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Buying a home in Los Angeles can feel overwhelming, and sometimes even impossible. I mean the median list price of a home $997,000, according to Fed data. Interest rates might as well be a new rollercoaster at Six Flags. And the quality of homes these…is it too much to ask for a working roof and floor.
Los Angeles Real Estate is Still Hot
All jokes aside though, Los Angeles remains one of the hottest real estate markets to be a part of. While property values have been all over the place in the past 5 years, zooming out you’ll find that the median price of a single-family home in the LA metro has grown astronomically, from where it was in 1995…hovering just around $183,000.
That’s a $814,000 gain in equity, over the lifetime of the average 30-year mortgage.
Will Home Prices Keep Going Up?
While home prices, hopefully, can’t go up as much as they have over the last 30 years, we are experiencing the lowest levels of housing inventory in decades, which means the residential real estate market here in Los Angeles remains strong. And prices could continue to climb.
For this reason, don’t be surprised when you step out to shop for a home to find competition not only from other aspiring buyers, but also real estate investors, developers, Wall Street companies, and even foreign nationals.
So How Do You Win Against All-Cash Buyers?
Within this guide, I simplify the journey and share the key aspects of what you need to know—from understanding the market to touring homes– so that when the dust settles, you’re the only buyer coming out on top…with an accepted offer and closed sale.
Quick Takeaways
Research and understand the unique Los Angeles market
Define your budget, goals, and must-have features early
Get a Pre-approval letter and hire a knowledgeable real estate agent
See as many homes as you can and make offers swiftly
Be prepared for closing costs and the escrow process.
Step #1: Understand the Los Angeles Real Estate Market
Location Drives Price
They say with real estate it’s all about location, location, location, and that could not be truer. When buying a home for the first time, it’s critical for you to understand the unique LA landscape.
The best way to visualize the market is to picture clusters or different villages in a sea of concrete streets, freeways, and traffic. Each with a unique role within the greater ecosystem.
Downtown LA
Take Downtown LA, for example, which acts as a hub for corporate business, corporate entertainment, and…let’s be honest… off-campus housing for USC students.
Many people from all over Southern California pile into Downtown in the morning to work their 9-5, but then quickly leave at 5:00pm to return to their suburban communities. Leaving the area somewhat dead around the early evening.
The Westside
Then you have the Westside “village” located east of the 405 freeway, but north of the 105 freeway. It acts as a haven for influencers, techies, and work-from-home power players, who love the occasional run along the water. As a result, it has some of the priciest pieces of real estate.
North Hollywood
North Hollywood plays a unique role in providing budding comedians, actors, and people within the industry, a place to live affordably, while still being close to the studios and key venues.
I could go further, but hopefully you’re beginning to see a pattern emerge, which is each unique “village” within Los Angeles carries its own personality, which in turn carries its own value when it comes to real estate values.
STEP#2: Define Your Homebuying Goals
Everyone has different reasons why they’d like to buy a home, therefore, it’s important to be extremely clear on what those reasons are for you.
Are you trying to find your forever home?
Are you looking just for a starter home that’s close to work or school?
Is buying a home a step towards building your real estate empire?
Once you have clearly articulated why you want to buy a home, it makes it that much easier to communicate what location you want to be in, how large of a home you’d like, the minimum number of bedrooms you’d need, proximity to schools, and so on.
20 Questions to Ask Yourself Before Buying a Home
Here are 20 important questions buyers should ask themselves when deciding on the right home to purchase:
Location & Neighborhood
What city, neighborhood, or school district do I want to live in?
How important is the commute to work, school, or other daily activities?
Do I want to be close to public transportation, highways, or airports?
What type of community vibe do I want to be a part of?
What nearby amenities (parks, shopping, restaurants, entertainment) do I need close to me?
Home Features & Layout
How many bedrooms and bathrooms do I need?
Do I prefer a single-story or multi-story home?
What size of home (square footage) will fit my needs?
Is having a backyard, patio, or outdoor space important?
Do I need a garage, driveway, or additional parking?
Condition & Maintenance
Am I comfortable with a fixer-upper, or do I want a move-in-ready home?
How much ongoing maintenance or renovation am I willing to do?
Do I prefer a newer home or an older home with character?
