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The San Francisco Bay Area is a place like no other. With its booming tech industry, vibrant cultural and food scene, and an endless list of weekend outdoor activities, anyone could be easily drawn to living in the Golden city. The only catch? You need to find a home. 

Buying a property in San Francisco is no easy feat. First-time homebuyers might face hurdles that go well beyond securing the down payment of 20% of the property price. From high prices to a fast-paced competitive environment where bidding wars are no exception, it’s definitely a chaotic market to enter. 

Here are a few tips to navigate it smoothly and help you get your dream home without losing your head in the process.

Tip 1: Get your finances in order

Properties in San Francisco don’t stay on the market for long, so having all the necessary financial documents ready ahead of time can save you from some nerve-racking stress while increasing your chances of sealing the deal. This means that your loan shouldn’t be just pre-approved, but ideally underwritten. By having a letter that says you’re prepared to get the loan when sending out the offer, you’re making sure you put your best foot forward. 

According to Business Insider, 7 of the top 10 most expensive housing markets in the US are located in the Bay Area. For first time buyers, it might be difficult to secure a 20% down payment. However, there are different lenders around – some even allowing a 10% down payment – so make sure to do the research and find a mortgage that best fits your unique needs. Remember not to run up any new expenses that could affect your credit ratio and ratings – if you want to buy a new car or furniture, it’s better to do it once you move in. 

Be honest with yourself about how much you’ll be able to save for a down payment and what you can afford to pay per month for a mortgage, property tax, insurance, and potentially the homeowners association fees (should you be purchasing a condo vs. house). Likewise, think beyond closing: By keeping at least a year’s worth of these expenses, you can ensure you have all the necessary resources to pay for your home no matter what.

Tip 2: Do your homework

When exploring the San Francisco market, you might encounter some options you weren’t familiar with. Doing some research goes a long way. For example, you might find that Tenancy in Common (TIC) properties are generally older multi-unit properties that are often considerably cheaper than condos, but their ownership brings challenges. Many lenders will not provide fractional loans for TIC properties, which means that all owners are listed on the same mortgage – if one can’t pay their share one month, the others are obligated to even it up. 

Co-ops, on the other hand, are similar to condos because they both collect homeowner association dues for common areas and sometimes require approval on individual unit changes. However, they have boards that approve buyers and financing, with buyers getting shares of stock, not outright ownership. When looking for outright ownership, you might want to stick to condos or single-family homes.

But don’t just end your research there: Make sure to read about homes, common amenities, and neighborhoods. Visit as many houses as possible, see how different types of houses might look, what are the things to watch out for, and refine your preferences as you go.

Tip 3: Flexibility is a virtue

If you found your perfect house but another buyer ends up closing the deal, don’t feel discouraged. Having patience is key – and the same goes for flexibility. Make a list of your absolute “musts”; this can be the neighborhood, the quality of the home itself, proximity to work or schools, or public transportation access. These can be the minimum requirements that will make sure you go strategically about your search. 

Even when there’s an aspect about a home that you don’t like, don’t forsake it immediately. Maybe you find a great property that has a different number of bedrooms that you wanted – but there are ways to work around that – such as remodeling, or minor changes such as adding, or removing, a wall. 

The same goes for choosing the neighborhood. While you might not end up with your first or second choice, there are so many options to choose from – and you might be surprised to find some hidden gems. Just by expanding your search by a few blocks away from your dream street or neighborhood, you can find great options that you would have otherwise missed.

Tip 4: Find the right realtor

Having the right agent to help you get insight into the local real estate market, evaluate your unique needs, and help you tailor the offer is key. Look for realtors with deep knowledge about the greater Bay Area with demonstrated experience with first-time buyers. A gut feeling is also important: Your agent will help you guide an important decision, so make sure they are a good fit. 

Your agent will help you draft the perfect offer and present your case favorably. They will also use their best judgment to identify opportunities – such as helping you draft a personal letter to the seller that explains why you are so interested in their property.

In San Francisco, sellers often set a low initial asking price, looking to incite a bidding war. A good agent can help you strategize and navigate this process effectively. In other cases, they can leverage their network to help you avoid this situation altogether by identifying a property even before it appears on the market. 

With these tips, you’re in the best position to dip your feet into the waters of the San Francisco real estate market. If you’re looking to learn more about the process, feel free to contact us.

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