12 Insider Tips for First-Time Homebuyers in the Bay Area
If you’re a first-time homebuyer in the Bay Area – one of most intense real estate markets in the country – and feeling intimidated or frustrated right now, read this first. We know it isn’t easy out there, so we’ve complied an ultimate list of insider tips to help you win.
1. Pick the right real estate agent
Don’t swipe right on the wrong agent. Date around, ask questions, and find the best match for you.
Here’s what you want:
A licensed Realtor with deep knowledge about our unique East Bay and greater Bay Area real estate market, and ideally someone who specializes in helping first-time homebuyers and making the process easy to understand.
“You’ll be spending a lot of time together, and it’s important to feel understood and at ease when speaking to your agent,” says Abio Properties Realtor Felicia Mares.
Abio Properties Realtor Krista Miller also tells homebuyers to avoid hiring an agent who represents the seller. It’s called “dual agency,” and it’s a sensitive issue in the real estate world. When the agent represents both buyer and seller, sticky questions might arise about whether the agent can realistically push for both parties’ best interests.
2. Price doesn’t always equal value
It’s important to understand that the asking price might not be anywhere near a home’s assessed value, says Abio Properties Realtor Brian McCarthy.
When housing inventory is low like it is here, some buyers are offering well above a home’s asking price in order to win the deal.
Brian recommends that every buyer work with an experienced agent who understands our intense market and can advise buyers about a property’s true value and potential future worth before bidding begins.
3. Be prepared
The motto “Be Prepared” isn’t just for Boy Scouts. Avoid the nerve-racking stress of hunting down your financial documents and trying to get loan approval after you’ve seen the house of your dreams. You could very well lose out to another, more organized buyer who was ready to submit a fully qualified offer.
Before you hit those open houses, gather your financial documents into what we call a “green file.” (Green for money, get it?) Then, meet with a lender to learn what you can afford and get pre-approved.
Also, check out our blog post about the 6 simple steps you need to take to qualify for a mortgage.
4. Use a local lender
Online mortgage lenders promise convenience and quick approvals, which is especially appealing to millennial buyers. But hopeful homebuyers should know what they are giving up by not choosing a local lender: regional expertise and relationships.
Plain and simple, mortgage professionals need to be in the Bay Area to truly understand this unique real estate market, Brian says. Also, local lenders use local appraisers and have relationships with other real estate agents, which can inspire confidence in your offer.
5. Look for creative financing
Let’s face it. Not everyone can be the traditionally perfect candidate for a standard 30-year fixed home loan.
Krista advises her first-time homebuyers to research creative financing opportunities, such as first-time buyer loans, tax credits, home improvement loans, and targeted loans for teachers, military vets, and new doctors.
Read our previous post about 9 Creative Financing Solutions here.
6. Top dollar doesn’t always get the house
Making the highest offer seems like the obvious way to win a home, but in the Bay Area the bottom line isn’t always about money.
With more bidders than homes on the market, buyers must make their offers stand out. Some get a leg up by offering to pay for inspections, increasing their down payment, paying with cash, paying the seller’s closing costs…even presenting homemade cookies along with their offer packet.
Felicia counsels her clients to be prepared to make things easy on the seller. “For example, pay for your own home warranty instead of asking the seller to cover the costs (I always purchase this as a gift for my buyers), or be flexible with your timeline, depending on the seller’s needs,” she says.
Abio Properties co-founder and broker Cameron Platt also tells clients to draft a love letter (a.k.a. cover letter) to the seller that is “filled with humor and humanity, seeking to create a shared connection.”
Write a one-page letter to introduce yourself and explain why you fell in love with the home and what kind of life you envision creating there. Tug on the heartstrings! Some buyers include a personal photo (one family we know is convinced a pic of their puppy sealed the deal) and even videos.
Get our Love Letter Do’s and Don’ts here.
7. You have a right to conduct a physical property inspection
Don’t write off your right to hire experts for pest, roof, foundation and other specialized inspections – even on new builds.
You wouldn’t buy a car without checking under the hood, so why would you do it for a house, the most expensive thing you’ll probably ever own? Ask your real estate agent to recommend their most trusted inspectors.
8. Consider lesser-known neighborhoods
Buying a home in the Bay Area doesn’t have to be scary or suck you dry if you pay attention to the “hidden” pockets of affordable homes.
Choose an agent with serious local knowledge – someone who knows more than the “name brand” neighborhoods and can point out lesser-known spots in Saranap, Concord, Martinez, Vallejo, Pacheco and others that sound far out but have great amenities and reasonable BART and ferry access into San Francisco.
9. There is no “perfect” house
“No matter what your price range is, there are always going to be tradeoffs you will have to make in our competitive environment,” Jeanine says.
“It helps to consider these ahead of beginning your search. What is included in your list of non-negotiable ‘can’t live without’ criteria? What will plunge you into despair if you had to buy a house with a certain feature? (For me it would be a house with very little natural light). The clearer you are about the things on these lists the more content you will be with your final home selection.”
If you are eyeing a true fixer-upper, prioritize and assess the costs of making it your dream home. Abio Realtor Nicole Platt says she helps her clients create a list to determine if a home is worth bidding on and how much to offer. When should the furnace be replaced versus fixing the roof? Can you live with the dinky galley kitchen for a few years? Does your property’s sewer lateral line need to be brought to compliance (replaced) as part of a remodel? (Most of Alameda County requires PSL compliance, which can get pricey.)
10. Take the plunge
Abio Properties Realtor Mariah Bradford says her top tip for first-timers is “lose your virginity.”
“And by that I mean, write a stinking offer on a house!!!” Mariah says. “Take the plunge. Write a totally lowball offer on a house you know you will not possibly get at that price (although you would be thrilled if you did!) Go through the experience of Docusign and choosing appropriate contingency periods. Read the disclosure package when it actually means something. Get your feet wet with the fear and anxiety of experiencing first hand an offer date, and hopefully even a counter offer!”
And you never know. You might have beginner’s luck and actually win with that first lowball offer, just like one of Mariah’s clients who closed escrow this week.
11. Don’t forget about closing costs
You scrimped and saved for the down payment. But did you remember to budget for closing costs?
Closing costs are those expenses associated with the purchase and sale, such as taxes, title insurance, appraisal, recording and lender fees. We recommend that Bay Area homebuyers be prepared to pay about 3 percent of the offer price.
12. Your heart will be broken as a first-time homebuyer
“Never fall in love with a house until we hand you the keys.”
That’s what Krista warns her first-time buyers.
Obviously, you should like a home A LOT if you are making an offer. But Krista says brace yourself for possible hiccups that might doom the deal. Know that your heart could be broken once, twice, or three times before you score a win.
But you will get that win. Ultimately, patience will be your best strategy.
If you have questions about buying your first home in the East Bay, contact any of our Abio Properties real estate experts at 888-400-ABIO (2246) or firstname.lastname@example.org.