It seems like just yesterday that buyers ruled in Los Angeles and Beverly Hills real estate deals, but all of that has changed. Real estate prices in Los Angeles have risen by more than 57 percent in the last five years. That’s good news for homeowners, but not so much for buyers.
This economic climate has caused a shortage of homes on the market, particularly in luxury real estate markets like Beverly Hills where bidding wars are common. When multiple buyers have their hearts set on the same property, the competition often causes the successful bidder to pay more than the asking price for the property.
According to Redfin Research, more than 80 percent of homes sold in the Los Angeles real estate market in March 2014 involved competition from multiple bidders, and more than 50 percent of those homes sold for more than the asking price.
How to Avoid a Real Estate Bidding War
As prevalent as bidding wars may be, they are not inevitable. There are several things you can do to avoid going head-to-head with other buyers to win the home you want.
1. Secure your financing in advance. Without having financing in place beforehand, you’re putting yourself in a weak negotiating position. Make the bank your first stop in your home search so that the lender will be ready to issue an approval letter for a specific house as soon as you find it. If you’re in a position to offer cash, that’s even better.
2. Aggressively seek out new properties as soon as they go on the market. Sometimes it takes a little detective work to find the real estate you desire. Did you just hear via the grapevine that a Beverly Hills resident you know has accepted a job on the east coast? It wouldn’t hurt to ask if he or she is going to be selling their house. Such information can lead to a private, off-the-market deal without all of the competition.
3. Make an attractive first offer. In a multiple offer situation, you may only get one stab at your offer. You need to make sure it’s the best deal you are willing to make with the seller. Make it attractive enough and the seller may just agree before other bidders have a chance to submit their bids.
4. Enlist a real estate professional. A seasoned real estate agent is in a much better position to learn about new properties that come available on the Beverly Hills real estate market or other upscale area. Their network of business associates, past clients and other real estate professionals gives them access to news about properties as soon as, or even before, such properties go on the market.
Just because the luxury real estate market in Los Angeles has changed doesn’t mean that you can’t buy the house of your dreams. It just means that to find your dream home at the best price you’ll have to be more diligent to ensure that your first offer is your best offer.