What is the best way to get started?
Best way to get started is to just go out and look at some houses. Sunday open houses are great- you might meet a great realtor while you are out looking if your friends/family don’t have a referral.
As a first time home buyer, you can have a lot of questions. I am here to help. Just click the button below to get started!
Move-up means to sell your house and buy a more expensive one. Just a couple hundred thousand dollars can make a huge difference in the type of property you get in Los Angeles.
Many homeowners who have owned their home for a while have equity built up from appreciation and paying down their mortgage. They might consider taking their equity in their current property and using it to move-up to a better neighborhood, a bigger house, or a better school system. It’s a good idea to hold onto your property at least two years before you move-up to take advantage of the capital gains exemption.
For most people, their home is their best investment. Increasing your investment in your home by moving-up can be smart business.
Is it better to Move-up or Remodel/Add on?
If you want to change your neighborhood, then move-up is the only option. However if you like where you are but just need more space (extra bedrooms, family room, guest house) Remolding/Add on could be smarter- here is why: when you move-up you have to pay closing costs. Seller side closings costs are approximately 7% of total sales price when you sell, plus an additional 1-2% of purchase price buyer’s side closing costs on the upleg property. This gives remodeling an 8-9% handicap versus Move up. In my experience you can build new for fairly reasonable cost. The downside to Remodel Add/on is that your house will be a construction site for two or three months which can be a real pain! Remodeling costs aren’t as easy to finance as a new purchase- your best bet would probably be a home equity line of credit to use some of your equity to fund the construction cost, or cash if you have the available cash to cover the construction cost.
To determine which is better, ask your real estate agent how much your home is worth, look at the price of homes you would want to buy if you moved up (are they better than your house?), and get a few bids from construction companies for the remodel and see how it all adds up.
What is my move-up price range?
When you move-up, your expenses increase because you have a bigger mortgage and higher property taxes. Many move-up buyers are ready for higher expenses, because they are established at their jobs and making more money than when they bought their current home.
It’s probably not worth the hassle of moving-up unless you are getting a big upgrade on your current living situation, or you have no choice! Moving-up can be a real pain because you have to sell your house and buy another house so the sale timing is very important. I would start by setting a budget you are willing to spend and talking to a lender. Lenders are very helpful about this kind of stuff. Also ask a real estate agent how much your home is worth, and how much proceeds you would net on the sale. Add to the sale proceeds, any extra savings you are willing to through in and you will know your Move-Up Price range.
Proceeds of Sale + Any Extra Money + Max Loan = Move-Up Price Range
When you spend more, you expect to get more- so the properties you are seeing in your price range should be getting you excited to pull out those moving boxes!
When is the best time to move up?
I have ran the numbers for different market conditions and there isn’t a significant difference, so it really doesn’t matter when you do it. The real estate market moves together more or less, so if you’re property is going up, the move-up house is going up too. If you’re property is going down, then the move-up house is going down too.
Prices Going up
Prices Going down
Most buyers move-up when the market is going up (sellers market). This is because the increasing prices are creating equity quickly, which is needed to buy up. Also, consumer confidence in the economy is high, and unemployment is low so buyers are willing to take on larger expenses.
I am ready to move-up, How do I do it?
The first question I always ask is: can you buy before you sell?
If the answer is yes, then you have it easy. Go buy the property you want, then put your house up for sale afterwards or rent it if you want to keep it. You might have to make a few double mortgage payments but all in all this will be pretty stress free.
For most of us, we are not in a financial position to buy before we sell. If you can’t buy before you sell, then you have to list your home for sale.
Here are some tools you have to help you make a smooth transition from your old house to your new home:
The seller leaseback is the most popular option when moving up. You essentially rent your house back from the buyer after you sell it. What is good about this, is that your house has closed and you have the money, so when you write offers you do not need a contingency on sale of other property, which will make your offer a lot stronger, and you have a place to live while you are looking. Typical time periods for a seller leaseback are 30-60 days, and the rent is usually the buyers holding cost.