Budget & Affordability
What is my ideal price range and monthly payment budget?
How much can I afford for property taxes, homeowners insurance, and HOA fees?
Do I need downpayment assistance, or potentially a co-borrower?
Lifestyle & Future Needs
Will this home meet my needs for the next 5-10 years?
Do I need space for a home office, gym, or guest room?
How important is it to be in a quiet area versus a vibrant, social neighborhood?
Does the home have good resale potential if I need to sell in the future?
Thinking through these questions will help you refine your search and make confident decisions during this journey.
STEP #3: Get Pre-Approved for a Mortgage
In order to purchase a home, you’re going to need proof that you can qualify financially, which is where getting a pre-approval letter becomes a necessity in the process.
How Do You Get a Pre-Approval Letter
To get a pre-approval letter, start by choosing a lender that you trust and submitting financial documents like your W2’s, tax returns (business and personal), bank statements (all pages), and credit information to them. With this information, they’ll be able to tell you the highest price of a home you can afford (of paper) based on their underwriting standards.
The key tip I like to tell my clients is to walk away from a lender with a pre-approval, as opposed to just a pre-qualification, or pre-qual letter, before starting see homes.
What’s the Difference between Pre-Approval, Pre-Qualification, and Fully Underwritten?
What is a Pre-Qualification Letter
Securing a pre-qualification (pre-qual) letter is the most basic step you can take towards buying a home, where a lender provides you an estimate of how much of a home you might qualify for based on self-reported financials. In other words, they create that letter based on information you tell, not information that has been verified, which is why pre-qualification letters carry little weight in the eyes of sellers.
What is a Pre-Approval Letter
Getting a pre-approval letter is a much stronger step than getting a pre-qual, as it requires lenders to review and verify all of the information you provided, before generating a commitment to lend you a certain amount that comes with conditions. Because this is the most common requirement when submitting an offer, it’s the best one to get.
What Does It Mean to Get Fully Underwritten
Now, if you’re interested in being extremely competitive, the most robust step you can take is to get fully underwritten, which happens when the lender fully reviews you’re your documentation, including income, assets, and credit, verifies your income, your employment, your tax returns, your credit, and issues you full approval.
The only condition is that the home you choose appraises and meets the minimum condition standards they require.
Should I Get Fully Underwritten Before Buying a Home
These types of letters are the strongest – making your offer as strong as a cash buyer’s -- but take the most time to generate.
Therefore, if the process of buying a home already feels overwhelming, consider just starting with a pre-approval letter.
STEP #4: Find a Real Estate Agent to Work With
Once you have your pre-approval letter, you’ll want to start searching for the best real estate agent to work with. Do your research and talk to as many professionals as possible to find one who understands your needs and the market. Look for an agent with positive client reviews, a track record of successful transactions, who is patient and easy to get a hold of.
Interview Questions for Your Real Estate Agent
Consider asking the agents you interview, key questions like:
· How long have you been working as an agent?
· What approach do you take to get your buyer’s under contract?
· What’s your availability?
· How do you help buyers navigate competitive markets?
· What’s your strategy when it comes to negotiating credits?
· How often can I expect to receive new property suggestions from you.
A great agent will be responsive, knowledgeable, and proactive in guiding you through the buying process while prioritizing your goals.
If you’re searching for a real estate agent now to buy your first or next home, let’s talk: 909-243-3022 or click here to schedule a call.
STEP #5: Tour Homes and Make Offers
Once you’ve found an agent…now comes the fun part. Touring homes! Go to as many showings as possible. Attend open houses early to beat the competition. During this phase of the process, stay proactive and responsive, as the best properties will move quickly.
If your agent sends you a home that checks off all your must-have features, be ready to submit an offer immediately.
Submit a Competitive Offer
One thing to keep in mind when submitting offers is to incorporate your agent's suggestions on how to make your offer competitive. Many buyers make the mistake of trying to negotiate on the ‘small’ things, while leaving money on the table. Work with your agent to craft an offer that is strong and leaves you room for whatever may happen or come up during the inspection and/or appraisal.
When you book a call with me, I share a few of the strategies I use to help buyers outbid all-cash buyers. If you're curious to learn more, text me at 909-243-3022 to learn more!
