Buying a First Home in the San Francisco Bay Area, Step by Step

We’ve written about the home buying process many times in the past. Today, we’ll examine some of the steps that take place when buying your first home in the San Francisco Bay Area.

Buying your first house can be an intimidating experience. But with the right research and information, you can reduce the stress while achieving success.

5 Steps to Buying a First Home in the Bay Area

The Bay Area real estate market can be highly competitive. Most of the time, there are plenty of home buyers seeking properties to purchase, but not enough inventory to go around. This can make it challenging for first-time buyers, in particular.

You can improve your chance for success by understanding the process beforehand. With that in mind, here is a step-by-step guide to purchasing your first home in the Bay Area.

1. Financing and Budgeting

Pop quiz. How much can you afford to spend each month on your housing costs? If you don’t know, you have some budgeting homework to do.

Before buying a first home in the Bay Area, you want to have a pretty good idea as to how much you can afford. This is especially important for first-time buyers who are planning to use a mortgage loan. Before speaking to a lender, review your income and debt situation to determine how much of a monthly payment you can afford.

Once you’ve completed that process, you are ready to apply for a home loan. We’ve covered the mortgage application process in separate article.

It’s also wise for Bay Area first-time buyers to get pre-approved for a mortgage loan, before entering the real estate market. This helps you narrow your home search to a specific price range, which in turn can save you time and increase your chance for success.

2. House Hunting

Once you’ve established a budget and received a mortgage pre-approval letter, you’re ready to start your housing search. As mentioned above, the Bay Area real estate market can be pretty tight in terms of inventory. So you might have to extend your house-hunting process to a broader geographical range.

You probably have a first choice in terms of where you want to live. But you might not find a suitable property within budget in your first-choice location. This is why it’s good to have a second and third choice as well.

By expanding the search box, you’ll have more properties to choose from when buying a first home in the Bay Area. That means more chances to find the right house for you.

3. Purchase Offer and Negotiations

So, you’ve found a house that meets all of your needs and falls with budget. The next step is to make and offer.

Your real estate agent will handle the paperwork side of things. But you should be involved in the price-review process. In short, you want to make sure the house is worth the amount the seller is asking. You can do this by looking at other homes that have sold recently in the same area.

This kind of market research is critical when buying a first home in the Bay Area. It can prevent you from offering too much or too little, both of which could cause problems.

Most buyers put down an earnest money deposit along with their offer. This is not required, but it is expected. Skipping the deposit could result in the seller turning down your offer. True to its name, “earnest” money shows the seller that you’re serious about buying their house.

There’s also a chance that the seller might turn down your initial offer. They could also come back with a “counter” that falls somewhere between the original list price and the amount you’ve offered. You have now entered the negotiating stage of the home buying process.

This is where your budget and mortgage pre-approval come in handy. When negotiating with a seller, you have to make sure you’re not offering an amount that exceeds your budget or financing range.

4. Home Inspection and Appraisal

Many Bay Area first-time home buyers choose to have the house inspected prior purchasing. Home inspections are not required in the state of California, but it’s a worthwhile investment from the buyer’s perspective.

The inspector will review all aspects of the property and provide you with a detailed report that includes any issues or discrepancies. This gives you a much better insight into the true condition of the home, not to mention some solid peace of mind.

The home appraisal is another important part of the Bay Area first-time buying process. If you are using a mortgage loan, the lender will have an appraiser evaluate the property to determine its current market value. This is true for all types of home loans, including FHA, VA and conventional mortgage products.

If the appraiser determines that the home is worth the amount you have agreed to pay (or more), the deal can move forward. However, if the appraisal “comes in low,” you might have to go back to the seller and ask them to reduce the sale price. Or you could pay the difference out of your own pocket, by increasing your down payment amount.

The home appraisal outcome can vary from one deal to the next, depending on a number of factors. So you want to lean on your real estate agent’s knowledge and expertise, to determine the best path forward.

5. The Closing Process

Closing represents the final step when buying your first home in the Bay Area. You’ve probably heard the term “closing” in the past. But maybe you don’t really know what it involves. So let’s dig into this process.

In the Bay Area, as in most of California, the home buyer and seller can attend the closing process separately. And these days, much of the process can be handled electronically. So you don’t necessarily have to sit in a conference room across from the seller, signing a bunch of paperwork. You have your documents to sign, and the sellers have theirs. As long as it all gets completed, the deal can close.

At closing, Bay Area first-time home buyers have to sign a variety of mortgage, real estate, and tax-related documents. This is also when you pay your closing costs and other upfront expenses, typically in the form of a cashier’s check or wire transfer.

Once the closing process has been completed, you are no longer a Bay Area first-time buyer. You are officially a homeowner! The deed of ownership will transfer from the previous owner to you, and you’ll receive the keys to your new house. Feel free to enjoy some champagne, or other beverage of choice.

This article provides a basic overview for those buying a first home in the San Francisco Bay Area. In a follow-up to this article, we will offer some helpful tips and strategies to help you succeed with your purchase.

Need mortgage help? Please contact us if you have questions about the mortgage process or would like to apply for a loan. Located in the Bay Area, Bridgepoint Funding serves first-time and repeat home buyers all across the state of California. We offer a broad range of mortgage products including conventional, FHA and VA loans.