Buyer Resources

Congratulations!
You are on the road to buying your home!

Buying your home is probably the biggest financial decision you will make. Many steps go into buying a home and we are here to make those steps feel as effortless as possible. The first step to home ownership begins with you. Are you ready to become a home owner?

Benefits of owning

  • Greater control. True, governments and homeowner’s associations exert a lot of control over what you can do with the home you buy. But it’s nothing compared to the control landlords have on their tenants. Tenants can’t remodel their apartments, or use the common areas except as specified; the landlord can forbid them from having pets, sublessors, or more than a specified number of occupants in an apartment.
  • It’s an investment. Every dollar you put into the home you buy gets you “equity” — that is, an increase in your net worth. As long as you can sell your home for more than you paid for it, you or your heirs will get that money back eventually. And while it’s a forced investment, the effective amount you have to pay for housing decreases as time goes by. You’ll still be paying $2,500/month for your two-bedroom condo in twenty years, while equivalent rents will probably be much higher by then.
  • Legal and tax advantages. There’s no two ways about it: Property taxes are a big expense that renters don’t have. But balancing them out is a passel of income tax deductions only available to homeowners. In addition, a certain amount of your home’s equity is protected against judgements, so you probably won’t find yourself broke if you lose a lawsuit.
  • Security and pride. People who own their home tend to take better care of it, because they know it’ll be theirs for a long time. Even with San Francisco’s strong tenant-protection laws, renters can be kicked out of their apartment at any time, even if they didn’t do anything wrong. And the local market dictates whether you’ll find a suitable place, or how much you’ll pay. When you own, only political uprising or natural disaster can force you out.
  • Leverage. As you build equity, you also build your ability to borrow on the value of your home through a “home equity” loan. When you meet someone who owns several buildings, it’s often the case that they don’t “own” any of them outright, but rather have been able to use partially owned properties as security in the purchase of other properties. That’s how empires are built.

The Costs of Owning a Home

Other than your mortgage there are costs involved with owning a home that renters do not have. One of the largest is property taxes. Property taxes are re-assessed on the purchase price of a property at approximately 1.144% (this rate can change, please consult the Office of the Treasurer and Tax Collector). The tax bill is separated into two payments; one due in December and the other in April.

Other costs involved are hazard insurance (property insurance) Water, Garbage, and other utilities. Condominiums typically have Home Owner Dues which traditionally cover insurance, water, and garbage. Homeowners also should consider keeping a fund for maintenance. If the water heater or furnace breaks you will not have a landlord to call.

We supply our Buyers’ with a comprehensive one year Home Warranty to cover many of the homes systems.

Keep in mind that many of these costs can be used as deductions on your taxes, lowering your tax liability. Consult your tax advisor on how these costs can positively affect your taxes.

Choosing a Realtor

Selecting an agent, does it make a difference?

In one word, YES! We are both REALTORS®. Not all Agents are REALTORS®. REALTOR® identifies real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict Code of Ethics. We both work full time as Realtors and pride ourselves on accessibility. Since we work as a team there will always be someone available for your needs.

Between the two of us we have been owners and sellers of Condominiums, Tenancy In Commons, and Single Family Homes. We know first hand the emotions, questions, and concerns a buyer feels when making the decision to purchase their new home. We will take the time to answer your questions and listen to your concerns so that you are able to make the best decision for yourself.
What is the benefit of working with a Realtor?

The San Francisco Real Estate Market is ever-changing and unique. Some people feel that they will “go it alone”, or that they can do the job better than an agent would, or enlist the services of the “Listing Agent” giving them the edge. Besides the fact that there is no fee for using a Buyer’s Agent there are many other reasons to have an Agent working solely on your behalf. Do you know what a pre-emptive offer is and when to use it? Do you know how to include contingencies in your offer and still be competitive? What are rent backs? What are common practices concerning rent backs? Do you have a lockbox key to gain entry to vacant properties? If you answered NO to any of these find a qualified Realtor.

We will guide you through the entire process helping you find your new home. Once you are pre-approved for your financing we will meet with you and discus your needs, including type of property, amenities, and neighborhoods. We preview properties twice a week for our clients and search the Multiple Listing Service daily. We will email you detailed information on homes that fit your needs, make necessary appointments, and accompany you to view properties. Once you find the right home we will guide you through all the disclosures and negotiate the price and terms. Once an offer is accepted we will open Escrow and guide you through any inspections on the property, and renegotiate if needed. We will be in constant contact with mortgage brokers, escrow companies, and listing agents to ensure a smooth transaction and to be sure that your needs are being met. We will accompany you to the signing, explain the closing process, and finally hand you the keys to your new home!

How much can you borrow?

Many variables go into finding the right loan. Credit Score, Income, and Assets will determine what loan and amount you qualify for. Start by speaking to your bank or credit union and discus the options available to you, or we can refer you to qualified Mortgage Broker who will be able to assist you in what loan is right for you.

