It's rather amazing to think that $1 million won't even get you into a single-family home on the Westside of Los Angeles, and other U.S. cities, these days. It is truly frustrating for a young person — or anybody, for that matter — who says they're just trying to buy their first home. Of course, condominiums are an alternative, but not everybody wants a condominium, particularly if you're looking for a backyard because you want to start a family and have a dog or other pet. Certainly, there are condominiums for under $1 million, but not a whole lot of options are available even then. It is probably safe to say that $1.2 million is the starting price range for a livable single-family home on the Westside, but be prepared for a lot of drama.
Here are the problems that we face with buyers who are looking for a home up to $1.2 million. This is the same market that developers are looking at, and developers can beat the typical buyer out easily because they can pay all cash and close without any contingencies or inspections. A buyer, rightfully so, will want to do inspections and complete due diligence, as this is their life savings at stake and a home that they plan to live in. It is important they know the home is livable and safe with no surprises. I always recommend that a buyer has thorough inspections, even if they are threatened by competing offers from developers who are planning to tear the house down. But this itself is often a deal stopper that is hard to overcome when a seller is looking for the cleanest offer possible.
Many times, a buyer needs a loan contingency as well. One saving grace is that some owners really care about helping a first-time buyer and will really lean in that direction. Perhaps the seller has a lot of emotion for the home and has raised their family there or lived there many years, cherishing many sacred memories. It might be satisfying to know the home will be enjoyed by a buyer who will love it and carry on the tradition and memories. Be prepared, however. There will often be multiple offers, and the bidding war will generally end up with the person who is offering the best terms and the highest price. Of course, there are some exceptions, and let's hope for your sake that the seller will not only look at money as the criteria for accepting an offer.
There are alternatives for buyers who are pushing their budget of $1.2 million. One option is to go to a less expensive location. For example, many LA buyers have opted to go areas south of Los Angeles, into the South Bay or away from the beach, where you can get more house for your money. For $1.2 million on the Westside, you'd be lucky to get a house that is 1,400 square feet. However, in other areas south or east of Los Angeles Airport, you are more likely to find a house in your price range that is 2,000 square feet or larger.
Also consider a property with an income-producing unit. Perhaps you will look at a duplex or a house with guest quarters above the garage, or where the garage has been turned into an accessory dwelling unit. Being mindful of this, you may be able to stretch your price to $1.3, $1.4 or $1.5 million because you then have income to offset the mortgage and help qualify for a larger loan.
Keep these things in mind when you are a first-time buyer or a buyer with a very limited budget. The options are few, but at least there are options. Will it be a tiny fixer-upper on a small lot; a more spacious, updated condo; a home with a guest unit; or a larger remodeled home? What sounds best for you? In my opinion, these options all make better sense than renting, especially if you plan to stay at least five to seven years.
For more information, please call Ron Wynn at 310-963-9944, or email him at [email protected] To find out more about Ron and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.
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