-Write offers with Contingency on Sale of other property (COP)
In a buyers market, sellers will be desperate for an offer so there is a good chance you will get your offer accepted with a COP even before your property is listed! The opposite is true in a sellers market. Unless your property is in escrow and all contingencies are removed you won’t stand much of a chance in multiple offers with a COP.
The farther you are along on the sale of your other property the stronger you offer with a COP will be:
Instead of 30 day escrow, you can ask for 45 days or 60 days when you are accepting an offer on your current home. The longer escrow period will give you more time to look, the only disadvantage is that you don’t have the money yet. You can combine a long escrow period with a Seller Leaseback to get even more time.
Get a Bridge Loan
I don’t know much about bridge loans, talk to a lender about this option.
To sell and then buy requires a leap of faith. Because of the delay between deciding to sell your home and when it sells- you won’t know what houses will be on the market when you are ready to buy. Some sellers worry that they will have to settle for less, or overpay, or be homeless! Most houses can be improved so I wouldn’t worry to greatly. You might indeed need to overpay to get a property, but this is hardly ever more than 4-5% at worst. As for being homeless, if you are unable to find a property to buy, you can always choose to rent for a while.
In strong seller’s markets, where prices are going up rapidly, and there are few houses for sale, Multiple offers are plentiful. It can be discouraging as a buyer when every new house that hits the market gets 3 or 4 offers right away, and then the listing agent drags the sale out ten to fourteen days while they hold Brokers Open Houses and Saturday and Sunday open houses collecting more and more offers. If you aren’t lucky enough to snag a home quickly, you will start to feel the impact of the rising home prices- that same $800,000 house from two or three months ago, might be an extra $20,000 or $30,000 now. Ouch!
The more offers, the more competition.
With tough competition you need to go the extra mile to make your offer strong and to give yourself the best chance to win. When buying houses, there is no prize for second place (although- ask for formal backup position #1), so make your offer count!
Here are a few things you can do improve your offer’s chances of winning in a multiple offers situation:
1.) Offer the highest price.
Duhhh! In multiple offers the #1 most important factor for sellers is price. It doesn’t matter if you have everything else in your favor- you will lose if your price is too low. Ask yourself: at what price would I not be disappointed if I didn’t get the property? Then, if you do lose, you won’t feel bad about it and kicking yourself afterwards thinking you should have offered more.
Let’s reverse the tables and assume you are the seller and you have received these six ‘best and final’ offers on your house that is listed for $749,000:
Offer 1- $751,000 20% down
Offer 2- $650,000- all cash 15 day close
Offer 3- $735,000 10% down
Offer 4-$785,000 30% down
Offer 5- $766,500 5% down
Which of these offers would you choose?
2.) Introduce yourself! And don’t be a grump.
Make sure you introduce yourself to the listing agent of the houses you plan to write offers on. It only takes a few minutes at an open house or showing- and if you are friendly and genuinely interested in the property, the agent will remember. Negotiations began long before an offer is ever written. Even before you walked through the door. It starts the moment you meet someone, and before. I have had buyers lose properties because they complained during showings, which lead the listing agent to believe they didn’t really want the property. I have also camped out with one of my buyers for an entire open house (yes three hours- it was boring as hell) just to show the listing agent he wanted the place (he got it, and it was a great deal). Anything you can do that is memorable, and makes you more familiar will help the listing agent feel confident about presenting your offer in a positive light.
3.) Put your best “offer” foot forward
When you are writing your initial offer, I advise clients to make it pretty close to your best and final. Lets suppose there is a listing for $1,450,000 and you think it is going to sell for $1,600,000. And your willing to go to $1,580,000. I see buyers make this mistake that they write a low offer and plan to “go up a lot” and that that will get the sellers attention. They might write $1,475,000 in the scenario above, and are planning, when they get a counter to go to $1,580,000. However, there is one problem. You might not get even get a counter! Or your agent might have to beg the agent to send you one. The damage is already done. The seller will see the low offer and not take you seriously. It is far better to get the sellers attention right away with your first offer, and keep it. In this situation, write $1,550,000. When you get the counter, go up another $30,000 to your maximium- $1,580,000- this looks far better to the seller.
