All over the United States, homes are selling like hot cakes. This is especially true in most areas of California, including the Los Angeles metro area where the median home price hit $ 725,000 in May 2021. That’s 35.5% more than the price of. median sale in the same month in 2020.
With a limited inventory in Los Angeles and a large number of interested buyers, it’s no surprise that homes are selling for ridiculous prices. But even in this scorching housing market, it can come as a shock that a renovator with tenants who don’t leave could end up selling for $ 868,000 – which is exactly what just happened.
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This fixer came at a steep price
On July 1, a 1,830 square foot duplex on Rosemont Avenue sold for a whopping $ 868,000. The property was first built in 1921, and the seller has tried to find a buyer several times in the past, but it was the latest announcement in the ultra-competitive market that ultimately did the trick.
While a duplex in Los Angeles might seem like a steal at this price point, a quick glance at the details shows why it’s surprising the home has earned so much for the seller. The description of the property reveals that the original duplex units are “in need of a complete cosmetic refurbishment”. Specifically, any buyer should replace kitchens, bathrooms, and floors, which are often the most expensive areas of a home to renovate.
And the need for a bowel renovation isn’t the only potential harm for a potential buyer. The listing agreement also states that there are long-term tenants living in the duplex units that the seller is not going to be moving. This means that the new buyer will have to deal with tenants in the space who need to be urged to leave if they really want to do that remodeling job and move in or raise the rent.
While the listing agreement specified that one of the tenants would consider a ‘Cash for Keys’ offer, that would mean that a buyer who has already spent a hefty six-figure sum to secure the property would then have to offer. After money before you even start the renovation process.
The house, of course, was also sold “as is, where is”. There are few photos on the property listing, although none are of the interior. This lack of photos is a good indicator that the interior of the property is not going to impress potential buyers.
Of course, the value may be in the land rather than in the current duplexes. The listing description states that a buyer could start over and build three new units in what is a good location near Echo Lake. But, that would mean a buyer would have to spend $ 868,000, plus tenant relocation costs – all to turn around and pay to tear down the building and build a new one.
Obviously, a buyer determined it was worth the investment – but the high price of this home doesn’t bode well for those buying property in Los Angeles.
If you’re interested in finding a property in the LA metro area, or anywhere in California or the United States, keep a cool head when it comes to making the purchase. Don’t get carried away by the frenzied seller’s market and end up taking too much mortgage or paying more for a house than it’s worth. Make sure to look at long-term trends in the area, budget that works for you, and determine if now is a good time to buy a home.