WHO YOU ARE COMPETING AGAINST WHEN YOU ARE BUYING YOUR FIRST HOUSE IN LA AND WHAT TO DO ABOUT IT
There's very little inventory right now and thus way more buyers than sellers which means if the house is priced right you're going to be in a multiple offer situation. Here's who you're up against:
- •Someone exactly like youThis one's obvious. Anyone who is at your level of employment who is looking for their first home is your competition.
- •A spec builderWhen a grandma dies her beverly grove house can be a nice starter home for you if you're willing to do some work. But because of all the upside, you might be up against a development team who are planning on tearing the house down. They usually pay all cash but that's not why they beat you. They beat you because they buy the house without contingencies. They aren't performing inspections and you are so that's very attractive to a seller. They usually offer less money though.
- •A Beverly Hills millionaire buying for their son or daughter who just graduated from a liberal arts college about to get their first job as an assistant to a decorator or tv producer.As part of their investment portfolio, the wealthy Beverly Hills types are buying their young kids homes because why pay rent? This was completely unheard of when I first got into real estate only the billionaires were buying their kids houses and now all the wealthy people do it. They pay all cash and spend a lot of money remodeling these little houses until they look like a four seasons hotel suite. And the kids document the remodel on INSTA with hashtags.
- •The millionaire next door types buying a house for their adult kidWith interest rates like this, the families you've never heard of but with successful businesses are buying a home for their kid so that they can be close to the grandchildren. Also to diversify the family portfolio. Money's cheap to borrow right now and everyone is trying to take advantage of it. These people move right in without remodeling.
- •The millionaire next door types buying a house as an investmentThey buy a house and immediately rent it out. It's a business for them.
- •All kinds of foreigners laundering moneyThe super rich foreigners are buying mansions to pull cash out of unstable economies and launder it in residential LA real estate. But you're not competing against the super rich foreigners, you're competing against the regular rich foreigners. They are doing the same laundering just on a much smaller scale....your scale! In the last two or three years this category of buyer has exploded. They buy the house and they lease it out, or their daughter moves here to learn English.
- •A young modern orthodox couple with four kids and one in the oven.There's a ton of these. Modern orthodox is the new conservative it's so chic and modern!
- •A church or templeA church or temple has tons of money and they are buying the house for a member of their clergy. By the way there are more churches and temples than you've ever heard of and they all buy houses. They pay all cash but they have contingencies.
- •What can you do about it?This house is going to go on the market Friday, first showing at the open house on Sunday, open again on Tuesday, accepting offers until 5pm Wednesday and it will be in escrow thursday. So you have to have a game plan. You have to have your loan lined up. You can't hem and haw if you think you might like it you have to pounce. You can always get out of escrow but you can't always get in.
- •Be prepared to pony upYou can write the sweetest letter in the world, you can be adorable, but the seller is always looking for the best combination of terms and money. Sure being adorable in a dead heat might win it but money talks. In this market with this competition prices are breaking records every week right now so be prepared to stretch or be prepared to not get the house. The only way to beat an all cash offer if you're getting a loan is to pay more. Demonstrably more.
- •Don't get attached and know that things happen for a reasonJust by law of averages, you're probably going to lose out on a house or two so be prepared for a little heartbreak.
- •Okay that's all I have bye for now