Many buyers don’t bother to do this! If you want the property badly, make yourself standout and take the time to write a thoughtful coverletter to seller and tell them why they should sell their home to you.
5.) Put as much money down as you can.
Sellers want to pick the strongest buyer they can. The larger the downpayment the more likely the deal will close. Buyers with more money in the bank are stronger. In rapidly appreciating markets appraisals commonly fall short of the contract price, as the market could take several must to readjust to new price levels. Sellers want to get the price that they were offered. If the appraisal does come short, the fact that you have extra cash to cover the difference, helps them rest at ease.
Incomplete offers won’t be considered, they are thrown in the trash. If you don’t have all your ducks in a row yet, do it right away, because when the market is moving fast it doesn’t wait for you to talk with a lender and get preapproved or obtain a copy of your most recent bank statement.
7.) Find out if the seller wants any special terms and include them on your offer
Being flexible with any terms the sellers want (or dictates…) can push the bar in your favor. A lot of sellers in an rising market, will be moving- and they will be facing the same challenge of finding a new property as you do. Giving a seller a leaseback provides them time to purchase a replacement property. Usual seller leasebacks are 30-60 days, and terms are a small security deposit and monthly lease payments equal to your holding cost (mortgage, taxes, and insurance). Maybe the seller already bought a property and wants a quick close. Go to your lender and have them start working on your loan so you can close faster. Seller wants to keep the fridge? Take it!
8.) Choose an ODD number to write for you best and final offer
Veteran agents who deal with multiple offer situations frequently know that you never write round numbers. Think of it like the game show, the price is right. There is nothing more frustrating than losing a property because another buyer with more experience in multiple offers chose to write an odd number offer price ever so slightly above yours! (I once had a client who lost multiples a few years back with a $1,700,000 offer to a $1,710,000 offer…neither of us were happy campers). Let’s say your best and final is $450,000- I’d recommend making it $453,632. Or maybe $451,105. What’s your lucky number? I hear 8’s are lucky- $452,888. What is the property address? 305 Mohawk Ln? 450,305. Whatever you do, just don’t make it the same number everyone else is going to pick. Make it an odd number that is slightly more and give yourself the best chance of being the highest.
9.) When the counter offers are sent out, wait until near the end of deadline to respond
When you ask the listing agent what the property is going to sell for- they don’t know, because it depends on what the buyers are going to do. When you wait for some of the responses to come in before submitting yours, you give yourself a chance to try and glean some information from the listing agent where you need to be at. I might tell the listing agent what offer we are going to make verbally and ask them if this is going to get the property, and gauge their reaction. If you have a relationship with the listing agent, they may give you some hints.
10.) Have your agent Present your offer in person
This goes a long way with real estate agents that come from the old school. Twenty to thirty years ago, before emails, cell phones, and fax machines, driving to the listing agents office and presenting your offer in person was the way everyone did it. When you go the extra mile, the listing agent will notice and know you are serious and want to close.
11.) Shorten your Inspection Contingency
The purchase agreement has a 17 day inspection contingency by default. In fast markets listing agents are usually countering buyers inspection contingencies down to 7-10 inspection periods. This can put a lot of pressure on your buyer’s agent to get all the inspections done. 7 Days is the minimum time required to do inspections, and 10 is a lot better. You can voluntarily cut down your inspection time from 17 days to strengthen your offer. Maybe to 14 or 12 days, or 10 if you want to be aggressive. 17 days is more time than you need so shaving a few days off won’t hurt you if you stay on your toes.
12.) Waive Contingency
There are three main contingencies in the purchase agreement- the loan, appraisal, and inspection. Waiving a contingency, or three, will significantly strengthen your offer.
If you are a cash buyer, you have no problem waiving the loan contingency. For everybody else who is financing, this is not an option.
The most common contingency to be waived by buyers in multiple offers is the Appraisal contingency. In strong seller’s markets, properties sell for more than their asking price, and sell for higher prices than the most recent comps. This can create problems with getting an appraisal at value. Sellers don’t want to accept an offer that is ‘only as good as the paper it is printed on’. By waiving the appraisal contingency, the buyer eliminates any doubt about the final sales price and cannot renegotiating the sales price if the appraisal falls short. But, if you do this, be ready to pick up the tab!
