Buyers find hectic, fast-paced market
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by christopher.genung
- June 21, 2021
- Uncategorized
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Buyers find hectic, fast-paced market
Desire for a home in area has some throwing cash, contingencies to the wind
By Jeff Collins
After a three-year search for a house, apartment dwellers Arthur Grijalva and Michelle Moraveg considered moving back to El Paso, Texas, or living out their days renting a studio apartment.
Perhaps, Moraveg mused, they could put their first child in a dresser drawer when they start their family.
Then, after getting outbid again and again, they crafted their winning strategy for buying a Southern California home: Bid higher. Act fast. Streamline the offer.
It worked, and on May27 they moved into a cozy corner house in a leafy Burbank neighborhood.
To get it, they paid $150,000 over the asking price, waived their right to cancel based on a low appraisal or high home repair costs and closed the deal in two weeks.
“We kept waiting for (the market) to crash, and it never crashed. So we decided to bite the bullet,” Moraveg said. “You just have to accept this is what it takes to live in L.A. and be a homeowner.”
Grijalva and Moraveg are two of 87,000 “winners” in Southern California’s housing market this year, one of the most intense buying frenzies in three decades.
Market watchers say frustrated losers far outnumber the winners, with low mortgage rates, bulging numbers of millennials on the hunt and a pandemic-driven desire for bigger homes boosting demand.
Bidding wars are common. Desirable, reasonably priced homes are rare.
The number of homes on the market dropped 20%-50% this spring from last year’s levels, figures from several data firms show.
Zillow reports homes in Los Angeles and Orange counties are selling within 10 days. In the Inland Empire, the average time for a sale is eight days.
“It’s a huge challenge for buyers,” said Amy Cimetta, an agent for Vista Sotheby’s International Realty in Manhattan Beach. “Unfortunately, buyers have to remove as many hurdles as possible. Sellers are getting 10 to 20 offers. The buyers who stand out are paying all cash or removing financial contingencies.”
Interviews with agents, home shoppers and a Zillow home trends expert show it takes more than cash to win a bidding war, although that’s still the biggest factor.
Home shoppers also need to get pre-approved for financing, become adept at using real estate apps and prepare to act as soon as a home in their price range hits the market.
A lot of buyers are giving up after getting outbid over and over, agents say. Some are refinancing their current homes and remodeling.
Others are waiting to see if prices will drop, said Amanda Pendleton, Zillow’s home trends expert. But unless there’s a new crash, they risk paying even higher prices or higher mortgage rates down the road.
“Your buying power is going to be lower the longer you wait,” she said.
Pendleton noted that not all homes have bidding wars. Zillow reports 58% of homes in the L.A. metro area are selling at or below their asking price.
“There are stories of homes being bid up. But the majority are not,” Pendleton said. “So, stick with it.”
“It takes a lot of perseverance,” Cimetta added. “ … When you go the extra mile, that’s what it takes to get the property.”
Here are stories from several homebuyers who did.
A $1 million decision
Grijalva, 33, a manager with the U.S. Space Force, and Moraveg, an actor, had 15 minutes to make a $1 million decision: To bid or not to bid on a Burbank house after having just 15 minutes to see it.
In early March, Grijalva and Moraveg were among 74 groups of buyers with appointments to view an 1,800-square-foot house in Burbank with a brickmantle fireplace, hardwood floors and remodeled kitchen. Out front, the double- door entryway had beveled- glass windows, and a majestic oak tree towered over the corner lot.
The home was listed for $949,999.
The house was cute, “had good energy” and that beautiful tree in the front yard, Grijalva said.
The sellers got a dozen offers in a few days.
Studying comparable sales, Grijalva calculated the home could be worth $250,000 more than the list price. So he put in a $1.1 million offer, or $150,000 over the list price. The couple also waived their inspection since the owners had said they wouldn’t pay for any repairs. And they waived the appraisal contingency because Grijalva was confident the home was worth that much. To be even more competitive, they agreed to complete the transaction in just two weeks. Escrows typically take 30-45 days in a normal market.
The seller had just one other offer for around the same price, but it was “all cash” — meaning the buyer wouldn’t need a mortgage.