STEP #6: Power Through the Closing Process
Congratulations, your offer has been accepted, and now it’s time to close the sale. This is the part of the homebuying journey called ‘escrow’.
Understanding the Escrow Process
Escrow is a neutral third party that makes sure that both sides meet the conditions of their agreement, so that everyone gets what they want. Expect this process to take 30-45 days in California.
Home Inspections
During this time, get your home inspection done…and do it as soon as possible. A thorough inspection can uncover issues that you may not have seen the first time you toured the home. Speak with your agent to negotiate any major items that come up.
Overcoming the Appraisal
During escrow, the appraisal will be the biggest determinant of whether you will close the home, as it ensures the home's value aligns with the agreed purchase price.
If you're financing the purchase, your lender will order an appraisal through a third-party appraiser to provide an unbiased estimate of the property's worth. This appraiser evaluates the home’s size, condition, location, and recent comparable sales in the area to determine its fair market value.
If the appraisal comes in at or above the purchase price, breathe easy…the loan will proceed as planned. However, if the appraisal comes in lower than the purchase price, this is where you as the buyer will need to lean into your agent to renegotiate with the seller to make sure you’re covered and can close.
Closing Costs and Paperwork Essentials
Once you’ve successfully renegotiated the home inspection and appraisal, and have received final loan approval from your lender, you’re now getting ready to close. Work with escrow to get all remaining funds to them. In general, expect closing costs to range anywhere from 2% to 5% of the purchase price. Review all documents carefully before signing, and make sure to shop for home insurance early to avoid delaying your loan.
STEP #7: Move In and Settle Down
Congratulations! You’ve purchased your home and our one step closer to achieving your dream. Connect with your real estate agent to get the keys. Hire movers or grab a few friends to move in, and don’t forget to set up utilities, internet, and trash services in your name as soon as possible so you don’t have to sleep in a home without electricity.
CONCLUSION
While Buying a home in Los Angeles is a challenging endeavor, with the right real estate agent like myself, it can be the most rewarding one you ever make. By understanding the market, defining your goals, and partnering with the right professionals, you can navigate the process confidently. Start your journey today and take the first step toward owning a piece of this iconic city by giving me a call 909-243-3022.
FAQs About Buying a Home in Los Angeles
1. What is the first step to buying a home in Los Angeles?
Check our credit and make sure you 1) have credit and 2) that it’s above at least a 620. This is huge. I once worked with a potential buyer who entered her name into the groundbreaking CalHFA Dream for All Program, where she essentially won 20% downpayment assistance in the lottery they held. Unfortunately, though, her credit was below the minimum threshold, and she didn’t have enough time to raise it, meaning she had to let her assistance lottery ticket, expire. The moral of the story is to start by checking and keeping your score above that 620 minimum.
2. Are there affordable neighborhoods in Los Angeles?
Yes! Contrary to popular belief there are many affordable areas in Los Angeles, including Long Beach, the Valley, NoHo (North Hollywood), and parts of Central Los Angeles.
For example, it is very common and easy to find a condo in the Valley for under $400,000. Likewise, Long Beach is bursting at the seams with own-your-own condos as low as the $300,000s, these do require a bit of navigation when it comes to finding financing, so give me a call so I can connect you with the right lender.
As far as homes go, in areas close to USC, West Adams, the Valley, and Echo Park, Central Los Angeles, it’s a lot easier to find homes under $1 million than many people would expect. Even more so, as you expand outside of the city into areas like South Gate, Alhambra, Monterey Park, and Gardena.
3. How competitive is the LA real estate market?
Expect a fully remodeled, single-family home under $1 million to attract at least 12 offers. Minimum. There are things that you can do to make your offer stand out, other than price, which is something I can walk through with you during a free consult.
4. What are typical closing costs in Los Angeles?
Closing costs will typically range between 2%-5% of the purchase price. These will cover items like the escrow fees, title fees, the fees to record the new deed into your name at the County, as well as items like your appraisal fee and home inspection. As your agent, I’ll work with you to make sense of it all.
5. Are there first-time buyer programs in California?
Yes! There are so many first-time home buyer programs, and I’d highly encourage you to schedule a call to learn more.
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