In fast markets, sometimes the Listing Agent will provide buyers with a pre-sale inspection report paid for by the seller. The reason sellers do a presale inspection is to find any serious problems with their property before they list it. The seller then has the opportunity to fix those problems or disclose them, instead of dealing with them in escrow. The purpose of a presale inspection is to do an “as is” sale. The seller will demand a very short inspection contingency 10-7 days.
If you know me, like a broken drum, I always recommend to get an inspection. I would strongly advise buyer’s against waiving the inspection contingency. The only time I would consider it, is with an off market property that you have no choice, or with a property you intend to complete rehab or tear down. The seller is trying to avoid granting any repair credits to the buyers. For liability purposes most listing agents and sellers do not want to force buyers to waive their inspection contingency- so you really don’t need to give this up. So hold on to it!
Keep in mind that having less or no contingencies as a buyer can be risky, because if you don’t close, you will lose your earnest money deposit– so be careful you understand what you are doing before you start waiving these contingencies right and left.
13. Set up to the plate
When you receive the sellers best and final counter offer- go up and pick a number that you think will actually win. I have had client’s who dig in, and refuse to raise their offer. That’s fine if you don’t care whether you lose the property or not, but if you do want the property, make the winning bid. Sometimes the seller doesn’t always choose the highest price, but they are not foolish- there is a range that the best offers orbit, and you need to be in that ring.
13.) Write an Escalator Clause
This is a trendy new tactic buyers are using to win multiple offers in Los Angeles. In states like Michigan and Oregon, escalator clauses are common practice, but in California escalator clauses are not widely used. If you plan to use an escalator clause make sure the listing agent is open to it and understands it, because many listing agents will not have heard of it.
Unlike a normal best and final response offering a specific price, with an escalator clause buyers offer some amount higher than the next highest offer so they cannot be overbid. The language for the counter offer response may be something like “buyer offers $5,000 above next highest offer”. This would be an example of $5,000 plus escalator clause. The amount you bid over the next offer depends on the price range, for $500,000 $5,000 over the next highest offer is probably appropriate, and for $1M $10,000 and so on. Don’t want to bid above a specific price? You can add a cap to the escalator as well- such as “price not to exceed $950,000” for example. I would also request the listing agent to produce a copy of the next highest offer so you have some proof.
Some agents feel like escalator clause is an unfair practice and have negative response to it. That is why I say to check with the listing agent before writing one in to your counter offer. I can understand where those agents are coming from- if every buyer responded to a multiple offer counter offer with an escalator clause it wouldn’t work, and for buyers who lose out to an escalator clause, they may feel that the bidding was unfair.
I think in certain situations it can be an excellent strategy but not right in every situation so check with the listing agent first.
14.) Ask for the “Take it Off the Market Price”
In multiple offer markets, listing agents are really drawing things out, holding the house open for one or two weeks, and setting an offer deadline at the end, and collecting offers that come in, but not presenting them until the deadline, at which point they counter offer. Some buyers get really frustrated having to wait two weeks, then get countered, and have to wait another week, just to lose the property they want. This strategy wont get you the best price, however, in some situations I have seen it successfully take a property off the market before the offer deadline. You need an agent on the listing side who is receptive to it, some agents will refuse to present offers (even though they are suppose to) until the deadline no matter what price they are. However, as an agent myself, I can’t resist showing a seller a really good offer when I get it. Like in the Godfather movies, you have to “make an offer they can’t refuse”. If you are successful you can head the property off at the pass, and take it off the market before weeks go by.
Buyers often ask me how much are their closing costs. Typical buyer side closing costs range from 2%-3% of the purchase price as a rough rule of thumb. The biggest buyer side closing costs is the loan, so if the purchase is all cash your closing costs may be as little as 1%.
