Can anyone give advice on how to buy a house in Southern California (Los Angeles Area) in this crazy market?

My husband and I are trying to buy a house in Southern California. The market here is out of control...too much competition with the tax credit. We've put in several offers on some bank owned and short sale properties. All of which were shot down because someone outbid us by a ton of money. We've put in offers for up to $30,000 over asking price and still did not get it. We are getting very discouraged and are feeling like we're not going to be able to buy a home. We're thinking we need a new bid strategy. We have a VA loan and are willing to pay closing costs, but no money down. Any ideas what we are doing wrong?Can anyone give advice on how to buy a house in Southern California (Los Angeles Area) in this crazy market?
You might try multi offers on various properties that interest you to several banks. Then once you get an acceptance or some acceptance select the one that is best for you.



The banks and lenders are currently using this method, holding all bids until they get one they like.



You might also consider looking in your local paper for ';For Sale By Owners'; (FSBO) a forgotten market. Your real estate agent will not help you with these type sellers because 95% of them refuse to pay a real estate commission.



I am at a loss as to why you are offering more than the sale price of the property. If the appraised value comes in at or near the asking price you would then be required to come out of pocket for the rest, thus paying more for the house than the appraised value.



If the Appraised value of the house you decide to purchase appraise at $350,000 the house is actually costing you $380,000 with the lender giving you mortgage loan of $350,000. Now add any closing cost to the extra cost you have decided to pay for your new acquisition.



Economically this does not make sense as you are placing yourself in an immediate hole. That is like a stock broker telling you that SZN stock is worth $35.00 per share. Then you in all your wisdom say, ';Oh that is ok we will pay $50.00 for the stock. I don't understand the logic.





There are several things that could happen with the way you are doing business and none are good or in your favor.



#1 Houses are still depreciating in certain areas. Now you have paid $30K more than the asking price. If for some reason the house depreciate in value you have lost all the equity from the appraised value and then for good measure you decided to add another $30K to your depreciated property.



#2 if your house do appreciate in value by 5% you are still behind the curve by $30K because you have decided to throw $30K in as a kicker so you are still losing while those that paid market value see their property appreciating in value you are still not there.





If your real estate agent is recommending this to you, perhaps you should consider getting another real estate agent.



I hope this has been of some benefit to you, good luck.





';FIGHT ON';Can anyone give advice on how to buy a house in Southern California (Los Angeles Area) in this crazy market?
You nailed the Southern California RE market exactly. It is not uncommon to have 10-30 offers on properties, especially on foreclosures. Just keep making offers at the fair market value, even it it is $30,000 over the listing price.



Often banks will accept above market offer, but the property doesn't appraise. In that case the bank will often lower the sales price to the appraised value.



Also consider using a real estate agent that represents a couple of REO banks to show you property. That way you might get a leg up on the other buyers.