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Real estate bidding wars in Los Angeles often break out during times when inventory levels run low. (Sound familiar?) In such times, buyers have to outmaneuver one other to get the seller’s attention—and to get their offers accepted.
But how does one navigate this type of scenario? What can a home buyer do to win a real estate bidding war in Los Angeles?
In this guide, we’ll explore some of the most effective strategies buyers can use for winning a bidding war in the Los Angeles market.
The first step to winning a bidding war in Los Angeles takes place before you even start shopping for a home. Or at least it should. It involves market research.
By researching your local real estate market ahead of time, you’ll be able to make a smart and timely offer when the right property comes along. You’ll also get a feel for the overall pace and competition level within the market—two things that buyers need to know.
You can find this kind of information online for free, and it will help you prepare for a possible bidding war. It could even help you avoid a bidding war altogether, by making a stronger offer than the other buyers.
Skipping the research, on the other hand, could put you at a disadvantage in a competitive Los Angeles real estate market.
Before considering home buying in Los Angeles, create a clear plan for making an offer and negotiating, in case you encounter a bidding war. You have to know how you’re going to handle different scenarios, including the maximum amount you can offer. This is very important if you’re wondering how to win a bidding war.
Depending on the situation, you might need to use one of the following LA housing market strategies:
If a bidding war ensues, be ready to increase your offer multiple times if necessary. Bidding on a home can happen in a “round robin” fashion, with each buyer making an initial offer and revising as needed.
Just remember to stick to your budget. If a bidding war drives the price well above your comfort zone, it’s probably time to walk away. Remember that there are other properties available. So it’s okay to miss out on one.
When a home sells in Los Angeles, the final sale price will be determined by various market factors including the level of competition among buyers.
You can use this information to make a strong offer that reflects market conditions. This could help you win a bidding war, or even get ahead of one before it occurs.
That market research you did earlier? This is where it comes back into play. You can use comparable sales data to present an offer the seller will be more inclined to accept.
Real estate agents refer to these as “comps.”
Basically, you’re looking for similar homes that have sold recently in the same part of Los Angeles where you’re trying to buy. Similar, recent, and nearby—those are the three most important qualities of a good comp.
Granted, comparable sales data won’t matter as much if you find yourself in a bidding war. At that point, the best and highest offer will usually win the day. But you have to start somewhere when shaping your offer, and comps offer a logical starting point. Employing these offer strategies for LA real estate can boost your odds of a successful transaction.
In real estate, a contingency is any condition or requirement that must be met for the sale to move forward. If the contingency isn’t met, the buyer has the option to cancel the contract without losing their earnest money deposit.
Common contingencies include home inspections, appraisals, and financing approval.
But in a competitive market where multiple offers and bidding wars are common, having too many contingencies could work against you.
If you’re buying a home in Los Angeles at a time when bidding wars are common, you might want to limit your use of contingencies. When sellers have the luxury to choose from multiple offers, they often lean toward the ones with fewer “strings attached.”
Contingencies have their place in the real estate world. They can protect a home buyer’s earnest money from things that are beyond their control. But they can also make an offer less appealing to a seller, especially in a competitive real estate market.
A larger earnest money deposit can show the seller that you’re committed to the deal and not likely to back out.
In Los Angeles and the rest of Southern California, earnest money deposits typically range from 1% to 3% of the purchase price. But if you can afford to put up more than that, your offer will stand out from other buyers.
If you can accommodate the seller’s preferred timeline—whether it’s a fast close or a delayed closing to give the seller time to move—you’ll gain another advantage. Offering flexibility with the closing date could tip the scales in your favor.
Bottom line: The Los Angeles area real estate market can be pretty competitive at times, with multiple offers and the occasional bidding war. But the strategies listed above could help you make a strong offer and set yourself apart from other buyers so that winning a bidding war in the Los Angeles market is possible.
After winning a real estate bidding war in the Los Angeles market, you’ll need to make sure you can financially close on the deal. If you need financing to buy a home in Los Angeles, CA, we can help. At Sammamish Mortgage, we’ve been helping borrowers with various mortgage options since 1992. Visit our website to get an instant rate quote, or call us today to get the mortgage process started.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.