Buyers ask if they need to pay for the buyer’s agent real estate commission. The answer is no you don’t, all real estate commissions are paid for by the seller. This is great for you as a buyer because it lowers the amount of cash you need to buy a property, but keep in mind you will have to pay both commissions when you sell. I say that it averages out to half a commission each transaction, but it is loaded on the backend.
With some deals, if you are running short on cash, and it’s a slow market, you may be able to work out a deal with the seller to help pay for your closing costs.
At closing, Escrow prepares a HUD-1 closing statement, which is all the actual closing costs. It is a good idea to review the HUD-1 to make sure everything is correct.
Here is the breakdown of the different buyer side closing costs:
Here is What You Really Need to Understand Before Buying a Probate House
Santa Monica Probate
Probate sales are not for the faint of heart. Probate houses usually are heavy fixers that have tough sales terms and may be subject to overbidding.
The owner of a probate property passed away and probably lived there for twenty or thirty years. When people retire they are on a fixed income, and they often fall behind on regular home maintenance – that is why you find most probates are in pretty bad shape. Buyers like buying probates because if you are willing to put work in, you can get a pretty good deal on one.
There are two types of Probate sales: court confirmation and no court confirmation. The Listing Remarks on a Probate listing will specify which of the two it is. If the remarks don’t say or are vague, you can always talk to the listing agent and ask.
Offers for Probate sales are written on a special purchase contract called the “Probate Purchase Agreement” instead of to the Residential Purchase agreement. This is because the sales terms for probates differs quite a bit from a standard sale.
Differences Between Buying a Probate House and a Standard Sale:
-Offers written on “Probate Purchase Agreement” and not Residential Purchase Agreement
-Sometimes: Non Contigent Sale: No Loan Contingency, Appraisal Contingency, or Inspection Contingency.
-Court Confirmation is Subject to Overbidding
The terms when buying a probate house, vary greatly from sale to sale. The sale terms are decided by the court, the probate attorney and the listing agent. Probate sales are always ‘AS IS’ sales. ‘As is’ means that the seller will give the buyer no credits and won’t fix anything. The hotter the real estate market, the more tough the terms of the probate sale are going to be. Probate sellers may not pay for termite, retrofit, and may demand no inspection contingency or no contingencies all together. To find out the terms of the sale the listing agent will usually produce an offer guidelines document that you can review or you can ask them before writing an offer.
Probates are Fixers, require work, and may not qualify for traditional financing. By default the Probate Purchase Agreement has no Loan Contingency.
Probate sellers prefer cash offers because the poor condition of the property normally won’t qualify for a loan, but when buying a probate house, you can still write a financed offer on a probate property if its just a cosmetic fixer or you are financing with Hard Money as an investor. You may check Paragraph 3C(4) on the Probate Purchase contract to add a loan contingency.
Or, you can write your offer with no Loan Contingency even if you plan to finance the purchase, and take the risk that if you cannot get financing you will lose your Deposit. It really depends on how strong the market is and how many offers the property gets. The seller may accept a financed offer if its the only one they receive.
No Court Confirmation Probate
The timing of a No Court Confirmation probate are a lot like a normal sale and will take 30-45 days. Once the seller accepts your offer, there is no overbidding, and no approval from the court is necessary. You can open up escrow immediately once your offer is accepted. No Court confirmation has flexibility with the Earnest money deposit amount as well, it doesn’t need to be 10%.
Court Confirmation Probate
Court Confirmation probate sales require 10% deposit of the purchase price, by law, to be made at the time of a successful winning bid at the court confirmation hearing (buyers with an accepted offer on a court confirmation probate don’t need to worry about having their 10% down payment tied up while waiting for a court date). Low down payment buyers such as 5% down or FHA buyers can’t qualify for the sale terms of a court confirmation probate.
Court Confirmation Probate sales take longer. From when you offer is accepted by the seller, the probate attorney will request a court date which will take four to six weeks. The listing price for a court confirmation probate is determined by a court referee who provides an appraisal to court. The court may only legally sell the property for 90% of the court referee’s appraised value. Court confirmation hearings are subject to overbidding, more on that below. Having an accepted offer gives you a slight edge at the court confirmation hearing because the minimum overbid is at least 5% more than the accepted offer price. If you are the winning bidder, closing will take place ~30 days after the hearing.
