Quick Sale or Fully Marketed Sale?
Real estate is a bustling industry that can offer tremendous rewards, but it also comes with its fair share of pitfalls and cautionary tales. One such tale unfolds in the story of Alta Unit 118, a property located at 200 N San Fernando RD, Los Angeles. What makes this case particularly eye-opening is that the owner sold the property for significantly less than its market value, only to watch an ebuyer investor immediately flip it for a tidy profit.
In a booming market like Los Angeles, where sellers could typically gain an extra $50,000 to $100,000 by fully marketing their properties, the story of Alta Unit 118 serves as an essential lesson. This article delves into the details and aims to provide value to home sellers, buyers, renters, landlords, and investors alike.
Key Details of the Transaction
MLS Listing: OC21175051MR
Size: 1,220 square feet
Sale Price by Original Owner: $475,000
Immediate Resale Price: $549,990
Property Features: 1 Bedroom, 1 Bathroom, $450.81 per square foot
What Happened?
The original owner of Alta Unit 118 sold the property to an ebuyer for around $475,000. An ebuyer, or electronic buyer, usually represents an investment company that uses technology to make instant offers on homes. These offers are often less than market value and can be enticing to sellers looking for a quick sale.
After the purchase, the ebuyer immediately listed the property without making any improvements. Within a short period, the unit was resold for its full market value of $549,990.
The Financial Implication
A quick calculation reveals that the original owner lost out on approximately $74,990 (ignoring transaction fees and other potential costs). In a market where sellers usually make about $50,000 to $100,000 more when selling fully marketed properties, this discrepancy is substantial.
Why Sellers Need to Beware of Ebayers
Quick Sale, Less Profit
Ebuyers offer the allure of a fast transaction, but at a price. Because they’re aiming to make a profit as quickly as possible, they’ll offer less than the home’s true market value.
No Marketing Exposure
Selling to an ebuyer bypasses the traditional marketing process, which includes listing the property on multiple platforms, open houses, and bidding wars—all avenues that could increase the sale price.
Inflated Service Fees
While traditional real estate agents typically charge a commission of 5–6%, ebuyers often have service fees that can range from 6% to as high as 14%. Although it seems like a quicker process, the costs can add up.
Why Working with a Traditional Broker Matters
Market Expertise
A broker who is intimately familiar with the Los Angeles real estate landscape can provide invaluable insights into the best time to sell, price your home, and can even help you stage it for maximum appeal.
Marketing Resources
Traditional brokers often have a variety of resources at their disposal, from professional photographers and staging services to an extensive network of potential buyers. This helps in showcasing your property to a wider audience.
Negotiation Skills
A seasoned broker can effectively negotiate terms, conditions, and prices. In a market like Los Angeles, where prices are skyrocketing, having an advocate on your side can make a substantial difference in your sale price.
Lessons for Buyers, Renters, and Investors
Market Research
Doing your due diligence and market research could save you from paying over the odds for a property or help you snap up a bargain before others notice.
Property Valuation
Always get a property valuation or appraisal. This could be a life-saver, as it was in the case of the ebuyer who bought Alta Unit 118—they knew the unit was undervalued and acted swiftly.
Timing is Everything
If you’re an investor, the tale of Alta Unit 118 demonstrates the lucrative profits that can be made through timely purchases and sales.
Get More Money, Faster, with Less Hassle
The story of Alta Unit 118 serves as a sobering tale for sellers in Los Angeles. In a bustling real estate market, failing to fully market a property can result in significant financial losses. On the flip side, this case presents a valuable lesson for savvy buyers and investors about the gains that can be made through strategic investing.
By understanding the pitfalls and advantages in the real estate landscape, sellers, buyers, renters, landlords, and investors can all make more informed decisions. Always consider working with experienced professionals, like brokers and financial advisors, to guide you through the complexities of the real estate market. This could make the difference between a regrettable loss and a highly profitable sale.
How Much is Your Loft Worth?
Get a free list of recently sold lofts, along with a list of nearby comparable properties currently listed for sale. Fill out the online form:
Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Broker DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. Prices are approximate. All information provided is deemed reliable but is not guaranteed and should be independently verified. Text and photos created or modified by artificial intelligence. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.
