With mortgage rates at all time lows and home prices way below what they were a few yeas ago, Boyle Heights native Frank Gallegos decided it was finally time to jump int0 the real estate market. Last fall, after getting pre-approved for a loan, the 40-year-old, first-time buyer who rents in Hollywood started shopping for an older home within his budget – under $300,000 – across Eagle Rock, Highland Park and Montecito Heights. It soon became clear, however, that buying an Eastside home in his price range would turn out to be a bigger challenge than he expected Many of the agents representing foreclosure and short sales never bothered calling back; others wanted offers before he even stepped inside the property.
In early December, Gallegos finally made an offer on a $220,000 fixer-upper in Montecito Heights that had fallen into foreclosure. Despite a full price offer, Gallegos lost the house to a flipper who offered less but paid in cash. “It does not feel like a buyer’s market,” he said.
None of the advice he had hear from earlier home buyers – as well as episodes of House Hunters – had prepared Gallegos for the cash-rich flippers as well as the owners and agents who were unmoved by full-price offers.
Gallegos said his ideal home would be an older house with character – a porch would be nice – as well as two bedrooms and one bath. He checked out homes from City Terrace to Eagle Rock before deciding to make Highland Park his target zone. “Highland Park seemed like a nice mid-point,” said Gallegos, who works in business development and government contracts for a translation agency in Santa Monica.
But Highland Park and his price range is crowded with investors looking for run down and aging properties that could be fixed up and flipped for almost double the price. The flippers are out buying houses “for a profit – I am trying to do it because I want to live there.”
Shortly after losing the Montecito Heights house, Gallegos had his agent, Aldo Linares with Keller Williams, call up the agent of a Highland Park short sale that never bothered to call him back. The house, a Spanish-Colonial near Figueroa Street and York Boulevard, had the character he desired and was also listed for under $300,000. “It looks nicer than the other houses in that price range. It just felt like my house.”
This time, the seller’s agent called back but there was a hitch. Not only was the home a short-sale, meaning the mortgage lender would have to approve the sale in what can be a lengthy process, but the owner was insisting on meeting with each prospective buyer before making a decision. “I know that a lot of people went to see it and it got multiple offers, ” Gallegos said. “But the guy liked me. I offered just under asking.”
The owner accepted the offer in early January, leaving Gallegos and his agent to wait for a reply from the bank. Gallegos was told it could take as long as three months for the bank to make a decision. He heard back a month later: the bank had rejected the offer and would be foreclosing on the house. Gallegos remains interested in making an offer on the Spanish-Colonial depending what price the bank sets. But he’s not going to wait.
“I’m looking at houses again and hoping to find a standard sale rather than a short sale”.
Gallego’s advice for fellow house hunters:
- Get pre-approved from a bank “with a reputation for being hard-nosed” that lets your buyer know you can follow up on your offer.
- Get as much data as you can. Review sales prices and statistics on Zip Realty, Redfin or other online sources to keep up with comparable sales.
- Be Patient
- Homes sales inch up in California as prices fall. L.A. Times
Adventures in Eastside real estate are stories about the experiences of home buyers and sellers.