Pre-Qualified/Pre-Approved

If a buyer is “pre-qualified” it has been determined, with a loan officer, what price the buyer can afford based on the down payment, debts and the amount the mortgage company will approve for the mortgage. Being “pre-qualified” is only a determination of probable credit. If “pre-approved”, credit, employment and funds have been approved by the lender. In the current market it is crucial to be pre-approved. An offer has little chance of being accepted without a “pre-approval”

Choosing a Neighborhood

When you buy a home, you buy more than a building. You also buy neighbors, access to nearby shops and services, and the “feeling” that makes each neighborhood unique. Everybody has a different idea of what makes a neighborhood “good”: Your best bet is to spend a day or five driving around, sitting in cafes, and talking with people throughout the city.

The good news is that just about everybody can find a San Francisco neighborhood they like, and every neighborhood has its fans. Here are some tips to help you find the best one for you.

Important things to consider:

  • Transit. Whether you travel by car, bike or public transit, an extra 15 minutes on your commute time will add up — as will the half hour you spend looking for parking if you have a car but no garage in North Beach. The San Francisco bus and light rail system “Muni” covers the city well, but you may wait as long as 40 minutes for a bus, especially in outlying areas. Parking varies throughout the city, but generally gets better as you get away from downtown.
  • Population. Do you like peace and quiet, or the excitement of city life? In San Francisco, the two are often within blocks of each other. Nonetheless, it’s hard to escape the bustle in The Mission or North Beach, while the residential quality of The Outer Sunset encourages tranquility.
  • Housing style. It’s hard to find a condo in some parts of the city, while in others that’s nearly all you can buy. For example, condos are popular in the areas near Van Ness Avenue (on both sides), Victorian and Edwardians reign in Hayes Valley, and more-modern single-family homes fill the Outer Sunset.
  • Weather. With its hills and valleys, San Francisco is a city of “microclimates” that make temperatures vary as much as twenty degrees Fahrenheit within a few blocks. But what you’ll notice most is the difference in moisture. Neighborhoods near the ocean (The Richmond) and high on some hills (Twin Peaks) get more fog than most, while those on the eastern side (Potrero Hill, Noe Valley, The Mission) are perennially sunny.
  • Price. Prices for the same building vary wildly from location to location within San Francisco, and there are no truly “cheap” areas anymore. In general, homes cost less as you move south, low, and away from downtown: District 10 neighborhoods Bayview, Hunter’s Point, The Excelsior are comparatively affordable, as is District 2’s Outer Sunset. Prices generally increase as you move north, climb the hills, and move toward downtown: Telegraph Hill, The Marina and Pacific Heights are famously pricey.
  • Familiarity. Many buyers tend to look in the area they currently live in. We encourage buyers to “venture” out and experience different areas. Many are surprised at what previously discounted neighborhoods have to offer.

No amount of demographic detail can take the place of a stroll through San Francisco’s many neighborhoods, or the opinions of people who live there. The more you experience will only help you make your final decision.

Types of Property

Part of the search will include identifying what type of property fits your needs and budget. In San Francisco you will find several types of property for sale. Common types of residential property are:

  1. Single Family Home: A home that sits on its own deeded land. This option is appealing to many due to the privacy of not sharing floors or ceilings with other dwellings. One thing to consider is that, unlike condominiums, owners are fully responsible for the maintenance of the property. Perspective buyers of Single family homes should consider a fund for the homes systems and unforeseen events.
  2. Condominiums: Individually owned units within a building. Condominiums typically remain more affordable than single family homes (by area and size) Condominiums usually have monthly assessments called HOA’s ( Home Owner Association Dues) These typically cover common expenses of the building such as maintenance, reserves, garbage collection, water, and insurance. The HOA dues vary greatly by building and amenities. Condominiums typically have Covenants, Conditions, and Restrictions commonly referred to as CC&R’s. The CC&R’s will outline rules of the building.
  3. Tenancy in Common/ TIC’s: This is actually a form of ownership. You will typically see these in multi unit buildings that are not condos. Buyers are buying interest in a building. The goal of many of these buildings is to eventually turn the units into condominiums. Perspective buyers should be fully aware of current condo conversion laws and seek the advice of a qualified real estate attorney. We can refer you to an attorney if needed.
  4. Cooperatives: Also called a stock cooperative or co-op. A structure of two or more units in which the right to occupy a unit is obtained by the purchase of stock in the corporation which owns the building. Accordingly, there is no individual ownership of a specific unit. Ownership is represented by a stock certificate with a proprietary lease which gives the holder of the stock the right to occupy a particular apartment. Currently there are only a few lenders that lend on Cooperatives. We can refer you to a qualified lender.
  5. Multi Units: This would include property with 2 or more units. This would appeal to investors, buyers doing a 1031 tax exchange, or owner occupiers wanting to live in one unit and collect rents on the remaining units. Many variable go into purchasing multi units including; tenant status, expenses, and rents.

The Search

Now that you have your financing questions answered and you have your Realtor the search begins. Decide what you want in your new home. What neighborhoods are you interested in? What amenities do you want in your new home? Is close proximity to public transportation important? Do you need parking? How much room do you need? If you’re searching for a condominium do they have pet restrictions? Do you need outdoor space? Do you need “move in ready” or do you like the idea of a fixer?

