Buying a property is one of the biggest investments most people make in their lives and has long term financial ramifications. Unfortunately, for many people, the process is very time-consuming and frustrating. In addition, the San Francisco Bay Area is among the most competitive real estate markets in the world where multiple offer situations are commonplace. Just like with anything else, preparation is key. Make sure you know what’s involved in every step of the way. That’s why we’ve put together this brief overview of the home buying process in the San Francisco Bay Area.
Since buying a home is such a major life decision, so it’s important that you choose the right realtor to represent you. We recommend that you interview 2 or 3 realtors before you choose one to make sure that you are making the right decision. Some important things to consider are; how familiar are they with the specific neighborhoods and areas you are interested in? How experienced and knowledgeable are they? Are they someone that you will have a good working relationship with moving forward? We know that not every agent is right for every buyer, so it’s important for you to talk to a few people to learn about what different agents have to offer and make a confident decision of who you want representing you on one of your life’s biggest financial purchases.
We work with clients across the entire spectrum from Bay Area native to just moved here 3 months ago for a job transfer. We recommend driving, walking, and exploring each individual neighborhood to get a good sense of where you’d like to live. Some people want to be up in the hills, somewhat secluded from the hustle and bustle, yet close enough to 280 or 92 to be able to get to work and back fairly quickly. While others prefer to be down in the flats closer to one of the many downtowns in the Peninsula where they have easy access to shops, restaurants, and gyms. Either way, sit down and brainstorm on what’s most important to you and your family. Based on that you can decide which areas you would like to narrow down your search.
This is the most important step in finding a home. Because of the competitive, multi offer nature of our local real estate market, only offers that are accompanied by a pre-approval (sometimes called pre-qualification or underwritten approval) letter from a reputable mortgage lender or bank will be seriously considered. Also, it’s important that we know the exact loan amount you are approved for so that we have a maximum purchase price number set and we are looking at the appropriate properties. There’s nothing more discouraging than watching a client fall in love with a property and then having their dreams crushed because they later find out that it’s over their price range. Just like with interviewing a realtor, we recommend you talk to 2 or 3 mortgage lenders and compare them on their rates, estimated loan origination fees, and their customer service.
Once you’ve identified the areas you like and have a pre-approval letter in hand you can start seriously looking for properties. Access to homes for sale on the MLS is widely available on all of the major national portal websites like Redfin and Zillow so you are able to easily pull up what’s currently “on the market”. At the Polyak Real Estate Group we make it a point to preview properties for our clients to make sure that it is a good fit for them and get the inside scoop of any potential issues or problem areas for that particular home. Many of our clients like to go touring properties during open house times (Usually 1pm to 4pm on Saturday and Sunday) on their own and just let us know which ones they are interested in. For other clients we will happily tour properties with them (either take them in our car or caravan). Many people appreciate this because we are able to flex our knowledge and walk through the house pointing out common issues and things to look out for, we are told this is a very educational and valuable experience. In both cases you will identify the properties you are most interested in and we will start gathering all the information required to potentially write an offer.
A disclosure packet is what the seller of a property and their agent provide to prospective buyers that gives them an insight into the property itself. If you are interested in purchasing a property you must review the disclosures in detail to ensure that you understand everything involved with that particular property. Most sales in our area are “As-Is” sales, meaning that the seller is willing to disclose everything they know about the property and are unwilling to do any additional repairs or provide credits while in escrow. A disclosure packet in our area usually contains the following:
Seller Questionnaires and Disclosures
The seller answers questions in writing in regards to any work that has been done to the property, whether that work was done with permits or not, if there’s been a death on the property recently, have there been any homeowners insurance claims, are there noisy neighbors, etc. Sellers are required by the state to disclose anything of material significance to a buyer.
Property Inspection Report
The property inspection is a general inspection by a licensed professional of the entire property. The look at the foundation, electrical system, plumbing system, roof, appliances, Heater and/or air conditioning unit, etc. The inspector will make recommendations for repairs and upgrades to certain issues they find, however, since often they are not specialists, they will make a note on the report for interested parties to contact a professional who specializes in a certain field, like if they find cracks in the foundation that require further inspection, for example. This inspection report usually will not provide cost estimates for recommended repairs and costs between $400 and $1,000, depending on size of the home. When this report is provided in the disclosures it is paid for the by the seller.
