Home buying is challenging for everyone in Silicon Valley: prices are high, inventory is low, and homes sell fast and usually with multiple offers, so decisions must be made quickly. Additionally, all the information on properties for sale is given up front, so San Jose area real estate consumers must read and digest hundreds of pages of inspections, disclosures, and reports for each house which is a serious contender. Most of the time, prospective buyers don’t get the first home on which they bid, so it’s a painful process which may be repeated a few times before success is had.
If you are someone who wants to be decisive without taking 6 months and 5 offers to get into a home, there are ways to wisely shorten the learning curve and the process generally. Sometimes people relocating here for work don’t want to rent and then buy – they want to buy quickly so that they can get kids into schools, establish neighborhood ties and generally begin their life here fully without having to prolong the house hunt. Sometimes that is not the case, it’s just a buyer who doesn’t want to make house hunting his or her main hobby for the forseeable future. No matter the reason, here are some ways you can speed up the process.
First, list your priorities: things you must have, things you’d like to have, things you do not want, things you absolutely will not accept.
Second, rank them in order. (Often certain things will tend to go together, such as better schools and lower crime.) This part can be difficult but is extremely important. Every home purchase involves compromise on something, whether it’s size, condition, location, walkability, price, schools, etc. Home buyers may find themselves with tradeoffs, so this is where you must have your ranking of priorities set. For instance, perhaps
- you can get one more bedroom if you’re willing to buy on a slightly busier street OR
- that same home might be remodeled from top to bottom if it backs to high voltage power lines OR
- you could buy a 1200 SF house in downtown Los Gatos that needs to be rehabbed or you could get 1800 SF of livable home for the same amount 4 miles away
- you could have a short commute and buy a condo or a 45 minute commute and get a house
Frequently, people struggle with ranking. I have often heard people say “I want everything on my priorities list”. For almost everyone, eventually, something will have to give, so the sooner you know where you will compromise, the better. Often home buyers who want to purchase in Cupertino, Sunnyvale, or Mountain View recoil in horror when they find what their money can buy there – and end up purchasing in Los Gatos, Cambrian, or Almaden instead, resulting in the longer commute but nicer home for the money. To be successful, it is crucial to rank, so the sooner you can do it, the better.
Third, hire a good Realtor early on. A lot of home buyers in the South Bay are running around, looking at open houses but getting no personal, professional guidance. They may not understand what a good buyer’s agent can do for them. They may incorrectly believe that a Realtor working with a buyer is just a glorified driver, taking them from home to home and then getting a commission when something is bought. I’ve written about this misperception (and the idea that some buyers have that “everything is on the web” so a buyer’s agent isn’t needed) but would like to simply state that this is an expensive and time-wasting misperception.
A good buyer’s agent will help streamline everything by helping you to narrow your field of vision and focus on areas that are most likely to work for your particular ranking. A good buyer’s agent will introduce you to reputable, reliable lenders, inspectors, and vendors. A good buyer’s agent will help you to identify red flags in the homes you see or the reports you read. And a good buyer’s agent will help you tremendously with pricing and the contract work.
Please note: there are about 16,000 members of the local multiple listing service, which covers Santa Clara County, San Mateo County, and Santa Cruz County. That’s a lot of choice when it comes to whom you might hire. As in every business, real estate professionals are not all equally experienced or skilled. Hiring a good sales person to guide and assist you doesn’t cost more than hiring a poor one, so do your due dilligence when you hire!
Fourth, put your financial house in order. It will be necessary for you to provide “proof of funds” of your downpayment (or all cash offer), and it will be best if your money is not in 100 different accounts and in 3 different countries. Of course you can buy with your money overseas, but with multiple offers, you want to give the sellers and the listing agent confidence that you can perform, and having your cash in US dollars is a help. Get preapproved with a local, reputable mortgage banker or mortgage broker.
Fifth, have realistic expectations. This isn’t easy, but it can be done if you work with your Realtor to understand the market trends. A common mistake is to look at the list price of homes for sale and to believe that the sale price will be the same, or close to it. In many areas, homes are selling for 10-25% over list price and with few or no contingencies. We are hearing about a cooling market in Silicon Valley, but that seems to mean that we will have 4 offers on a hot property and not 12 offers. Even with the change, it’s still a seller’s market – just not as deep. If you bid and miss the mark, ask your Realtor to try to find out how far off you were. I’ve had some home buyers who habitually underbid by 5%, time and time again. When that kind of pattern emerges, it’s easy to fix: decide on your number and add 5%. No, it won’t feel good, but it will probably work if you’re consistently off by the same amount.
Sixth, understand that it will be emotional to bid and to lose, but also to win in multiple offers. This may seem counter-intuitive, but “winning” the house in the current climate usually means your offer was stronger (best price & terms combination) than all the others. Realizing that no one else came in as high or strong as you can be really upsetting for some, and buyer’s remorse can set in, particularly if it’s your first or second attempt at buying a home here. Emotions run high with home buying everywhere, but perhaps no where more than here. Have friends, family or others with whom you can talk through some of these highs and lows so that disappointments don’t hold you back and neither do your successes.
Check out the current Santa Clara County market through the map below: