If you’re looking to buy and plan to finance a new home purchase in some Southern California communities, brace yourself for rejection.
Affluent Chinese home buyers make for stiff competition when it comes to getting the keys to your dream home in Los Angeles.
Chinese buyers only comprise about 2.5 percent of the real estate market in California, an expert told NBC4’s Gordon Tokumatsu. But many of these buyers are avoiding the hassles and paperwork that accompany a mortgage by plopping down cold hard cash.
Cities like Arcadia, San Marino, Walnut and Diamond Bar are communities that are highly coveted by Chinese nationals, said SoCal real estate agent Vincent Ruan. The Chinese elite want to invest in places where Chinese culture is readily available and schools are highly ranked.
Real estate agents like Ruan are rushing to accommodate these new "cash only" buyers and potential sellers. These "cash only" deals are attractive to both parties because no appraisals are needed and escrow only takes half the time.
So what does this mean for someone looking to buy in the LA area?
Pasadena psychologist Stephanie Law has looked at 20 different properties and made five different offers since January. She set her sights on a "fixer-upper" in Highland Park. Law planned on financing her home, and when the listing agent asked for $80,000 more than the original list price, the home was out of reach.
The real estate agent informed her there was a cash offer.
"It felt like there’s no way for me to compete against this," Law said.
As a result of the cash-is-king phenomenon, those house hunting like Law can find themselves priced right out of the market.