Question and Answer about his West Hollywood Condo

Q. I own a condo in West Hollywood. I've got it for a fair price a few years ago....with a down payment and a normal loan. However, it appears that I will need a bigger place within the next 1-2 years or sooner. I can move up....but only to a certain extent. A bigger place within the area that I want to live (westside) is just barely within the amount that I am willing pay. From the research that I've been doing....it looks like I will have a couple of options: 1. Sell my current place, pocket the money and rent. Wait for the market to drop and try to buy something that I want at that time. 2. Stay in my place and see what happens. Make do with whatever space I have and wait for the market to settle down one way or the other. 3. Rent off my place and rent something bigger for myself. 4. This is the more complicated option I guess....I can try to find a place that I like and then attempt to simultaneously sell and buy. As far as I understand, the option that I like the most is making a conditional offer for a new place, which would be based on selling my current condo. How complicated is this type of transaction? Are sellers likely to accept that type of an offer? What do I need to do if I want to go that route? Or should I just chuck that idea altogether and just sell my place. I guess this is probably the wrong place to ask this type of a question, but from everything that I've been reading, it looks like real estate will be going down over the next year....it's just a question by how much. I would really hate to buy a property now and see it's value decline by 10-20%.....From one perspective it won't really matter that much, if I can afford the payments and since I am planning to stay there for the next 5-7 years anyway. On the other hard I wouldn't want to miss out on a great place that I might not be able to afford now.....but will be able to afford in a year...Any advice would be appreciated. Thanks.

A.

Hi op,

 First off we need to remember that the 'Westside' is in its own microclimate and is not as impacted as other parts of Southern California. In fact, in the midst of all the negative media exposure pertaining to foreclosures, lack of consumer confidence, mortgage industry issues, economic issues, as well as reports of huge drops in sales volume and sales prices, the Westside is holding on quite strong. Lets look at a few statistics posted on the MLS for West Hollywood Condos. Sales volume is up a modest 3% year-to-date from 2006. Median price is up 7.7% year-to-date over 2006 as well. With days on market in October set at 52 days. All good numbers so far. In fact, most of the near by cities; Beverly Hills, Bel-Air, Westwood, Cheviot Hills, Beverlywood, Brentwood, Santa Monica and Palisades are all reporting positive numbers. So what is this? Higher sales volume than last year?... Higher median price than last year? ..But I thought the media reports all the numbers are down? 

We must remember that the Westside is a unique area with high demand, great schools, excellent climate, higher than average incomes, and is very central location. Basically its what some people call a 'Superstar' area in market performance.

 Now, having said all that... the market is still seeing some softness, even on the Westside. But its the outer extremities of Los Angeles County that drags on the overall numbers of Southern California real estate. With the condo market taking more of the hit than the single family market. In West Hollywood in particular, you must know that there is alot of newer construction going on that is increasing the units available for sale. This is putting a little bit of a damper on the resale market in West Hollywood. People seem to prefer these newer, nicer units.

So, what should you do? Without sitting down with you and going over specifics to see what might be some options with you, its very hard to give you the magic answer. Predicting the future is as impossible as walking on the sun. And for people to tell you exactly whats going to happen with real estate in the future is ludacris. All we can do is educate ourselves with as much information as we can and then come up with an educated decision. 

As some stated, if you plan to sell and buy in the same area at the same time then it could potentially be a wash. If things go down 10%, then yours will go down as well as the thing you want to buy could go down.  But again, real estate is local, and there are many areas on the westside that are not going down at all. One thing is certain. Condos are falling faster than single family homes. So it may make sense to sell your condo as soon as you can and either wait and rent or get into the best deal you can in a single family home. Also, you are very intelligent to understand that if your gonna buy and hold for a number of years than your new investment will probley make good sense.

 edit..

Oops, I forgot to answer the question directly about the procedural and contractual process of selling/buying.  You can add a provision in the listing contract that states that the sale of your condo is contingent upon you finding a suitable replacement propertie. And usually there must be a timeframe included...ie 30-45 days. And in the purchase contract there is also a provision that states that you are buying the property contingent upon selling your property. Also usually having a time frame associated with it.

Now, are sellers/buyers interested in this type of transaction? As a buyer, this might put you in a weaker position with a seller when making an offer. And if another offer comes in without this provision, you may find your self missing out on the property. As a seller, a potential buyer might not like this because they will be in limbo for a period of time while you as the seller are deciding if you can find a suitable property.

My best advice would be to try and not get into that situation where you need to put contingencies based on selling your place if you don't have to.