If you are a Los Angeles home buyer the news is that it is a sellers’ market. There is little inventory, and a home coming on the market in a good area at the right price is selling quickly and often over asking price.
Interest rates are historically low and hopefully new inventory will start to hit the market. When it does, here are some basic steps you will need to consider when buying a home in Los Angeles:
How much can you afford? Your first step is to consult a mortgage professional. They will be able to tell you the price range in which you should be looking. In this market, your Realtor® is going to insist that you are pre-approved, before they spend their time and yours looking at houses that are not within your reach. There is nothing more disheartening than getting excited over homes you cannot afford.
What the Mortgage Broker Does
The mortgage broker will inform you how much down payment and monthly payments you can afford based on your income, savings, etc and on the various mortgage programs available which will determine your buying power. Closing costs will also be taken into consideration. These include, your share of escrow fees, loan fees, cost of inspection(s), pro-rated property taxes and other miscellaneous charges.
When you find the house you want to buy, you need to be ready to go. This is a tough lending market and in a multiple-bidding situation (yes this is becoming more common given the low inventory) the most qualified buyer is going to get the home.
Find Your Home
Define your wants and needs. Make a list of priorities: Location, size of house, lot, number or rooms, etc. The more specific you are, the more efficient the process will be. Based on your budget your agent will be able to help you to target your search more efficiently.
Be prepared to make an offer. Chances are, if you like something there are others who will like it too. If you are waiting for a deal the market is going to pass you by. If you are looking to live in your home for several years, buying one that you love is going to be a deal in the long term.
Make An Offer
With your Los Angeles Realtor‘s® help you will submit a Purchase Contract to the Seller. The cleaner the offer, the better the chance it will be accepted. The offer is time-sensitive and if it is a reasonable one, the Seller will either respond with a signed acceptance, or you will receive a Counter Offer and then the ball is in your court. You can either accept the counter, submit your own, or simply walk away.
Once the Offer is Accepted..
The fun starts. You are now in escrow.
Your Los Angeles Realtor® will guide you through the process, but this is what you can expect:
- A Home Inspection will need to be done immediately, and it is advisable that you are present for that inspection. Upon reviewing the Inspection Report you will have to make a decision. You can ask for repairs to be done. You can ask for credit through escrow. You can ask for a reduction in the price of the home. You can also choose to do the work yourself. Or, you can walk away from the home.
- Your lender will send out an Appraiser to assess the value of the property for loan purposes. Hopefully the home was priced correctly and there will not be a problem, but if the Appraisal comes in under value then you have one of three options: You can ask the Seller for a reduction in price. You can choose to pay the difference in cash. You can cancel the contract.
- You will need to request a Home Insurance Policy without which you will not get a loan.
- Make sure you do not incur any further debt while applying for the loan. This could severely impact your chances of receiving one.
- There will be a ton of paperwork to fill out, a lot of it time sensitive, so you need to make yourself available during the escrow process.
- Once all the contingencies have been removed, the main ones being Loan, Appraisal and Inspection, then you have basically committed to purchasing the house. The next step will be to sign the Loan Documents. They will be sent to the lender, the lender will fund and the next day title should be transferred into your name and you will be given the keys and the house is yours.
How to Prepare to Take Ownership
Generally you will take over the utilities that the Seller is using, such as gas, electric, water, etc. Arrange to have everything transferred over on the day you take possession. The Seller most likely will have canceled the services in his/her name the same day and you will not be charged to reinstate them. Also, make sure you change the locks immediately upon possession.
Buying a home is a complicated process, but your Los Angeles Realtor® is trained to navigate the complexities of it and will ensure that your journey is made as trouble-free and comfortable as possible.