How to Buy a House in the Bay Area? 

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|10 min read

If you’re looking to buy a house in the Bay Area, you’ll probably be a little sticker-shocked, even more so if you’re from out of the area. Housing prices throughout the region are more than double the nation’s median home price.

The San Francisco Bay Area is home to Silicon Valley and some of the world’s most valuable companies, with new tech startups forming daily. Beyond tech, there are significant opportunities in biotech, education, finance, and the arts, making it an attractive place for professionals from various fields. That means that job opportunities are strong, there’s a ton of high-earning talent in the region, and their incomes drive up housing prices, especially in desirable areas.

For example, in San Francisco, home buyers are looking at a median home price of over $1.2 million. To the north, in Marin County, the median home price jumps to $1.3M. Across the bay in Oakland, the median home price is $765,000, with some neighborhoods having comparable or higher home prices than the city. In San Jose, home prices are around $1.35M.

If you’re looking to buy a home in the bay, be prepared to search for a while and compete against multiple offers. While high interest rates in 2023 and 2024 have dampened demand, plenty of buyers remain in the market, especially in desirable neighborhoods.

What Every First-Time Homebuyer in the Bay Area Should Know

Purchasing your first home in the Bay Area will be a challenge. You want to ensure you have the right team and are prepared to make an offer when you find the right property.

The Bay Area is one of the most expensive real estate markets in the United States. Prices vary widely by location, with proximity to tech centers, quality of schools, and neighborhood amenities being key factors contributing to costs. If you’re moving to the Bay Area from out of state, be prepared for a high cost of living. Expenses extend beyond your mortgage to taxes, utilities, and general expenses.

Buying a home in the Bay Area is tough, but it’s doable. It’s all about research, realistic expectations, and, sometimes, making compromises. Keep an open mind, and be ready to jump on opportunities when they come up. There’s a lot to consider, but finding the right place in the Bay Area can be incredibly rewarding.

Cash Buyers Dominate

It’s an unfortunate reality for many first-time homebuyers that they will face competition from cash buyers. A cash buyer means the party doesn’t require a finance contingency, which many sellers prefer.

Unless you have enough money to buy a home with all cash, you must start your home search with a pre-approval letter in hand. The only way first-time homebuyers can succeed in this market is if they are pre-approved and make strong offers.

Get a Bay Area Starter House

Home prices throughout the Bay Area have historically gone up each year. If you are waiting for home prices to drop, you might get priced out of the market. Real estate agents in the area try to educate their clients about starter homes and why they should “get into the market” so that home prices don’t walk away from them. As home prices go up, your equity will also increase.

Purchasing a started house instead of waiting until you can afford your dream home allows you to build equity over time.

Every Region of the Bay Area is Different

When buying a house in the Bay Area, it’s important to understand that every part of the region is unique. Prices, communities, and lifestyles vary significantly from one neighborhood to another. Whether you’re eyeing the tech-heavy Silicon Valley, the bustling streets of San Francisco, or the quieter parts of the East Bay, each area comes with its own set of characteristics and price tag.

Dig into the details of each neighborhood you’re considering. Look at crime rates, school ratings, and local amenities like parks and shops. Lastly, think about the overall vibe of the place. Before narrowing in on a neighborhood, spend plenty of time walking around during the day and night. It’s important to enjoy and feel safe in your community.

It’s also smart to consider your commute. Traffic can be a nightmare, and public transport options vary widely. Your daily commute can make or break your living experience in the Bay Area. If you work in tech, living close to Silicon Valley might save you hours on the road each week, but it’ll cost you. Sometimes, living a bit further away gives you more bang for your buck, as long as you’re okay with spending more time commuting.

Be Realistic About What You Can Afford

The Bay Area is expensive, and you might have to compromise. You may not get the spacious, modern home you dreamed of without stretching your budget. Be prepared to consider older or smaller properties or neighborhoods you had yet to initially think of.