Then, Grijalva and Moraveg composed a “love letter,” describing who they were, telling about the family they planned to raise in the home and the careers they hoped to build there.
“We instantly fell in love with the cozy living room overlooking the magnificent tree in the front yard,” the letter said. “We can already envision decorating the grand tree with Christmas and Halloween decorations to get into the holiday spirit.”
They looked forward to setting down roots in Burbank and making the house “our forever home,” they wrote. They included a photo of their two dogs, Otis and Calical.
Writing love letters, popular in sellers’ markets, has fallen into disfavor in the past year because Realtor groups fear it could encourage housing discrimination. But the couple says their letter clinched the deal.
Now they had to get through escrow — and in just two weeks. They battled over the cost of termite repairs and raced to get their financing and inspections done. They estimated the home needed about $20,000 worth of upgrades.
But a low mortgage rate — just 2.25% — helped bridge the costs.
“Just the fact the interest rate was so low made it work so much better,” Grijalva said.
A low appraisal
The listing agent was late.
So Rio and Daniel Baeza walked up and down the street outside the Ontario house they had an appointment to tour, giving the home and the neighborhood the once-over.
From the curb, they liked what they saw.
“It was beautiful,” said Rio Baeza, 34, who works the night shift as an operational director for FedEx Ground. “I was just praying this would be the house for us.”
Once inside, the couple liked the home even more. It was spacious, updated and had ceiling fans throughout.
“I could just see memories being made in that home, and it brought so much joy,” Rio Baeza said.
The couple made their decision on the street outside the home right after their tour.
With three children and two dogs, the family long had outgrown their rented two-bedroom condo in Chino.
At first, they wanted to buy a new townhome, but homesites were quickly selling out and prices jumped $15,000 by the time they picked out a lot. So, they decided to shop for an older house instead, looking in the Ontario, Chino and Upland areas.
They had been approved to pay up to $550,000, and there were 25-30 homes in their price range. But they were selling fast.
“If I didn’t go that day or the next day, they were ‘sale pending,’ ” Rio Baeza said.
The first house they looked at listed for $540,000 but needed about $20,000 worth of work. And someone had died there, “which really turned us off,” Rio Baeza said.
“We were really discouraged. If this was our price range, and this is what we got, we were going to have to look at really lowering our expectations or saving more,” Rio Baeza said. “Or taking another loan out just for upgrades.”
Then, they visited the second house, a one-story home listed for $535,000. They told their agent right away they would buy it, but another buyer already had bid $558,000.
“The seller said if we could give them $560,000, they would sell it to us because we were a young couple that reminded them of when they were just starting out,” Rio Baeza said.
They won their bidding war by going $10,000 over their price cap. But they still almost lost the house.
First, the loan appraisal came in $13,000 too low, launching a new round of negotiations. The problem was solved when the Baezas’ agent, Peter Perez of Coastline Properties, waived $10,000 of his commission and the sellers came down an additional $3,000.
Then, the sellers tried to back out of the deal after their bid to buy a replacement home fell through.
“It was really scary,” Rio Baeza said. “They were trying to cancel our escrow. But the lender said that’s impossible. The house had been paid for.”
The Baezas gave the sellers an extra two weeks to find a home to rent.
On April 10, Daniel Baeza’s birthday, the family moved in.
“When we got the keys and started to have the popcorn removed (from the ceiling), that’s when it started to feel like our house,” Rio Baeza said. “When they delivered our fridge, (it hit me), this is real. We just bought a house.”
Getting there first
Joe Ramondetta didn’t believe his agent when she told him “you can’t bid under the asking price in this market.”
Not until he got outbid on three houses.
Ramondetta, 62, a property manager for a financial institution, thought sellers would counter-offer if he entered a low bid.
When he asked why the sellers of an $800,000 home didn’t counter his $730,000 offer, they said, “We got six bids.”
The next house sold for $100,000 over the asking price with 11 offers.
“I was getting very discouraged. … People were paying $50,000 to $100,000 over (the asking price),” Ramondetta said.
Finally, Ramondetta told his agent, Corine Peterson of Berkshire Hathaway HomeServices in Anaheim Hills, “I’ll do whatever you say.”