A court confirmation hearing is basically a public auction. Even if you have an accepted offer on a court confirmation probate listing, you need to show up to the court confirmation hearing and get the court’s approval to get the property- so you better show up for your court date! I recommend to buyers who have lost a bid on a court confirmation probate listing to a higher offer to still show up for the court confirmation hearing, because the buyer with the accepted offer might bungle it or not show up and you can pick up the property there. A property isn’t sold until its sold!
The Minimum overbid amount is 10% of the first $10,000 plus 5% of the remaining balance.
EXAMPLE: A Probate property is listed at $650,000. The accepted offer is $625,000.
The minimum overbid is calculated as follows:
Accepted Offer = $625,000
+$10,000 x 10% = $1,000
+$615,000 x 5% = $30,750
Minimum Overbid = $656,750
COURT CONFIRMATION HEARING
Downtown Los Angeles probate court confirmation hearing
The judge will call the sale and ask everyone who is there for the sale to stand up and identify themselves to the court. The judge will state the opening bid and and set the increment for bids. In the example above for a $656,750 min. overbid increments might be $3,000 or $5,000 or something. Just because the increment is $5,000 it doesn’t mean that you can’t bid more if you want. Sometimes going higher quickly will discourage other bidders from continuing.
Whoever is the highest bidder wins. They are responsible for depositing 10% cashiers check.
WHAT TO BRING TO OVERBID?
When buying a probate house, be prepared before you go to court. Thoroughly review the comparable sales and be familiar with the sale terms. I recommend setting a maximum number you are willing to pay for the property and stick to it. It is easy to get caught up in emotion during an auction and its important that you don’t stretch yourself too thin or overpay.
For the probate attorney and the court to allow you to overbid, you must show a cashier’s check for at least 10% of the minimuim overbid. Personal checks are not accepted. The cashier’s check must be made payable to the right party. Ask the listing agent before you come to court. It is also a good idea to bring proof of funds and a preapproval letter (if financing) to show that you are a well qualified buyer.
Are you planning on buying a probate house? Have any more questions?
Feel free to call me directly at (310) 388-7332 or click the button below and I will be in touch!
You’ve completed your final walk through and signed the loan documents and wired cash for the remaining balance of the purchase price. The loan has funded, and the deed has been recorded.
Congratulations, you have just closed!!
Once the deed has been recorded and your name is on title, You are officially the new owner of the property.
Here are some things to do now as the new owner:
Pick up the Keys
The listing agent will hand you or your agent the keys (gate keys, house keys, mailbox keys), garage door openers, remotes, and anything else that passes along with the property. Sometimes organized sellers have the manuals for their appliances and equipment and will leave these too.
Bert from ALL LA Key Service 818-558-5083
Every Realtor recommends rekeying your property after you close because there is no telling who has a copy of the old keys- a neighbor, a friend or relative of the previous owner, a contractor that has done work on the property, who knows. Also, if the property was on a lockbox while it was for sale, anybody with the lockbox combination had access to the keys while the property was on the market and could have made a copy. Perhaps the property was rented at some point by the previous owner before they sold it and some ex-tenant out there somewhere has a key. The only way to be sure that your property is secure after you close is to change or rekey the locks. Expect to pay about $400-$500 for this service
For a smooth move in, try to avoid closing on Fridays or near the end of the month. Public utility companies work business days M-F, not on the weekends or holidays. The typical time to start new service is 2-3 business days. If you close on a Friday, the earliest you can start new service is Tuesday or Wednesday. Not fun to live with no hot water, no heat, no light, no stove, and no power for 4-5 days.
Most people move the 1st of the month. If you are trying to start service during this time, expect to add 2-3 days in delays because it is busy. Avoid closing at the end of the month, there will be less wait time to start new service.
There are two major providers of electricity in Los Angeles- The Department of Water and Power (DWP) and Edison. The DWP services the city of Los Angeles, and Edison services the county and some of the incorporated cities.