In a market as competitive as the Bay Area, you need to be ready to move quickly and maybe even bend on some of your must-haves. The more open you are to different options, the better your chances of finding something that works for you.

The “Listing Price” is Not the Real Price

What can often be the most frustrating experience for homebuyers is that Bay Area homes tend to sell for far above the asking price. The reason is that selling agents employ a pricing strategy that involves underpricing the property to create a bidding war.

Don’t be surprised if you see homes sell for as much as 20-50% more than their listing price. Often, these sellers will turn away offers that are at asking while they wait for their preferred number. If you see a home that appears under-priced, talk to your real estate agent about what they think its true market value is before getting excited.

Steps to Buying a House in the Bay Area

So, you already know that the San Francisco Bay Area is a difficult market. Many buyers get frustrated with the home-buying experience. To set you up for success, we have put together the steps to buying a home in the Bay Area.

Step One: Pick Your City

The Bay Area encompasses nine counties and over 100 cities. Before connecting with a real estate professional, you need to narrow your search area. Many locals will refer to parts of the Bay Area as the Peninsula, North Bay, East Bay, and South Bay.

Buyers should pick a city that offers an easy commute and home values that fit within their budget.

Step Two: Find a Top Bay Area Real Estate Agent

A seasoned agent brings a wealth of knowledge and experience, not only about the local real estate market but also regarding negotiation strategies, property evaluations, and the intricacies of the buying process in such a competitive environment.

One excellent resource for finding the right real estate professional is FastExpert. FastExpert simplifies the search for a reliable real estate agent by allowing buyers to browse a list of real estate professionals, read reviews from previous clients, and compare track records.

With FastExpert, you can ensure that you’re getting personalized guidance and expertise tailored to your specific needs and preferences. In a market where timing and knowledge are everything, having a top local real estate agent by your side can make all the difference.

Step Three: Plan Your Down Payment Strategy

The Bay Area’s expensive real estate market demands a solid down payment strategy. Given the high property values, the typical 20% down payment can seem daunting. However, accumulating a substantial down payment is achievable with the right approach and a bit of discipline.

It’s crucial to understand what’s expected in the Bay Area market. While a 20% down payment is standard, some buyers may qualify for loans that require less, such as FHA loans, which can go as low as 3.5%, or VA loans, which can offer zero down for veterans.

However, a larger down payment in the competitive Bay Area market can make your offer more appealing to sellers, especially in multiple-offer scenarios.

Look into California Down Payment Assistance Programs. There are several options available that help make closing costs more affordable for first-time home buyers.

Step Four: Get a Mortgage Pre-Approval

A pre-approval gives you a clear understanding of your budget and strengthens your position as a buyer when making an offer on a home. It shows sellers that you are serious and financially prepared to purchase their property.

Most Bay Area home buyers get financing through:

  • Conventional Loans: These are the most common type of mortgage. Conventional loans are not insured by the federal government and typically require a down payment of at least 5%.
  • FHA Loans: Insured by the Federal Housing Administration, FHA loans are an attractive option for first-time homebuyers or those with lower credit scores. FHA loans allow for down payments as low as 3.5% and are more forgiving with credit issues.

To start the pre-approval process, you must provide your lender or mortgage broker with comprehensive information about your financial situation, including income, assets, debts, and credit score. The lender will use this information to determine how much they will lend you and at what interest rate.

In the Bay Area’s fast-paced market, homes can sell within days of being listed, sometimes with multiple offers. A mortgage pre-approval letter can make your offer more appealing to sellers by demonstrating your financial readiness. It also helps you move faster once you find a home you love, giving you an edge in a competitive environment.

Step Five: Conduct Market Research and Set Preferences

Market research involves scouting for available properties and gaining a deep understanding of the local market dynamics, neighborhood characteristics, and housing trends. Start by familiarizing yourself with the broader trends in the Bay Area’s real estate market.

Look at recent sales data, average home prices in different neighborhoods, and trends in market inventory (such as whether it’s a buyer’s or seller’s market). The Bay Area encompasses diverse neighborhoods, each with its unique vibe, community, and amenities.