Peterson was the first to call when the next home in Ramondetta’s price range came on the market. She managed to convince the listing agent to give Ramondetta the deal — without entertaining any other offers — if she got the offer in that same day.
The only problem was she couldn’t find Ramondetta.
“I wasn’t around,” Ramondetta said. “She put little snippets together and tracked me down. She was driving around every block and looking for my car. … And then, she saw me in the window.”
“We have to get to the agent right now,” Peterson told him when he came to the door.
This time, Ramondetta offered to pay the asking price, $830,000. And after the inspection, Peterson convinced the seller to drop the price another $15,000.
“This woman is a go-getter,” Joe Ramondetta said of Peterson. “She actually got (the seller) to come down $15,000 in a market where there are five to 10 bids.”
‘Just do it!’
Elvia Del Cid was ready to give up her dream of buying a home.
People were paying ridiculous amounts, way out of proportion to their actual values, she thought.
“We can’t do this,” she told her husband, Jean Silvestre, 37, a foreman for a construction company. “It’s too much.”
But her husband kept rooting for the American dream. And her 20-yearold daughter, a student at Cal State Fullerton, got involved, searching online after classes for homes her mother should consider.
“You can do this,” her daughter kept saying.
Del Cid, 43, a children’s social worker, had been living in a Norwalk apartment for the past 20 years. About a year ago, soon after Del Cid and Sylvestre married, they started to think about buying a home since they now had two incomes. With a price cap of $550,000, they started their search in December.
They made offers on six homes but kept getting outbid, Del Cid said.
“I felt like my heart was being crushed one time after the other,” she said. “After we started getting experience and kept getting outbid, my husband said we need to find one we feel comfortable with and make a higher offer.”
Then, they looked at a three-bedroom corner house in Whittier that had an updated kitchen, granite countertops, new air conditioning, a large covered patio and a workbench in the garage.
“Elvia, this is the home,” Silvestre said.
“I didn’t want to get my hopes up, but the more I walked through the home, the more I realized it was a well-cared-for home. It was well maintained,” Del Cid said.
But the price was $599,000, or $49,000 above Del Cid’s and Silvestre’s price range.
“I couldn’t let myself get excited. I needed to do a lot of numbers,” Del Cid said.
When she finally agreed to make an offer, her agent pushed her to go higher.
“This home could be yours,” their agent said. “You have to make a higher offer because they have other offers.”
Twelve other offers, it turned out. She bid $640,000 — $90,000 above their price range.
But she knew. This would be just like the other offers. Her heart would get crushed again. She couldn’t take it anymore. Time for a pause, she thought.
The phone rang just before midnight the next day after a long day at work. Silvestre was in the shower.
“Elvia, are you still interested in the home?” her agent asked. “Yes,” she said.
“Well, they’re willing to consider you. They’re interested in you making a counteroffer,” he said.
“What do you mean, a counteroffer?” she asked.
“If you offer what they want, they’ll go ahead and make a deal,” he said.
Silvestre popped his head out of the shower: “Make it!” he said. “Just do it!”
Del Cid raised their offer to $655,000. Then she hung Daniel and Rio Baeza relax outside their recently purchased Ontario home with their children, Logen, 14, and Collin, 18 months, on June 4. The Baezas, who had been renting a condo, after months of frustration trying to buy a new townhome at the Ontario Ranch development and watching prices rise before any units became available, decided to join the hordes of homebuyers shopping for a resale house and the bidding wars that have become common.
WILL LESTER STAFF PHOTOGRAPHER
up and called her loan officer. At 2 or 3 a.m., the loan officer called back with numbers showing they could afford that price, along with a letter of approval.
Her agent called back at 9 a.m. “They’re willing to accept your counteroffer,” he said.
Then came a flurry of paperwork and electronic signatures.
During escrow, the sellers agreed to pay off the rooftop solar panels and pay for minor termite damage repairs.
On March 22, the home was theirs. They ended up paying $105,000 over their original price cap, but their low mortgage rate offsets that cost somewhat. It was the right decision, she now believes.
“We definitely overbid,” Del Cid said. “But that’s the world we live in now. It’s crazy. It’s a jungle out there.”
Source: Page A1 The Press-Enterprise (PE) (06-21-2021) by Jeff Collins
