One of the hardest things to do when buying a property is figuring out what price to offer. You obviously want to pay the lowest price possible. But most owners are not willing or able to take a loss. So you need to consider what the owner paid for the property.
There many different tools for finding out how much the current owner paid. Most of them either cost money or are only available to real estate professionals. In Los Angeles, though, we have a powerful tool called Zimas to help us get at the information.
Here’s a quick step-by-step guide to using Zimas to find out what the owner paid:
- Go to zimas.lacity.org
- In the white “Search By Address” overlay that pops up, type the street number and name in the relevant boxes
- Click “Go”
- On the left side of the page, click on “Assessor”
- Scroll down and check out “Last Owner Change” – that’s the date of the last sale of the property
- Then, check out “Last Sale Amount” – that’s the price the current owner paid
Caution: Remember that many property transfers take place among and between family members and friends, so sometimes the price the current owner paid didn’t reflect what the actual market value of the property was at the time of sale.
One other important thing to note: With properties that have increased in value since their last sale, often the owner will have re-financed the property to take cash out. For example: Imagine an owner who bought a house in Silverlake for $200,000 in 1993. You might think that you could offer him $600,000 and he’d be very happy to sell. But it’s possible that, somewhere along the way, he went to a bank, got the property appraised at $800,000, and took out a loan for 80% of the value, or $640,000. He can’t sell to you for $600,000, because he needs at least $640,000 to pay off the mortgage.
In future posts, I’ll discuss how to figure out how much the other guy owes and how to pick an offer price.