Consider what’s important to you—proximity to work, schools, public transportation, or specific community features. Make a list of your top neighborhoods based on these criteria.

A knowledgeable local agent can provide insights into specific neighborhoods and the overall market. They can offer perspective on which areas are up-and-coming versus those that might be overvalued, helping you make a more informed decision.

Start by exploring online real estate listings on popular platforms such as Zillow, Realtor.com, and Redfin. Most online real estate platforms allow you to set up notifications for new listings that match your criteria.

This can be incredibly helpful, ensuring you’re immediately informed when potential matches hit the market. While online listings provide a good starting point, seeing a home in person is different. Attend open houses on the weekends to get a feel for different properties and neighborhoods.

A good local buyer’s agent will help send you listings as soon as they are available. Ask your agent about potential off-market or pocket listings that meet your requirements. Maintain open and regular communication with your real estate agent.

Share your feedback on the homes you’ve seen and any changes in your preferences or priorities. Your agent can adjust the search criteria accordingly, ensuring you always see the most relevant listings.

Step Seven: Make a Competitive Offer

successful offer will require you to be competitive. In most situations, a lowball offer won’t be accepted. If you love the home and location, you’re probably not alone. Make an offer that you can afford but is realistic about the home’s value.

Flexibility is the key to a successful offer when buying a home in the bay. This includes being flexible on closing dates and contingencies. While it’s important to protect yourself with contingencies (like those for inspections, appraisal, and financing), limiting them as comfortably as possible can make your offer more attractive. Many sellers in the Bay Area will prefer offers without a home inspection contingency.

Step Eight: Proceed with an Earnest Money Deposit

Once your offer is accepted, you must pay your earnest money deposit. A higher earnest money deposit can show sellers you’re serious about your offer and financially stable. It acts as a good faith deposit, 1-3 % of the purchase price in many markets, but might need to be higher in the Bay Area to stand out.

With a purchase contract signed, you are now in escrow on your Bay Area home. Now, you’ll need to order a title search to ensure the property can be transferred free of liens, disputes, or encumbrances. In California, the process is usually done by your title company. They will review documents such as deeds, court records, property and name indexes, and other documents to ensure the title is clear.

If there are outstanding liens, they must be paid off by the seller before the property can be transferred. Any disputes over property boundaries, easements, or other issues must be resolved before closing.

Step Ten: Get Home Insurance

Homeowner’s insurance is a must-have for any homebuyer. It covers damages to your home due to fire, theft, certain natural disasters, and other specified events. It also provides liability coverage in case someone is injured on your property. When choosing a homeowner’s insurance policy, it’s important to:

  • Shop around for different rates and policies.
  • Understand coverage limits and exclusions of each policy.
  • Consider a higher deductible to save on monthly payments.

If you’re financing your home, your lender will require proof of insurance before closing. Make sure your insurance policies are in place and that your lender has the necessary documentation.

Given the Bay Area’s susceptibility to earthquakes, consider earthquake insurance. This coverage is separate from standard homeowner’s policies and must be purchased separately.

Step Eleven: Schedule Inspections and Appraisal

A home inspection helps a home buyer identify potential issues in a home. They are particularly helpful in the Bay Area, which has many older properties. However, many buyers forgo an inspection contingency so that their offer gets accepted.

Whether or not you have an inspection contingency, you should get a home inspection so that you’re prepared for any work required. If you have an inspection contingency that reveals issues, you may have the leverage to negotiate repairs, a lower price, or concessions with the seller.

A lender requires an appraisal to assess a home’s market value. The appraised value needs to meet the amount required to fund your loan; otherwise, you could have issues with financing. If your offer includes a finance contingency and the appraisal is low, you may need to renegotiate the price.

