The Bay Area Home Buying Guide
How Bay Area pricing actually works, so you stop losing offers you should have won.
Read this part even if you read nothing else
In the Bay Area, a list price is usually a strategy rather than a statement of value.
Some listings are priced under market deliberately, to create competition and drive the number up through multiple offers. Others are aspirational and will sit for two months before a cut. Both look identical in a search app.
If you take list prices at face value, one of two things happens. You overpay on the aspirational one. Or you never even tour the underpriced one, because you assumed the final number would be out of reach.
Almost everything else in this guide follows from that single fact.
1. The two numbers, and why they are not the same
There is what a lender will approve you for, and there is what you can carry without resenting the house. The gap between them is usually large, because a lender is calculating a ratio rather than accounting for your actual life.
Start from the monthly figure you are genuinely comfortable with. Include property tax, insurance, and HOA dues if it is a condominium. Then work backwards to a purchase price.
Then get pre-approved, not pre-qualified. Pre-qualification is a conversation. Pre-approval is a lender having actually looked at your documents, and in a competitive situation it decides whether your offer gets read at all.
2. The Bay Area is not one market
It is a collection of micro-markets that behave very differently from each other, and this is the most misunderstood thing about buying here.
Two homes that look almost identical online can have completely different outcomes depending on the street, the school boundary, the layout, the block, and how the house actually shows in person. None of that is visible from a listing.
Practically, this means county-level or even city-level research will mislead you. The useful unit is smaller than you think.
3. Who is actually working for you
The listing agent works for the seller. At an open house, the friendly person answering your questions has a legal duty to somebody else. That is not a criticism of them, it is simply how representation works.
Before an agent shows you homes, you sign a California Buyer Representation Agreement. It sets out what they do for you, how long it runs, and how they are compensated.
Compensation is negotiable and agreed between you and your agent. It is not fixed, and no rule, association or custom sets it. If anyone tells you otherwise, they are wrong.
4. An offer is not just a price
In a competitive situation the terms frequently matter more than the final number on the price. What goes into a strong offer:
- Price, informed by what actually sold nearby rather than by the list price.
- Earnest money. Typically around 3% of the purchase price in my transactions, held by escrow rather than by the seller. It is your money and it is applied to your purchase.
- Contingencies. These are your exits: inspection, appraisal, loan. Their length is negotiated in the contract. Shortening them strengthens your offer and increases your risk, and you should never shorten one without understanding exactly what you are giving up.
- Closing date, matched to the seller's situation where you can. This is free leverage and it gets ignored constantly.
Read the disclosure package before you write, not after. That is how you get to be fast without being reckless, and speed is where most buyers lose.
5. Inspections, disclosures, and the appraisal
California sellers have extensive disclosure obligations, so you will usually receive a substantial package. It runs to hundreds of pages and it is written to protect the people who produced it.
The job is to work out what is normal for a house of that age and what is a genuine problem. A fifty year old building with wall furnace heat and no central air is a building of that age, not a defect. A foundation note is a different conversation.
On the appraisal: if you have gone over asking, it can come in below your contract price. That gap has to be covered, renegotiated, or it ends the deal. This is not rare here, and it should be discussed before you write an offer over asking rather than after.
6. Closing, and one serious warning
California closes through escrow and title rather than through an attorney at a table. Escrow is a neutral third party holding the money and documents so neither side has to trust the other.
Wire fraud in real estate is real and common. Criminals send convincing emails with altered wiring instructions at exactly the moment you are due to send funds. Before you wire anything, call escrow on a number you already have and confirm the details by voice. Never trust wiring instructions that arrive by email alone, from anyone, including your agent.
Do not open new credit and do not change jobs before closing without telling your lender first. Both can undo an approval late enough to cost you the house.
What to do next
If you are early, that is the best time to talk. The buyers who do well here understood the process before they needed it.
Call or text (415) 305-6708, or email kate@cryptonrealty.com. You can do all of it in English or Russian.
The full seven-step process is on the How I Buy page.
This guide describes a general process. It is not legal, tax or lending advice.
Frequently Asked Questions
How much earnest money will I need?
In my transactions it is typically around 3% of the purchase price, held by escrow. The exact amount is negotiated in the offer.
Do I need an attorney to buy in California?
Not for a standard purchase. California closes through escrow and title. You may still want your own attorney for an unusual situation.
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