We bought our condo in Los Angeles for under market value thanks to preparation and luck.
By the time I stumbled upon the listing on Redfin, a buyer was already in escrow but the seller was taking back-up offers. We submitted a back-up offer but was quickly outbid. We pretty much gave up on this property right away. But a month later, my mom saw that it was relisted because the first and second buyer both fell out of escrow. We immediately contacted the seller’s agent to find out why and it was because the previous buyers had issues with the property during inspection. We were willing to accept those issues as long as we could get it for a good price. We submitted a really low offer and at first, the seller was hesitant to even negotiate with us. But because it had been on the market for several months and she already had 2 buyers back out, we ended up agreeing on a price about halfway between our offer and the listing price.
Below is a timeline of how everything played out. Feel free to skip to the end for some final thoughts.
August 16, 2016 (my birthday!) – Saw the property on Redfin.
August 29, 2016 – Found out that the seller had already received an offer but is accepting back-up offers. We submitted an offer a little higher than listing price but was outbid.
September 29, 2016 – My mom informs me that the property has been relisted.
October 2, 2016 – Found out why it was relisted. First and second buyer changed their minds for different reasons but they both offered way above listing price. The first buyer offered $54,000 above listing price. The Second buyer offered $26,000 above listing price.
October 3, 2016 – Submitted our first offer ($39,000 under listing price).
October 6, 2016 – Received the seller’s first counter offer ($6,000 under listing price); sent our counter offer ($19,000 under listing price).
October 7, 2016 – Accepted the seller’s second counter offer ($12,500 under listing price).
October 10, 2016 – Opened 45 day escrow.
October 31, 2016 – After the inspection, the seller decided to lower the purchase price even more instead of paying for the repairs. So the final purchase price ended up being $25,000 under listing price.
November 22, 2016 – Closed escrow.
The listing price was already under market value because the seller was betting on a bidding war. Today, the property is worth about $84,000 more than what we purchased it for. But this estimate is without taking into consideration the complete remodel that we’ve done.
We got lucky because my mom happened to see that the property was relisted and told us right away. Preparation was important because we had all our paperwork ready to go and were able to move quickly. Even if we got lucky with the timing, if we weren’t prepared to move forward right away, the seller probably would’ve moved on to another buyer. But because we had everything ready, the seller could see that we were serious buyers and there was a very good chance this escrow would go through.
So if you’re in Los Angeles (or any major city) and buying a house for “a good deal” seems pretty much impossible, I just want to encourage you to be patient. Keep looking and stay on top of all the listings, even the ones in escrow. Have all your paperwork ready and make sure your real estate agent and lender are also ready to go at a moment’s notice. In the meantime, pile on the savings. You can never have too much savings. There’s probably going to be repairs needed, closing costs, remodeling costs, etc. so it helps to have a bunch of cash ready to go. And if you happen to buy a move-in ready home, you could use that cash for a bigger down payment or maybe even to buy your property completely debt free :)!