Step Twelve: The Final Walkthrough

The final walkthrough is the last opportunity to ensure that all conditions of the sale are met before you close and take possession. A final walkthrough usually takes place a day or two before closing. This step allows you to verify that the property is in the agreed-upon condition, that necessary repairs have been completed, and that the house is ready for you to take ownership.

Look for any changes in the property’s condition since you last viewed it. This includes checking for any damage that may have occurred during the move-out process. Confirm that any fixtures, appliances, or other items included in the sale are present and in working order. Refer to your contract to verify what should be included.

Step Thirteen: Closing on Your New Home

At least three days before closing day, you will receive a Closing Disclosure. This document details the final closing costs, mortgage loan terms, and how much money you need to bring to closing. Review it carefully to ensure all details are correct.

On closing day, you will sign your loan documents and your loan will be funded. Your escrow officer or closing agent will review all documents for accuracy and completeness. They’ll also ensure that all funds, including your down payment and closing costs, are accounted for before finalizing the transaction.

Buyers in California can expect to pay various fees at closing, including lender fees, title insurance, escrow fees, notary fees, and possibly prorated property taxes and homeowners association (HOA) fees. The transfer of property is completed when the county records the deed. Your escrow or closing agent will handle this step, and once recorded, you are the official owner of the property.

After all documents are signed and the deed is recorded, you will receive the keys to your new home. This is when the home officially becomes yours, marking the end of the buying process and the beginning of your new journey as a homeowner.

5 Tips for Buying a Home in the San Francisco Bay Area

Homeownership is a dream, but getting to that goal in the San Francisco Bay Area takes time, patience, and a little bit of creativity. To help you on your journey, we’ve compiled some tips from local experts to help you buy your Bay Area home.

Search Below Your Budget (Way Below)!

The listing price is not the actual asking price for many homes in the Bay Area. Seller’s agents use a pricing strategy of underpricing properties to drive up competition. If you see a home with a price that appears too good to be true, it probably is. Expect to face more competition on this property and have to pay well above asking.

Set Up Property Alerts

Homes in the Bay Area tend to sell quickly. For example, homes in San Jose sell in an average of just 21 days. In this hot housing market, you need to act quickly. Set up alerts on online platforms so you know any new listings that might meet your requirements as soon as they hit the market.

Considered Homes That Aren’t Staged or Have Bad Photos

Marketing drives competition. If a home has bad photos or isn’t staged, it will draw less attention from buyers, which is an opportunity for you. Don’t judge a book by its cover. Take the time to visit the house in person before completely writing it off.

Pay Attention to the “Saves” on Zillow

You can often tell how intense the competition is on a home by how many users have saved the listing. A home with 200 saves will likely get many offers, whereas a home with just 15 saves might get just one. This data point can help you decide how much you want to offer.

Consider Lesser-Known Neighborhoods

As you get to know different parts of the Bay Area, you’ll quickly discover some hot neighborhoods where it feels like everyone wants to live. However, some of the best deals can be found in the lesser-known neighborhoods. Take your time to explore different pockets.

Top Tip: Work With an Experienced Agent

When buying a home in the Bay Area, nothing will save you more time, money, or stress than an experienced agent. You want a real estate agent who knows your market and is connected with the community.

Buying a home in the Bay Area is hard enough. Make it easier by working with a top realtor who can expertly guide you through the process.

FastExpert helps you find a buyer’s agent who meets and exceeds these criteria. With an extensive network of top-rated real estate professionals across the Bay Area, FastExpert makes connecting with the right agent for your unique needs simple.

Don’t leave your home purchase to chance. Use FastExpert to find your ideal real estate agent and take the first step towards making your Bay Area home-buying journey successful. Your dream home is closer than you think with the right expert by your side.

Kelsey Heath

Kelsey Heath is a real estate content specialist with an extensive background in residential, industrial, and commercial property. She has been involved in the industry for a decade as a professional and personal investor, gaining a deep understanding of the market and trends. With a passion for written communication, Kelsey loves helping people understand the sometimes-complicated concepts behind real estate and is now a sought-out guest and ghostwriter.

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