The Los Angeles real estate market has always been hot, but it really took off during the COVID-19 pandemic when people began looking for more spacious homes with larger backyards and it hasn’t shown any signs of cooling down.
Prices are up, housing inventory is tight, and mortgage rates remain low, all of which contribute to a feeding frenzy by buyers that is putting cash into sellers’ pockets.
While this is great for sellers in Greater Los Angeles, including West Hollywood, Hollywood and Hills Hancock Park real estate, what can serious buyers do to win a home?
Regardless of whether you’re buying or selling, the first step toward making a successful real estate transaction is to hire a real estate agent with extensive experience in a dynamic market like Los Angeles. A seasoned veteran knows the ins and outs of the best neighborhoods and will advise you at every step of the process, whether this is your first transaction or whether you’ve bought or sold real estate before.
A top real estate pro also knows that closing on a deal in a hot market doesn’t follow the norms that it used to. Transactions move much faster, and if you try to stick to the way things were done even a few years ago, you’re going to get left empty-handed. For instance, setting a realistic price for Hancock Park luxury homes is more important than trying to break the bank. And making an offer on Hollywood Hills home will mean going over the listing price to win a bidding war.
Agents are the first to know when homes are listed for sale and can schedule a viewing for a buyer as soon as possible. Agents also have access to recent sales figures in the neighborhoods you’re interested in. They can advise buyers on a winning offer and help sellers price their homes competitively.
The Los Angeles Times put the breathtakingly hot real estate market into perspective when it reported in March of this year that more than half of the homes listed inside the L.A. city limits sold for over asking price. The newspaper reported that April home sales increased a whopping 86.2% year over year.
Prices have continued to heat up along with the weather. According to Realtor.com, the median listing price of homes in Los Angeles in June was $969,000, an increase of 11% year-over-year. The median sales price was $930,500. Narrowing it down to Hancock Park, the median listing price was $3.9 million, and the median sales price was $1.7 million.
Real estate experts say the surge was being fueled by people being shut in due to the pandemic and a lot of whom can now work from home full or part-time. They want larger homes in more desirable neighborhoods, with offices to work from and yards to relax and entertain in. The reopening of California in June and the fact that more people are getting vaccinated has helped further boost the market to remarkable heights.
Here’s a look at how the hot market affects each side of a home transaction, whether it’s for Hancock Park real estate or houses for sale in the Hollywood Hills, West Hollywood or anywhere in Greater Los Angeles.
What it Means for Buyers
1. Line Up Financing
Buyers need to budget for how much house they can afford. Those who will need to take out a mortgage have found themselves competing with buyers who can offer all-cash. A cash deal for Hancock Park real estate makes the transaction easier for both sides because it removes the need for the buyer to qualify for a mortgage, which obviously takes time and sometimes can fall through. A cash deal also eliminates the need for an appraisal and possible problems if the number comes in too high for a mortgage lender’s liking.
So, if you can pay cash, do it. A full cash offer would undoubtedly put you at the top of the list. If you can’t make this type of offer, the more you can pay above the 20% down payment will make your offer more enticing.
If you can’t pay cash, don’t worry, you’re hardly alone. But you do still need to get pre-approved by a mortgage lender, who will check your income, credit history, and other financials to determine how big of a loan you will qualify for. A pre-approval letter lets the seller know a deal won’t fall through due to questions about financing if they accept your offer and in this market. Your offer will not be taken seriously unless a pre-approval letter is attached. Your lender choice also matters; in this super-fast-paced environment, your lender should have a quick response time and work with you to prepare your file so you could agree to shorter appraisal and loan contingency time-frames and a potential short closing.
2. Offer Strategies
The path toward a smooth closing in a hot market starts with a well-written offer. Again, your agent knows what comparable Hancock Park homes have sold for. Rather than trying to lowball the seller and have your offer rejected right away, come in above the listing price. That should keep your offer in play.
Another strategy is to keep the offer as clean of contingencies as possible. In other words, don’t make your offer contingent on selling your current home. The market is simply moving way too fast for that to be feasible, and a seller won’t be willing to wait around. Also, don’t ask for traditional contingencies such as assistance with closing costs or a home warranty. Again, the seller holds the cards here.
Have your agent ask the seller’s agent if it will help get your offer accepted if you offer to rent the home back to the seller for a short time after closing, or if the sellers would like to close earlier than the traditional 30-day close.
What it Means for Sellers
Even in a hot market, home sellers in Hancock Park still need to price their homes competitively. If you price your house too high, you could be frustrated by watching it languish on the market while other homes sell quickly. Buyers have a wealth of data at their fingertips, and even though they’re willing to pay over your asking price, an unrealistic price tag will work against you from the get-go.
You should also speak to your agent to put a strategy together to clean, declutter and stage your home to give it a “wow” factor that will inspire buyers to put in a top-dollar offer.
Remember, constant communication with your agent is key to closing a deal in a hot market.
For all your home buying and selling needs in Hancock Park, the Hollywood Hills or West Hollywood in 2021, contact McNamara & Associates for assistance.