LEARNING CURVE SUCCESSFUL BUYERS MASTER THE INS, OUTS OF GETTING THE RIGHT SELLER'S MARKET.

Byline: Barbara Correa Staff Writer

Whether you're a first-time homebuyer, an upgrader or a downsizer, buying a house in Southern California involves scaling a steep learning curve and, in many cases, absorbing a few surprises.

One hurdle faced by every category of homebuyer in today's market is a lack of available real estate for sale.

``There's been an imbalance between supply and demand for a while,'' said John Karevoll, a market analyst at DataQuick Information Systems, a real-estate research company in La Jolla.

Typically, the ratio of sellers to buyers rebalances as home prices rise, he said. But this time, because of low interest rates, there are still more buyers than sellers in the market, a situation that isn't likely to change in the next six months.

Fixed-rate home loans, now around 5.85 percent for a 30-year mortgage, would have to rise to 7.5 or 8 percent before buyers would start to drop out of the competition.

Beyond the lack of inventory, buyers face other challenges in the current market: unrealistic expectations, finding the right agent, the importance of bringing cash to the table and trying to get used to the rules of a condominium association after years of owning a house free of such regulations.

Here's a look at how three categories of homebuyer in three different areas of Southern California navigated the purchase process - and how they'll do it differently next time.

First time buyer

After participating in a real estate class given by her employer last June, Michelle Spence, a single mother in Upland, discovered that becoming a homeowner was definitely within her reach.

Spence immediately began doing research, cleaning up her credit and determining her house budget: comfortably $135,000 for a two-bedroom condo or town home in Claremont, Rancho Cucamonga or Upland.

``I wanted to know exactly what I could afford to pay so my heart wouldn't be broken when I found a place I liked,'' said Spence.

As a training administrator at the Glendale office of the Los Angeles Federal Credit Union, she has access to a network of co-workers with expert knowledge of lending, so she is already preapproved for a loan.

As a member of the credit union, she needs to put only 5 percent cash down, which she plans to pay for by withdrawing from her 401(K) plan, an option she also learned about in the real estate class.

First-time homebuyers - or those who haven't owned a home within two years - can take a distribution from an IRA or individual retirement account without paying the 10 percent penalty. Taxes and penalties may still apply in the case of a 401(k) withdrawal.

After spending almost a year preparing to buy, Spence started searching a few weeks ago. Finding something to buy may turn about to be a bigger challenge than arranging the financing.

``Homes, especially condos and town homes, are going quickly,'' said Connie Gimbel, Spence's broker at Baldwin Realty in Claremont. ``When something comes available, there are immediately offers on it.''

So far, Spence hasn't seen what she wants: a two-bedroom, two-bath condo or town home in a nice neighborhood with good schools for her 10-year-old son.

``I drove by one in Chino, but I didn't go in. I didn't like the neighborhood. The building was nice, but I saw graffiti. I'm going to look more toward Rancho Cucamonga and Claremont.''

She's renting, so she can take her time to find what she wants.

``I'm 35 years old. It's time,'' she said. ``I pay $905 a month in rent. When I started looking into (buying), ... you're paying $200 a month less, or even if your (mortgage payment) is the same, the house is yours.''

The Upgrader: Long Beach

Real estate price appreciation in the last five years is allowing the Bosetti family - Diana, Ted and their two young boys - to buy a home they never would have been able to afford without it: a 1,700-square-foot, $490,000 three-bedroom in the Bixby Knolls area of Long Beach.

The house they are upgrading from has 1,200 square feet and is located in the Plaza area. Escrows on their sale and their purchase were expected to close only a week apart, requiring a speedy move - no small feat with two young children.

The Bosettis' experience shows that upgrading isn't as simple as owning a nice home in a seller's market.

The buying was definitely the tough part of the equation for the Bosettis. They got a lesson late last year in just how stiff the competition is when two of their offers, based on various financing arrangements, were trumped by buyers with cash in hand.

That's when their new broker, Pam Luckey - the Bosettis worked with several other brokers previously - insisted they sell their three-bedroom house in the Plaza area of Long Beach before making any more offers.

``You're not really taken seriously unless you have the cash to offer,'' Diana Bosetti, a writer, said she learned.

Luckey, Prudential California Realty's top seller for the Long Beach area, raised the price to $365,000 and the house sold in three days. The Bosettis then had 45 days to buy, and they were off and running.

One of the most frustrating aspects of buying in this market, Diana said, is the prevalence of sweetheart deals between brokers being made behind closed doors.

``One house we looked at, we made a full-price offer on. The agent said the people selling the property would be out of town for a while. Three days later they said they were sorry, they'd sold the house. Then we found out they sold the house to one of their (own) clients for $2,000 more. The people weren't out of town. There were no counteroffers. It was just odd.''

Another friend buying in Bixby Knolls paid his broker $5,000 on the side to secure the deal, Bosetti said.

In addition, Diana Bosetti said she and Ted attended more than one open house where they learned, after some asking, that the home already had been sold, and the agents were holding the open house just to snag new clients. After that, she always checked before looking at a house to make sure it was still for sale.

If she had it to do over, she'd begin the process by finding the agent ``who is the star of your area,'' Bosetti said. Doing the homework to find a broker who knows the local market inside and out will cut out a lot of time-wasting, she said, and doesn't add to the cost.

The Downsizer: Newbury Park/Camarillo

In many ways, the downsizer has it easier than the first-timer or the upgrader. The downsizer, looking for something cheaper and smaller, is in the enviable position of selling in a seller's market.

Still, there are difficulties - particularly for buyers who are picky about what they want.

Darlene and Tom Appleford, both in their early 60s, lived in their four- bedroom ranch-style house in Newbury Park for 33 years before selling last fall, finally giving up the responsibility of a huge yard with a eucalyptus grove. Selling was the easy part: the house sold in three days for $369,000.

The Applefords had very specific ideas about their new home: It would be a two-bedroom, two-garage unit located on a golf course.

``We wanted the privacy of some space. The view was important,'' said Darlene Appleford, an art teacher at several Conejo Valley private schools. To get it, the Applefords had to wait three months for their dream condo at Leisure Village in Camarillo to become available.

Darlene Appleford said there weren't a lot of choices in the area for condo developments that didn't feel like apartments. And buying another house was out of the question.

Darlene is unapologetic about holding out for what she wanted, and she advises other downsizers to do the same.

``Don't settle for something. If something bothers you about a location, don't buy it,'' she said.

Mike Plisky of Coldwell Banker Town and Country, the Applefords' sales agent, said the couple chose not to sell on a home-of-choice contingency, an agreement that kills the deal if the seller doesn't find another property to buy within a specific period, typically several weeks.

While the Applefords did not choose it, ``people should know that they have that option,'' said Plisky.

Even after purchasing the condo, the Applefords have spent almost six months renovating it floor-to-ceiling, staying with Tom's mother during the transformation. The renovation has put them through a crash course in dealing with condo associations, as they've had to get written approval for every exterior change they are making to the property.

``When I take over the landscaping, I have to submit a drawing. Also for changing the light fixtures,'' said Darlene. ``That's something new for us. But the trade-off is that my husband can go right to the golf course from our patio.''

CAPTION(S):

3 photos

Photo:

(1 -- color) As her broker, Connie Gimbel, locks the door on a condo that first-time home shopper Michelle Spence viewed, Spence asks about pool and laundry facilities in the complex.

James Ku/Staff Photographer

(2 -- color) The Bosettis - Diana, Ted and their two sons - look around the yard of their Long Beach home that they have sold to buy a larger, higher- price house in another part of town.

Stephen Carr/Staff Photographer

(3 -- color) At Leisure Village in Camarillo, Tom and Darlene Appleford hold hands in front of their dream condo. It took three months for it to become available. They sold their bigger house.

Michael Owen Baker/Staff Photographer