Pest Inspection Report
A pest inspection, sometimes referred to as a termite inspection, is inspecting for wood damage on the property caused by termite infestation, water damage, dry rot, etc. The report describes the damage as either Section I or Section II issues. Section I issues need to be addressed sooner rather than later. These include active termite infestations, or dry rot damage to the wood structure that needs to be repaired. Section II issues are items that are deemed likely to lead to termite infestation or water damage but no evidence of such was found. An example of this would be missing grout between kitchen sink and counter that could lead to leaks in the future. Unlike the property inspection, pest inspections will often include cost estimates for repairs. These reports can be anywhere from $300-$700 depending on the size of the house.
Preliminary Title Report
Issued by a Title Company such as First American Title Company or Fidelity, this document indicates if there are any liens or easements on the property. The title company insures that the seller can convey clean title without any liens preventing a smooth transfer.
Homeowners Association (HOA) Documents
If you are considering purchasing a condominium or townhome the seller will usually include HOA documentation in the disclosures. It is important to review the size of the financial reserves for any future maintenance or repairs that will be required, whether there are any upcoming special assessments, potential litigation, or plans to increase the HOA dues. Unlike the interest on your mortgage, HOA dues are non tax deductible.
Traditionally, buyers decide how much to bid on a property by similar homes that have recently sold in the neighborhood. Because of the unique diversity between properties in most of San Francisco and the Peninsula, even in the same neighborhood, you simply cannot compare properties apples to apples. In addition to that, because of the low supply of homes for sale over the last several years, we don’t have many properties to compare it to. So while this method of valuation is certainly very important, it is just one of several tools that we use to establish an offer price that will beat the competing offers, yet not cause you to overpay for the house you want.
Once we’ve established an offer price range, it’s time to decide on the terms of your offer; more specifically, what is the timeline for your close of escrow, appraisal contingency, loan contingency, and inspection contingency? Will you be removing some or all of these contingencies? More often than not we will decide on close of escrow timeline and contingency removals at an earlier point in the process, but these may change depending on the particular property, what the seller has provided in the disclosure packet, your offer price, and the level of competition among other buyers.
Once we’ve established everything, you sign and initial the California Association of Realtors Residential Purchase Agreement (sometimes we will use the PRDS Residential Purchase Agreement, or the San Francisco Association of Realtors Purchase Agreement) which lists all the price and terms and present it to the seller. We will usually sign and initial all of the disclosures and any other related documents, and then Joe will personally go present your offer to the seller or the seller’s agent.
More often than not, seller’s do not simply choose one of the offers. There will usually be some negotiation regarding price, terms, or other small details in the contracts with one or more of the parties involved to come to an agreement. During this period, this is where you need a strong and powerful negotiator on your side who will make sure that you get the best possible price and terms that are advantageous to you. Joe has taken many classes, seminars, and read countless books on negotiation to master the art of negotiation. Joe’s has become a valuable resource to his clients in this way, having negotiated hundreds of thousands of dollars back into their pockets.
Once your offer has been accepted, you will wire or deliver a check to the escrow company. An escrow company is an independent third party which acts as an intermediary between the buyer and seller and handles the money throughout the transaction. In California, title insurance and escrow services are handled by the same company. The escrow period can last anywhere from 10 days to 45 days, depending on the type of financing. On average, if you are taking out a traditional mortgage, escrow will take about 30 days. The escrow period will include the following:
If the seller didn’t provide adequate inspections of the property and you still have your inspection contingency in place this is the time when we will coordinate inspections of the property. In this case you will be paying for your own inspections, unless the seller agrees to reimburse you.
For a bank to approve your loan they must verify the purchase price. The bank will order the appraisal from a third party company and the schedule will call us to schedule an appraisal of the property. This is usually done within the first week of the escrow period. Their report is completed within a few days afterwards. Usually you will be paying for an appraisal which costs between $400 to $800.
As soon as we enter escrow, your loan application process begins. The underwriters from the bank will request pay stubs, tax returns, bank statements, etc. Once they receive the appraisal they can continue the underwriting process. As long as you submit everything as quickly as possible there should be no delays.
