The truth: it IS a seller’s market right now and that poses real challenges to buyers looking for a home. But whether you are a first time buyer with limited funds or a seasoned pro looking for your dream estate, you need to keep in mind, not all common knowledge is 100% accurate
- I cannot afford to buy a house in this market: While it may be true you cannot afford the exact house in the exact neighborhood you have been dreaming about, sometimes close enough works. Look outside your ideal location to find the house you can afford. Can’t afford Silver Lake, try Altadena… Consider condos, fixer-uppers or short sales… Work with an agent who can help you think outside the box and provide advice on locations and alternatives that will allow you to get the most for your money.
- I will get a better deal if I don’t use a buyer’s agent, its best to approach the listing agent and let her represent me in the transaction. The thinking is, if the seller’s agent accepts the buyer as a client, he makes the full commission and is more likely to cut a deal with the buyer. But keep in mind the buyer does not pay the agents, the seller does. The listing agent is hired by the seller and has a fiduciary duty to the seller. The half of the commission they would traditionally split with the buyer’s agent is not going to be handed over to the buyer. It’s more likely the agent will keep the full commission and walk away happy to have found another misinformed buyer.
- It’s a housing bubble in LA and I should wait until the next downturn to buy. The truth is the signs present in the last bubble are not present today. Pricing is at historic highs, but you could be waiting quite some time to catch the market on the downside. Your home is an investment you can live in. Trying to time the market could leave you wasting more money on rent and loosing potential appreciation, than the possible future gain from buying when everyone else is selling.
- You need to have 20% for the down payment. There are a variety of ways buyers can reduce the amount of money required for the down payment; qualified borrowers can make down payments as low as 3% with private mortgage insurance, or the FHA offers a low-down option payment of 3.5% for people with imperfect credit histories. In addition to these and other loan programs, there are sources of monies you may not have considered such as taking a loan from your retirement plan or you may also withdraw cash from an IRA for a home purchase. Working with a real estate agent and loan officer early in the process will put folks on your side who want to help you make your home buying dreams happen.
- El Sereno is the next Highland Park. There are a number of locales that are being pushed as the next hot neighborhood but there is no one specific neighborhood that everyone agrees will become the next place the hipsters are moving to. You can get great deals in “up and coming” neighborhoods throughout LA and with the guidance of an experienced real estate agent you should not find yourself in a place you are unhappy living.