How long does it take to buy a home in Silicon Valley? There are really two questions within that one: first, how much time will be required before you’re ready to choose a home to purchase (or how many homes will you need to see), and then how much time is involved in getting the transaction closed.
Prior to this housing crisis, the national average used to be seeing fewer than 10 homes in order to make a decision. The number of homes now visited (and the time) has been rising, though. According to the California Association of Realtors, “On average, home buyers spent 8.4 weeks considering buying a home in 2009, compared with 7.2 weeks in 2008. Buyers spent an average of 10.3 weeks searching for a home with their REALTOR®, compared with 8.7 weeks in 2008.”
Often my clients need to see between 10 and 20 homes before they feel like they know the market and the choices well enough to select a home they want to write an offer on. Depending on how broad of an area they’re considering, and how much of a hurry they’re in, this varies from couple of weeks or less – or a couple of years! Clients relocating to the San Jose area often want to settle in. If they’ve owned homes before, they may have a perfect idea of what will and won’t work for them. Once I sold a Los Gatos house to a couple before the wife ever saw the property! They moved every couple of years, the husband knew his wife’s requirements perfectly and they had no trouble being expedient.
It’s much harder for first time home buyers, who may not be positive about their priorities (and ordering of them). In every market, understandably, it takes more time and exposure to listings before they’re ready to take the plunge.
Today, the process is longer than many entry level home buyers would want because there are so many multiple offers that frequently several bids will be made before one is successful. What may seem like a 2 month process from the outside (searching for a home, bidding on it, and closing on it) may really take six months or more.
Part of the time is due to a “buyer’s learning curve” for some. It seems counter-intuitive to write offers higher than list price, but if there are several other offers besides yours, that’s probably what you’ll have to do. This is even more true if you do not have a lot of cash to put down.
Another challenge for home buyers happens when friends and relatives – often far removed from the Santa Clara County real estate market – strongly advise low offers or terms that strictly favor the buyer. Beware of over the cubicle wall advice from those not actively involved in real estate, which can really cause a buyer unnecessary unease, panic, and an inability to move on good homes. Last year one buyer said to me that her relatives just didn’t understand that when there are multiples you pay more than list price, not less. “I’m just not going to discuss it with them any more”, she said, after losing out 4 or 5 times. The next time she placed an offer on a home (this one got 16 offers), she was successful, and is very happy in her new house.
Once in contract, the typical time to close is 30 days. It can be faster (a week or less) for “all cash” transactions. It can be longer (45 or 60 days) if it’s FHA or if the seller needs a longer escrow. Short sales are unpredictable. Some may close in 45 days, others in a year. If it’s a “pre-approved short sale”, 45 days may work. If not, and if there’s more than one loan, it could be very protracted. Bank owned homes usually close in a typical 30 day timeframe.
Rentbacks (also called seller leasebacks) are fairly common right now as sellers many times are buying nearby and need to do work prior to moving into the next home. (Some rentbacks are free, some aren’t – it all depends upon how you write up the contract with your Realtor.) So your move in date may not be the same as your close of escrow date.
For home buyers with clear priorities and solid grasp of what they can afford, often the “looking” part of the equation is a month or less, especially if they’ve been visiting open houses and doing research on the web. Some will be faster, some slower, but if you’re buying a home I do suggest seeing 10-20 properties before writing an offer to purchase one of them.