We’ve seen it all in the LA market, and we’d love to share some of our insights. Making an offer here is a bit different than other areas, as it’s among the most popular markets in the world. Standing out from other offers is key. Otherwise, no one will take you seriously. The current real estate market is incredibly competitive with a combination of low interest rates and low inventory. This continues to drive up the prices, and make the market hard for buyers. Here are a few tips on making your next offer more competitive in Los Angeles.
Get a High-Quality Pre-approval
First, get yourself pre-approved. However, not any pre-approval letter will do. Only the highest quality letters will suffice. These banks better be fast and ready to fund your purchase!
Signs of a Quality Mortgage
- Well-Established Lenders:
If the seller knows who your lender is, all the better.
- Fast Turnarounds:
Waiting for another 60 days doesn’t sound like fun. And, with so many offers on the table, someone else can get it done quicker.
- No Catches:
Certain mortgages carry requirements that make them unattractive to sellers. Making an offer with a straightforward mortgage will always be more effective.
Flex your financial muscles by offering a large downpayment to purchase a house. This is your skin in the game, and people selling a home in Los Angeles respect this. California will most likely be competitive forever. Everyone wants to live here, invest here, or both! Money talks in this state, especially in LA.
If the house is in a neighborhood with very high demand, you’re likely to have a ton of competition. Companies that buy houses for a living may also be submitting offers. A large downpayment will make your offer more appealing and credible.
Drop All Contingencies
Partway through the closing process, something can derail the entire deal because of a contingency set in place. Sellers are aware of this and tend to avoid offers that have too many of these. If you waived most contingencies from the start, your offer is more likely to be accepted.
Waiving contingencies does put you at some risk, but in this market, you’ve got to make some sacrifices.
Otherwise, owning a home might remain out of reach for a lot longer than you’d like. Appraisals happen to be the most common contingency that fails. If a home appraises lower than its selling price, you may have to bring more money to the table if you’d still like to close the deal. Letting sellers know that you’ve got what it takes ought to calm their nerves a bit.
Include an Escalation Offer
After you’ve made an offer, what happens if someone else outbids you? Well, unless you’d included an escalation offer, that house would be off the market, and in another person’s hands. Escalation offers let your realtor counter anyone who tries to go above you.
That way, even if a larger bid appears, you’ve still got a shot. Los Angeles is notorious for bidding wars. Escalation offers have become somewhat of a necessity. Not including them would be as ridiculous as wearing your pants inside out to a prom dance.
Competing in the LA Housing Market
Above all, size up your downpayment properly. Although the bank may say that 3% is the minimum (depending on your loan), you’d better have quite a bit more to make a serious offer. Coming to the table with less than you need is a quick way to get put in a corner, ignored and alone. Fortunately, by strategically placing offers, homeownership is still attainable for an average family.