Gas is harder to turn on than electricity because the gas company is liable for gas leaks. It is not just a simple matter of flipping a switch and reading a meter. When the Gas Company turns on the gas, they must test every gas appliance for leaks. It takes about 30 minutes to check everything.
This picture shows a gas meter with a lock. When the gas is shut off, the gas company places a lock on the gas valve so that it cannot be turned back on. If you see this lock, then service is disconnected and you will need the gas company to come out. As a side note, if the gas company comes to a property to read a meter, and the property appears to be vacant, they are required to shut off the gas.
The Peak season for gas companies is Nov 1st – April 30th, you will have longer wait times to set up service during the winter months, instead of 2-3 business days, expect 4-5 business days. The worst week to set up service is around January 1st because they get a very big backlog from all the holidays around that time so plan for extra time in Late December, early January.
If you need a gardener or pool man, I like to start by asking the seller who they are using and if they are good. Many times it is easier to just continue using the same gardener and pool man. Make sure to ask how much they are paying each month- I know from experience that pool and gardener prices sometimes go up when there is a new owner so it is a good idea to check how much the seller is currently paying as a reference. If you don’t want to use the seller’s people- then ask your real estate agent, friends, or new neighbors for a referral.
What is my Trash Pickup Day?
You can look up your trash collection day on the Los Angeles Sanitation Department’s homepage:
You can update your mailing address with the US Post office by going to a post office and getting a change of address form, or change your mailing address online at the United States Postal Service website:
Now that the property is all yours you will want the for sale sign taken down. Most listing agents remember to take their sign down, but sometimes they can forget. Send the listing agent a reminder if they forget to Remove their Yard Sign after the close.
Special Closing Items for Condos
If you purchased a Condo, register yourself as the new owner with the property management company managing the building or the HOA. You will usually get a new owner information form along with your HOA disclosures. If the building has an intercom entry system you will want to change the number on the intercom to your phone number, and if your mailbox doesn’t have your name or unit number on it- you can add a label on it with your name.
Some High Rise condo buildings have special move-in/move-out procedures. The HOA documents should give you the specifics on those procedures before you close. Sometimes these can include a moving fee.
Before you move in all your things, it is usually a really great time for interior paint if you want to change the colors of the walls or personalize a room with an accent wall.
Hang your art
.. and finally, the Last thing to do is plan your housewarming party!!!
Condo-buyers starting their home search in Los Angeles want to know what price range to look in. I recommend to get a preapproval letter with a lender as soon as possible for two reasons: 1) the lender will tell you how much you can afford 2) if a property comes on the market that you want to buy you will be ready to make an offer right away.
Condo’s are a little different than single family homes. They have a monthly Homeowner’s Association dues. The amount of the HOA dues vary by the size of the building, and the amenities it offers. Buildings with Valet, and front door man tend to have HOAs starting around $800 and going up into the thousands, whereas buildings with a simple fitness room and a heated pool are in the $400 to $500 range. The absolute lowest that HOA dues can go is $250 per month.
In the monthly cost estimate I assumed 20% downpayment at a 4% interest rate on a 30 year fixed loan, and the monthly cost includes mortgage payment, taxes, insurance and utilities and HOA dues. If you are putting less than 20% down, then you will need Mortgage Insurance, which will be an additional monthly cost. The Annual Income was estimated as 35% of monthly cost- the most lenders will lend is 45%, although if your debt to income ratio is this high you will pay a higher than normal interest rate. These are estimates, actual costs will be different.
Home-buyers starting their home search in Los Angeles- often ask how much a month do properties cost? I recommend to get a preapproval letter with a lender as quickly as possible when buying a home for two reasons: 1) the lender will tell you how much you can afford 2) if a property comes on the market that you want to buy you will be ready to make an offer right away.
