You’ve decided that it’s time to make a move and buy a home in San Francisco. Where do you begin with it all? I’ve been selling real estate in the city since 2002, and have represented many successful buyers. Here’s the advice I gave them when we first met:
Be completely preapproved for a loan. You’ll often be in a competitive offer situation, with buyers waiving contingencies to stand out. Make sure you’ve submitted all required documents to your lender, and consult with him or her to see what latitude you may have when it comes to, for example, waiving a loan or appraisal contingency.
Know what you can—and can’t—afford. Study comparable sales with your agent to figure out where your budget will take you. For example, if you’re seeking a three-bedroom house in Bernal Heights, know the average price for that type of home. If your purchasing power is nowhere near that, it might be a good idea to expand your geographical area and not spin wheels. Review comparable sales you could’ve seen yourself buying, and make sure your budget is in line with what you like.
Don’t get sucked into list price lures. The list-low, sell-for-more pattern has basically been a mainstay in San Francisco. If you’re preapproved for up to $1.5M, look at houses that are listed for lower. (How much lower will depend on neighborhood and other factors.) Focus more on the realistic value range of a given property.
Decide what your true purchase price max is. You may end up in a counter offer situation, faced with boosting your purchase price in order to get the home. It’s a sound idea to know how far you can go so you can negotiate accurately. How will that additional $50,000 or $100,000 affect your mortgage payments? Talk it over with your lender to avoid frantic phone calls when you’re up against a counter deadline.
Be willing to make trade-offs and compromises. I have news: Very few people find the “perfect” home. There are pros and cons, and you have to figure out what you can live with. For example, you need parking and the condo you like comes with tandem parking. Not ideal, but workable when you consider you’ll also be getting in-unit laundry, low HOA dues and outdoor space. Come to terms with the fact that San Francisco properties are not cookie cutter, have their quirks and demand careful consideration when it comes to the details.
Sit out the offer situations where you probably don’t have a chance. If your agent is telling you that the property you love has 30 disclosure packages out, it may be best to sit that one out unless you have the wherewithal to bid big and waive all contingencies. There’s nothing like losing out on multiple properties to discourage your home-buying efforts. Trust your agent to guide you toward the offer situations where you’ll have a chance.