If you are a buyer looking for a home in Los Angeles it is important to understand the market you are in.
Right now, Los Angeles real estate is a sellers’ market. What does this mean? Basically there are more buyers out there than homes available for sale and this creates a lot of competition. Unfortunately, many buyers don’t adjust their expectations and continue to lose out until they finally understand that they really don’t control the market.
In a sellers’ market when a home is first listed the question should not be “how much do you think I can get this for?. It should be “how much do you think I should offer in order to be considered?” It is amazing how many times buyers in this market want to offer below asking when they see something their really like. This is unfortunate, because if you like it then you know there are going to be other buyers who also do. This is not the time to listen to your family and friends who are telling you that you can probably get the property for lower than the list price. With very few exceptions it is not going to happen in a sellers’ market.
This is not a time for buyers to be looking for homes above their price range hoping that they will be able to negotiate the seller down, and generally you should maybe cap your search at listings a little below your top price so that you have room to offer more when you are in competition. Making an offer at the top of your range in a multiple offer situation is probably not going to get you the home.
There are areas in Los Angeles where the average sales price to list price is over 100% and many areas that are close to 100%, and homes area appraising. This is a great indicator of where a Los Angeles home buyer’s mindset needs to be. There are no “deals” and if you find a home you must have you are going to have to pull out all the stops to get it. If you don’t someone else will.
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