These are all questions you will need to ask yourself when your search begins. Many times your criteria will change once the “house hunting” begins.

We will customize the process to meet your needs and personality. Some home buyers prefer to preview properties themselves, some like us to accompany them. We will send you daily updates from the MLS (multiple listing service) with details of properties you may be interested in.

Currently the market is very competitive and desirable properties move quickly. Prospective buyers are encouraged to commit themselves to the search and set time aside each week to view properties and speak with your realtor.

Writing an offer!

Once you found the right property it is time to construct an offer. In the current market many listings are seeing multiple offers, with many above the asking price. Our job is to assist you with completing a competitive offer. Many elements go into writing an offer. Although price is one aspect, terms are just as important. What are the motives of the Seller? How quickly does the seller need to close? Does the seller need a rent-back? What contingencies to include and for how long? All of these will go into making a successful offer, while protecting your interests.

Contingencies, What are they?

Contingencies are conditions included in a contract to protect the Buyers interest. Contingencies follow a timeline and allow Buyers to obtain necessary information for the purchase of property. There are several contingencies that are included in a standard offer. The primary contingencies are Financing, Appraisal, Contractor’s Inspection, and Pest Inspection. There are more depending on the property. With each contingency, depending on the information received, the Buyer will have the option to move forward, re-negotiate, or back out of the transaction. We will explain all contingencies and advise on how to compile a competitive offer and still protect your interests.

The Escrow Process

Once your offer is accepted the escrow process begins. Escrow is period between having your offer accepted and the close of the transaction. This is facilitated by Escrow companies. Escrow companies are neutral third parties that are required in the sale of Real Estate. They hold necessary deposits, supply title reports and issue title insurance. Title insurance protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner that attach before date of policy. The escrow period is determined by the contract and is typically 30 days. This of course will vary depending on the needs of both buyer and seller.

The Inspection Process

Closing Costs

Buying a home does come with costs, commonly called closing costs. Closing costs will vary. Traditionally buyers in San Francisco pay for Escrow fees including Title Insurance. There may also be prorated fees such as Property Taxes, Interest on new loan from the date of funding to the end of the month, & HOA fees. Additionally the Buyer pays for their loan fees which can vary depending if there are points or fees associated with their loan. If there are “points” (which equal 1% of the loan amount) the rough estimate is approximately 1%-3% of the purchase price. Additionally Buyers will pay for Contractor’s Inspection and Pest Inspections, if included in the purchase agreement. These inspections cost from $250-$500.

The Final Process

Once all the inspections have been completed we will contact you to make an appointment to sign your escrow instructions and final loan papers. The escrow officer will tell you the amount of money you’ll need (in addition to your loan funds) to complete the purchase. This amount will include “closing costs” such as appraisal fees, loan fees, escrow charges, advance payments on property taxes, homeowner’s insurance, title insurance premium, inspection charges and the like.

Before coming to sign escrow papers, make sure you have done the following:

  1. Identify all your lender’s requirements and make sure you have satisfied them.
  2. Obtain hazard/fire insurance. Call your escrow officer with the insurance agent’s name and telephone number. You must have your policy in place before the lender will send your loan funds to title. Condominiums should have insurance in place but Buyers are encouraged to obtain insurance for their personal property.
  3. Obtain and bring with you a cashier’s check or certified check issued by a California institution made payable to the title company in the amount indicated to you by the escrow officer when you made the appointment to sign your escrow instructions.
  4. Bring either your valid driver’s license or passport to your appointment.
  5. Before your appointment, you must decide how you wish to hold title to your new home. We suggest you consult a lawyer, tax consultant, or other qualified professional.

After the Sign-Off
After you have signed your escrow instructions, the escrow officer will give them to the lender for a final review. The review usually occurswithin a few days, after which, the lender advises the escrow officer that the lender is ready to fund the loan. If all the conditions of the escrow have been satisfied, the escrow officer will inform you of the date the escrow will close and will take care of the technical and financial details.

The Close of Escrow
This is when you will receive the keys to your new home! Close of escrow signifies legal transfer of title and occurs when the grant deed is recorded with the County Recorder. As well, the lenders deed of trust on your home records concurrently with the grant deed. Recording usually occurs within one working day after loan funds are received in escrow. Several weeks after closing, the County Recorder’s Office will mail you the original grant deed.

An Overview of Buying and Selling

Buyer:

  1. Considers purchasing a home
  2. Selects a real estate agent
  3. Determines needs and wants
  4. File loan application
  5. Views & researches target homes
  6. Makes an offer to buy

Seller:

  1. Decides to sell property
  2. Selects a real estate agent
  3. Determines needs
  4. Prepares home for marketing
  5. Agent markets the home
  6. Accepts, rejects or counters offer

Escrow

  1. Offer accepted
  2. Loan application
  3. Inspections
  4. Title search
  5. Appraisal
  6. Loan approval
  7. Closing papers signed
  8. Documents recorded
  9. Funds available to seller