Once the lender has approved you for a loan they send you the closing documents for your review. Then the escrow officer will schedule a time for you to sign all the documents. Once signed documentation is received by the lender, they will send the funds to escrow. At this point, the escrow company will disburse the funds to the seller and record the deed in your name with the county. We will provide you with the keys, garage opener, access codes, any manuals or warranties leftover, and a closing gift. After close of escrow, we will continue to assist you with moving into your new house, sending you information for vendors and local service providers, and make your move an easier one.
As a San Francisco and San Mateo County native, Joe has a very intimate knowledge of all the diverse cities and neighborhoods. In addition to this, he also spends countless hours per week studying recent sales, touring properties, and networking with other realtors to ensure that we are always best equipped to guide our clients in the right direction. Also, having been involved in hundreds of transactions in our area, we understand the different types of properties and the common issues that could arise from owning a home in a certain area. Whether one area has many homes which are built on landfill or clay soil, or another which has a lot of moisture and potential termite issues, we will inform you accordingly and ultimately save you a significant amount of money.
We firmly believe in educating our clients thoroughly before and during the home buying process. By discussing and reviewing everything ahead of time we will ensure that you are comfortable and confident in what you’re signing and what you are committing to. Joe is extremely passionate about helping first time home buyers because of the unique opportunity he has to influence someone’s life in a dramatic and positive way. The reason a real estate transaction oftentimes seems so overwhelming to people is because there is so much to learn in such a short period of time. Joe is a natural born teacher and loves to empower his clients by educating them on what our market is like, what the next steps are, and common mistakes people make that his clients can avoid. Carrying this level of knowledge allows clients to be certain in the decisions they’re making and have more time and energy to focus on the fun part of buying a home.
Throughout his years in real estate, Joe has developed a reputation among his clients and colleagues alike of high integrity, and the ability to get the job done. Because most offer situations are very competitive, a seasoned listing agent will prefer to accept an offer from someone that they’ve worked with in the past and/or who they know is easy to work with and is bringing an offer from a highly qualified, serious buyer who will close escrow on the property. Because of the relationships we’ve developed over the years, an offer from the Polyak Real Estate Group is highly regarded among our colleagues. In addition to this, our connections allow us to regularly keep an inventory of off market “pocket listings” which are not yet available to the general public. Many sellers are open to accepting offers before going on the MLS to avoid multiple showings, or open houses if they are able to get the price they want. Think one in the hand versus two in the bush. We provide this list to all of our buyer clients to potentially get them into a house before it goes on the market, avoiding competition and possibly getting a better price in the process.
Of course the price and terms of an offer are usually the most important factors for a seller, there are other intangible factors that weigh heavily as well. We already discussed the importance of our reputation, in addition to this, we help our buyers draft a cover letter to deliver with our offer, this has the effect of personalizing your offer and distinguishing it from the others - we want the sellers to fall in love with you. Also, all our offers are presented in person, to the seller when we can. All of our offers are presented persuasively and powerfully, including all of the requested documentation to ensure that even if we are not necessarily the highest bid, we still may get our offer accepted. In just the past year alone we have had several offers accepted that were not the highest ones due to our offer presentation skills.
The importance of effective negotiating skills cannot be overstated. When we’re dealing with average sales prices of $1,000,000, and some as high as tens of millions of dollars, it is imperative that you have someone on your side who can fight tooth and nail for every last dollar of your money and ensure you have the leverage at all times during the escrow period. Having read countless books and taken many seminars and workshops to sharpen my skills of negotiation, coupled with my vast experience in the real estate market, and my many legal resources who I consult with regularly, my negotiation skills are unmatched in the San Francisco Bay Area Real Estate Market.
After we help you with your purchase, it is vitally important to us that you get settled in to your new home. We know this time can be the most hectic, so we help you arrange for locks to be changed, sending you information on the local utility and service providers and reminding you to set those accounts up, we help arrange for your moving companies, and sometimes, if time permits and you need an extra hand, we’ll even come out there and help you move some couches in. Our highest goal is to create an unmatched client experience and we will do whatever it takes to make this home purchase as fun and painless as possible, that’s our guarantee!
Why Choose Us
At the Polyak Real Estate Group, we turn the stressful experience of buying a house into a fun and enjoyable one. We utilize our expertise, negotiation skills, and proactive approach to get our clients the house they want for the lowest possible price. Our team of highly skilled professionals acts as your partner throughout the entire process. We focus on developing a good relationship with our clients to ensure that we understand what their goals are, and we carve out and execute a plan to get them the results they want. What separates us...