5 Steps of Buying a House in the Bay Area
Aug 4, 2022
Buying a home is an exciting yet challenging process that takes a great deal of time and energy to complete. Not only do you have to read through a ridiculously immense amount of paperwork, but you also have to stay in constant contact with multiple people at a time. Despite the many complexities of the buying process, there are some basic steps by which one can navigate their way through it all. Here is a small summary of the steps of buying a house.
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Step One: Find a Realtor
Preferably, you will want to find one that has your best interest at heart. A good real estate agent will not only walk you through the buying process but also work beside you, going above and beyond the expectations of an agent.
An adequate agent will:
Work with you through paperwork
Guide you through negotiations
Once you have found a realtor who meets your standards, they will introduce you to lenders that they recommend.
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Questions to ask when Interviewing Realtors
Do you read disclosure packages and how can you help me figure out which homes are good and which aren’t?
What kind of due diligence do you do on homes for your clients?
How do you approach valuation on properties?
What are the main things to look out for when shopping for a home?
Step Two: Pick a Lender
Every agent has lenders that they have previously worked with that they recommend to their clients. Each one has individual items for you to fill out and do to get pre-approval. They look at various qualifications that must be met in order to acquire a mortgage. These requirements include:
Once you have met all the necessary requirements for a mortgage and are pre-approved, you are eligible to write an offer on a house. Then you can start looking.
Something for the lender stage that is important to note: Certain banks do a hard credit pull. If you are having multiple inquiries done, make sure to have it all happen in the same period of time rather than different, as happening multiple hard pulls too far apart is not good for credit. This is due to the nature of a “hard pull.” Normally, an individual gets an updated FICO score on their credit card that is easy to check. This check is called a “soft pull” or “soft inquiry.” However, when applying for a new line of credit for a mortgage or auto. Hard pulls also happen when a credit line increase is requested or if one responds to a preapproved credit card offer in the mail. With hard credit pulls comes the implication of uncertainty, as they generally indicate that debt of a particular individual is increasing. This uncertainty can negatively affect one’s FICO score, leading to a 1–10 point decrease in one’s credit score. The potential to hurt credit score is why, when doing hard credit pulls, it is wise to have them all happen in the same focused period of time.
Beyond awareness of hard credit pulls, there are a few other important tips when working with lenders and finding the right one.
Make sure your lender is communicative.
Constant contact and communication are incredibly important, as one’s mortgage rate can change after getting pre-approved. If rates are volatile enough at the time of pre-approval and writing, then a mortgage rate can change drastically. This can either be beneficial or detrimental, depending on how the mortgage rate trends are performing during a given time. These rates continue to shift and change until you are able to get into contract, at which your lender can lock in exactly what your rate will be.
2. Make sure they have a good reputation among listing agents.
A good lender affects the appealing nature of a buyer. If a lender has very low standards, and thus, has a history of lending to individuals who consistently default on their loans, then as a buyer, your profile seems less appealing to a seller and selling agent who are aware of the lender’s reputation. In a similar manner, if your lender has a well-standing reputation, it will benefit you as a buyer.
Step Three: Find a House
This is potentially one of the most enjoyable parts of the buying process. Here is where you get to look at numerous houses, attend open houses and private showings, and envision the life you wish to build in new and exciting homes. You get to go through photos, check out the interior work of lovely homes, and figure out exactly what type of place it is for which you are looking. However, there are also many factors that go into the process of finding a house. These processes can be made much easier, depending on one’s agent and attitude. They include:
Comps, also known as comparable properties are drawn up once interest in a specific home has been expressed. These comps assist with figuring out what the property should go for.
Disclosure packages that break down important details about the home prior to sale.
Sometimes, in cities outside of San Francisco, disclosures would not be sent until after signing. In this case, it is important to discuss whether you should write a “contingent” or “non-contingent” offer.
A contingent contract would, in some way, allow the buyer to step back from the contract and recover their deposit in the event that the inspections were not clean, they were unable to secure financing, or for any other reason, that called for termination of the purchase. Contingent offers are common in situations where inspections were not provided.
A non-contingent offer would not allow the buyer to get their deposit back in the event they drop out of the contract. In areas such as San Francisco, many offers are non-contingent due to the competitive nature of the market. Your agent should help you understand what writing a non-contingent offer means. It's important to thoroughly read the inspections and provided disclosures before writing a non-contingent offer.
Step Four: Write an Offer
Once a buyer has decided on a home, they can communicate this with their agent, who will then help them write an offer for a home.
The process will include the agent drafting a purchase agreement, waivers (such as contingency waivers), signed disclosure documents, a cover letter, proof of funds, and a pre-approval letter. In certain situations, sellers might not want cover letters. However, for the most part, cover letters definitely help with the deal.
If a house is “hot” (or popular) then there is a high likelihood that there are other buyers who are writing offers as well so communication with your agent about strategy and how to navigate negotiations can be crucial. With this in mind, there is never a guarantee that the offer will be accepted or countered, so it is smart for buyers to have multiple homes in mind in the event that their number one choice doesn’t work out.
Step Five: Get into Contract & Close Escrow
If you are able to “win” the deal, then the seller will sign the purchase agreement signifying acceptance of the offer, at which point you are “in contract.” In some cases, the listing agent will keep the listing “active” on the MLS, Zillow, and other real estate websites even after the offer date has passed. Generally, it is when the Early Money Deposit (EMD) is made that a home’s “active” status will be changed to “pending.” This EMD wire usually happens within 24–48 hours of contract acceptance.
Once the house is “pending,” you will be in the escrow period. During this time, an appraiser will visit the property and final documents will be sent to lenders. At this time, people will begin looking at furniture, listings agents are coordinating moving staging pieces out of the home, and cleaners get hired. Escrow on average lasts around 30 days, however, it is dependent on how fast your lender can close. Towards the end of escrow, a final walkthrough will be conducted, final documents will be signed, and the rest of the necessary deposit will be made. And at this point, the deal will officially “close” with a key handoff and you will be a homeowner!
Finding the right home is a necessary process that can take a significant amount of time. There is an incredibly large amount of paperwork, documentation, and stress through which an average buyer will have to sift through. Rather than losing too much hair over the numerous obstacles that sit between you and your dream home, don’t be afraid to reach out for help. At Atlasa, we aim to guide you through the buying process so that you get a quality home that meets your standards. Contact us today at firstname.lastname@example.org
or check out our website at www.atlasa.com
Bay Area Housing
Real Estate Agent