Homebuyers in Los Angeles often spend years saving up to purchase that Hollywood Hills or Culver City home of their dreams, only to fall short when someone else outbids their offer. After searching through listings, attending property tours, and organizing a mortgage pre-approval, mustering the effort to compete against other buyers can be a drain on the soul.
But while the competition is fierce, there are ways LA homebuyers can prepare themselves to outpace other buyers. To help navigate the competitive frenzy that has taken over the Los Angeles real estate market recently, the team at Prevu Real Estate organized a list of several tips to increase your chances of winning a bidding war.
Learn your price limit and aim higher
Most Californians save for years to amass the necessary funds for a downpayment, and getting outbid in the final steps of the deal process is a heartbreaker. But by researching the market before dipping your toe into it, buyers can set realistic saving goals. The easiest way to do this is by figuring out what neighborhoods you are interested in, then track the average home prices of the area so you can set savings goals.
The last thing you want to do is step into a bidding frenzy for a Santa Monica home without understanding how much money you are able or willing to spend. By aiming higher than the average asking prices, buyers position themselves to outbid the competition when they find their ideal home nestled in Westwood.
Make offers based on value, not emotion
Many buyers lose out in their first few bidding wars out of fear of overpaying, and when a great new listing hits the market, a burned buyer may overbid to compensate for past losses. The Los Angeles housing inventory is tight, and while many buyers may feel like they are overpaying for homes, savvy Californians can do due diligence on their target neighborhoods to make sure that if they need to pay over asking price, they are still comfortable with the value of the home.
Taking a data-driven approach to home prices can give you a good sense of value, but sizing up the competition may mean the difference of winning vs losing. Leverage the expertise of your real estate agent to extract as much information as possible on the strength of the other offers. While there is a time to pull the lever and up the ante on an offer, an expert broker can advise you on what other offer terms a buyer needs to consider before making a winning offer.
Work with an expert that can save you money
Every dollar counts when you are making the winning offer on the South Bay beach house you’ve always dreamed of but new homeowners that just closed on that Redondo Beach home also need capital to cover new furniture or remodeling projects. If you find yourself needing to shell out more money to win a multiple offer situation, be aware that you can get cash back just by working with the right broker.
For instance, Los Angeles residents that purchase with Prevu Real Estate benefit from the company’s Smart Buyer Rebate, where homebuyers can get a commission rebate of up to 2% of their purchase price when they close on an LA home.
Get creative with your offer
While outbidding competing Californians is a surefire way to cinch a deal in your favor when bidding, there are non-financial terms you can deploy to make sure you win out on the Diamond Bar home you are eying.
Sellers evaluate much more than just the price when looking at deals, and all-cash buyers remove a lot of uncertainty from the deal process for owners looking to offload properties. An all-cash offer means no need for mortgage pre-approvals or waiting the 45-60 days needed for a bank to conduct due diligence. Of course, not all Californians can close on an all-cash deal, and since mortgage interest rates are still low, it may be better to put that cash towards other investments.
Another way to curry favor with a seller is to skip a home inspection. The home inspection process helps buyers assess what types of issues a property might have before closing a deal on the home. Buyers that are confident in the soundness of a home can waive their inspection. Most brokers advise against this practice as it does present risk for a buyer, but it can be a successful strategy used to win over sellers of newer homes.
Crafting an offer letter closer to the heart
Sometimes, when a seller deals with multiple offers, it comes down to standing out through a concisely drafted offer letter. This way, you can explain to a seller, who may not want to let go of their home, what it is about their house that pushes you to want to move in.
Start by extolling the remodeling work a seller did, noting how much you love the color schemes used in the home. Simple overtures like this connect you to the seller, showing them you appreciate the work they put in on the home. Mentioning how the house reminds you of your childhood home can put sellers at ease as they trust you to continue making memories in a home that holds many memories for them.