Buy A Home

Home buying can be a stressful time, and the Bay Area housing market can present its own set of challenges. We are an expert group of local real estate professionals, here to help you navigate the home buying process, for a smooth, streamlined experience.

The Home Buying Process

Step one

Understand your financial situation

Your financial situation will have an impact on your buying options, if you’re planning to take out a mortgage for the new home. Before buying, make sure the following are in good shape:

Credit score: You’ll need a 620 or above for most conventional loans, anything lower will impact the rates you can get.
Debt-to-Income Ratio: Ideally, you’ll want to spend less than 36% of your income on debt, which includes your mortgage payment.
Down Payment: You’ll need at least 20% down to avoid mortgage insurance on a conventional loan
Closing Costs: Typically, home buyers need to pay 2-5% of the home’s price in closing costs. These are paid out-of-pocket, unless you receive a lender’s or seller’s credit, so make sure you have enough savings to cover them.

Step two

Find a neighborhood that’s right for you

Location is one of the most important factors when looking for a new home. Consider the following when deciding what area is best for you:

Home Values

You should have a good sense of your home buying budget after step one, so start exploring areas within your estimated price range.
Home value trends can help give you an idea of how your new home will appreciate in value over time. A home within your budget that can give you a nice return upon sales is ideal.
Look at how homes in different neighborhoods in your desired city have appreciated over the years to get a sense of how your house’s value can change over the years.

Local Lifestyle

After you create a list of neighborhoods that are within your budget, and have good long-term investment potential, you can look at how each will fit your personal lifestyle needs and preferences.

Conveniences, amenities, restaurants, etc.
School districts
Crime rates
Walkability and transportation options

Step three

Connect with a real estate agent

Your real estate agent will be a key resource and main ally during the home buying process. They will find and show you homes, and can also make recommendations for other services, like CPAs, lenders, and escrow companies. Once you find a house, your agent will be the one who can help you get a great deal. A good agent will be able to get you the information and guidance you need to help you find what you’re looking for.

Schedule a time to meet with and interview your potential agent, to see if they will be a good fit. Know that you can schedule showings with an agent before signing a buyer’s agency agreement. It’s a common practice, and a good way to see if an agent will fit your needs before you commit to working with them.

Step four

Get pre-approved for a mortgage

Sellers are looking for buyers who are serious and financially ready to put in an offer, so getting pre-approved for a mortgage is an important step in giving you and the seller the confidence that you’ll be able to get a loan and close the transaction at the end of the sale process.

There are many available mortgage terms, but most conventional loans are for 15, 20, or 30 years. A shorter-term will give you a lower interest rate, but a higher monthly payment. As an example, here is how the numbers break down for a home worth $685,000 (with a 20% down payment):

	15-year Mortgage	30-year Mortgage
Loan Amount	$548,000	$548,000
Interest Rate/APR	2.49% / 2.58%	3.375% / 3.391%
Monthly Payment	$3,651.43	$2,422.69

Choosing A Lender

Your mortgage lender will have a big role in the closing of your home. You can work with a direct lender, or with a mortgage broker that can help guide this part of the process. No matter what, make sure you work with a lender who can give you a full picture of your situation, and your chances of having a successful closing.

Maintaining Your Credit

Once you have been pre-approved, any changes to your finances or credit score can void your pre-approval. If you need to make a big purchase or have your credit checked, make sure to do it before you are pre-approved. Here are some tips to help keep your credit status from changing:

Avoid opening new credit card accounts
Don’t close any accounts that have been open for a long time
Make all of your credit card payments on time

Step five

Start house hunting

Finally, the fun part! Start viewing homes that fit the criteria you’ve set up for yourself, and remember the following as you are looking:

Make a list of priorities, starting with a list of everything you might want in your new home.
Rank each item based on how important it is to you, to start to separate “must haves” and “nice to haves.” No home is perfect, so decide which priorities are non-negotiable, and which ones are just nice bonuses.
Have a discussion with your agent to see if your list is realistic or not. They are familiar with the homes in your target area, and can inform you about concessions or compromises you might have to make.

Housing Inventory

The time of year when you start house hunting can impact what options are available to you. In California, there are historically more homes on the market, while in November, there are about 20% less. You may have to adjust your expectations if there are fewer houses on the market.

Step six

Make offers

So, you found a house that you really like. It’s time to make an offer to convince the seller to sell to you. Learn when to make an offer, and how to make it attractive so that the seller will accept it.

Homes in California typically stay on the market for 40 days, but there are seasonal changes where homes are sold more quickly in some months than in others. Depending on when you’re house hunting, you may need to make an offer sooner than expected. Talk to your agent about how quickly you might need to put in an offer.
Price is important, but it isn’t the only thing that can influence a seller to accept your offer. Based on the state of your market, you can make other compromises to sweeten the deal for you and the seller.

	Pros for Buyers	Pros for Sellers
Seller Concessions	Closing costs included in mortgage	Higher sale price
Repair Credits	Control over repairs	No risk of repairs going over budget
No inspection contingencies	Faster closing	Less chance of the deal falling through
Letter to the seller	Stand out from other buyers	Confidence that the home will be in good hands

Step seven

Inspections and appraisals

After a seller accepts your offer, there are some due diligence steps you will need to take to make sure the home you’re getting is what you signed up for. After inspections and appraisals, you’ll have another chance to negotiate if something unexpected comes up.

Inspections

A licensed professional checks the house for any unseen, unexpected, or potential issues. This is an important step that will give you peace of mind about the condition of the property. They should check:

Roof
Foundation
Electrical system
HVAC system
Plumbing
Radon testing (California-specific recommendation)

Appraisals

In addition to looking at the condition of a home, an appraisal looks at home’s value. If you’re getting a mortgage, lenders require an appraisal to make sure the house is worth the money they are lending to you.

Step eight

Final walk-through and closing

You’ll be able to do a final walk-through of the property when it’s time to close, to ensure that it is still in the expected condition. Though it may feel like you’re nearing the end of the buying process, it’s important to stay focused at this time, so you don’t miss anything. Make sure you go through the following checklist during the walk-through:

Inspect the walls, ceilings, and floors for cracks, chipped or peeling paint, and any other imperfections
Test all of the light switches and electrical outlets
Run the property’s water to check the pressure and temperature, and look for any leaks
Flush all of the toilets
Check to see if you have keys for all of the doors, including garage door openers and “smart” locks
Test any appliances that are included in the sale
Check the heating and air conditioning systems
Open and close all of the windows while checking that they all lock, and that there aren’t any unexpected drafts
Make sure that all trash or belongings from the previous owners have been removed

On closing day, be prepared to sign a lot of paperwork. Your agent and your escrow officer should explain every document before closing, but be sure to ask any remaining questions you have before signing.

Hiring a Real Estate Lawyer

Consulting with a real estate attorney for every part of a home sale is not a requirement in California, but hiring one can be helpful if you’re looking for an additional professional perspective.

Buying a house is a time-consuming and often complex process, but it doesn’t have to be an overwhelming one. When you’re familiar with the process and when you work with the right agent, you’ll be prepared for the home buying journey towards the home you’re looking for.