In the estimate, I assumed 20% downpayment at a 4% interest rate on a 30 year fixed loan, and the monthly cost includes mortgage payment, taxes, insurance and utilities. If you are putting less than 20% down, then you will have an additional expense of Mortgage Insurance to factor in. Annual Income was estimated as 35% of monthly cost. Most lenders will lend with a Debt to income ratio no higher than 45%, although if your debt to income ratio is this high you will pay a higher than normal interest rate. These are estimates- talk to your lender, they will be more accurate- this is for helping you get started.
A Cover Letters is a 1 page letter (write a letter, not a book!) that shows the seller that you have a strong motivation to buy their property. Cover letters are optional not required. Buyers can choose to include a cover letter to strengthen their offer.
Should I write a Cover Letter?
If you are in a multiple offer situation, writing a coverletter can improve the chances that your offer will be accepted. I strongly recommend cover letters in multiple offer situations. Sellers deepest fear is that they accept an offer that cancels and they fall out of escrow. Properties that come back on the market usually sell for less money because buyers are suspicious and some of the bidders may have moved on to other properties, lessening demand.
By demonstrating to the seller that you are strongly motivate to buy their property (Kids start school in a month and you need to be settled, You need to be within Walking distance to your hospital, etc) you reduce the risk in the sellers mind that you will fall out of escrow.
However, if you don’t feel strongly about the house then skipping the cover letter is best. I have read cover letters from buyers who were under pressure to buy a property quickly and it wasn’t their first, second or even third choice, and you can tell that they don’t really care if they get the property or not. Writing a cover letter when you feel like this can actually hurt you, so just skip it if you don’t have strong feelings and save your writing for only the very special house that speaks to you.
I would not recommend writing a cover letter if you want to negotiate price. Cover letters may weaken your negotiating position because it informs the seller that you are strongly motivated to buy, and they can use this information to negotiate a higher sale price.
Does a cover letter improve my chances?
When the seller is reviewing a bunch of offers they received in multiple offers, your offer appears to the seller like just a name and a number- the purchase price. Most of the time the seller will have never met you in person because their agent showed you the property when they were not there. The cover letter is the only time you can communicate directly with the seller and share your story. Cover letters personalize your offer. You might be surprised but many buyers don’t bother to write a cover letter! Writing a coverletter can make your offer stand out– and believe me, the seller is going to read it.
In a multiple offer situation, the most important thing is price. If your offer price is much lower than the other offers don’t expect the cover letter to make up the difference. You still need to have a competitive offer price. Selling a house is an emotional decision and your cover letter might be the deciding factor for the seller if they are struggling to make a close decision.
Should I add my picture to my coverletter?
A picture is by no means mandatory, but sometimes it can be helpful put a “face” to a name and make your offer more memorable. Although, beware, including a picture can be a double edged sword. You never know where the seller is coming from, and sometimes including a photo can actually hurt you instead of help you if the seller is prejudice. Most of the time I recommend to let the buyer’s words stand on their own merits and forego a picture. Sometimes, if you know the seller has pets, and you have pets too, including a picture with a furry family member can be good.
What should I write in my coverletter?
Many buyers ask me what to write in their cover letter. I have saved some samples of great cover letters over the years and usually send a few to get the ideas flowing and to pull inspiration from. The best advice for writing a cover letter is Write From the Heart. Your most powerful message comes from speaking the truth about how you feel about the house and what the house means to you. This is your chance to tell your story.
Good writing is rewriting. Be as specific as you can. Try to focus on yourself and the property and avoid the seller and their agent.
Here are a few questions to get some ideas flowing:
-Why do you want to buy this property?
-Why do you want to live in this area?
-What is your reason for buying a property right now?
-Where have you lived in the past and how does that compare?
-How does being at the property make you feel?
-How will you live in the property once you own it?
I wrote a Cover Letter- now what?
I recommend to have someone review your cover letter before sending it. Having a second pair of eyes is always helpful when editing. Fresh eyes will be able to spot any grammar or spelling mistakes, confusing sentences, or places that could use elaboration or more specific detail. A family member or friend, or your real estate agent should be fine.
When I am editing a client’s cover letter, I try to edit minimally because I want my client’s voice to be heard. I send the edited draft back for their final review and if they are happy- they give me their OK and I package it with their offer and send it and cross our fingers!!!