Thinking of buying a home in the Bay Area? It can be long and costly if you’re just on your way to becoming a high net worth individual. But with the right preparation, you can speed up the process. This article takes an in-depth and realistic look at the timeline of key steps and processes aspiring homeowners must expect if they’d like a dwelling of their own in the Bay Area. As an in-demand and high-priced market, the Bay Area. If you’re starting from scratch, you’ll know when to start improving your finances. If you’re about to close, you’ll learn how long home inspections, bank transfers, and related steps take before you can claim the house as your own.
Depending on the amount of preparation you’ve already made, the process of buying a home can take anywhere from a few months to a whole year. While it’s hard to whittle that down to something more precise, you can rely on common patterns for a good estimate.
Real estate trends in California tend to significantly differ from national trends, rendering most statistics barely usable. However, a 2018 survey by the California Association of Realtors (CAR) provides more relevant data.
So, if you’re buying a home in the Bay Area, here’s how long it can take you to go from pre-approval to closing.
Saving up and other preparations: 4 to 5 years
The Bay Area is known for having one of the highest home prices in the US. According to Zillow, the median price for a home in the area is $1,352,300. This is about two times higher than homes in Los Angeles ($698,800) and San Diego ($640,900).
Unless you’re already a high net worth individual, potential homebuyers that are still on the road to becoming one may have to spend a few years improving their finances before they can purchase a Bay Area home. On the face of it, this may be the biggest concern of millennial homebuyers. However, age doesn’t seem to play a big factor in how long it takes to secure the needed financing. Whether you’re a millennial, Gen Xer, or baby boomer, you may have to wait about five years for your finances to catch up with the price tag of the Bay Area home you desire.
According to the survey of the California Association of Realtors, the median length of time is nearly the same across generations: millennials (four years), Gen Xers (five years), and baby boomers (five years).
Since being at this stage means you haven’t officially started looking for a home, keeping your finances in check is critical. This is also the time to figure out where and when you want to buy a home so that you can better prepare for it when you finally start your search. How you handle your money now will determine whether you can buy your home much sooner down the road rather than later.
Pre-approval: 5 working days to 2 months
Once your finances are at a point when you can afford to buy the house you’ve been saving up for, approach a lender to find out whether you qualify for a housing loan. Obtaining their pre-approval is the first official step to buying a home in the Bay Area. Getting pre-approved can take anywhere from five working days to two months, but how long it takes depends on how quickly you can gather and prepare all the required documents.
The loan pre-approval process in itself only takes about five to eight days once you’ve chosen a lender. You can speed up this step by comparing lender rates for no longer than two weeks and getting all requirements in order beforehand.
Some important documents required for pre-approval are:
- Recent payslips
- Tax returns from the past two years
- Recent bank account statements
Home hunting: 10 weeks
Even if you have a clear image of the home you want, expect to spend about ten weeks looking for homes in the Bay Area. If you’ve done your homework, you know that the competition will be stiff. Approach your house hunting with this in mind. Be patient. Prepare to lose out to more robust offers, but stay the course.
To put things in perspective, most Bay Area homeowners visited nine homes before they made their choice. If you’re looking for the most affordable home, you may have to look at around 10 homes before you find the one that suits you and your budget. A third of buyers had to tour 11 or more homes before finding a home they could settle in.
Compared to repeat homebuyers, first-time homebuyers generally visited more homes during their search.
Entering a contract: 1 day to 1 week
If you come upon a home that ticks many of the boxes on your wishlist, draft an offer with the help of your real estate agent as soon as you can. Make sure to cover key points like price and contingencies. According to the survey by the California Association of Realtors, the Bay Area has the highest rate of multiple offers per buyer in the whole state.
If you don’t want to lose out on a deal or experience delays that will extend your closing, negotiate with the seller and respond to their counteroffers at once. When they accept your offer, hire a home inspector to assess the house’s condition. Based on the findings, you can then work in additional contingencies, if necessary.
Escrow and closing: 1 to 2 months
After house hunting, closing is the lengthiest part of the home buying process. In California, closing from escrow to handover can take from 30 to 60 days. Between mortgage approvals to transferring funds, there are still a lot of steps that will be happening all at the same time so this period will be particularly hectic.
Here’s a breakdown of closing steps and how long they take on average:
- Mortgage approval – A few days to 3 weeks
- Home appraisal – Up to 10 days
- Title insurance – 2 weeks
- Homeowners insurance – Up to 2 weeks
- Transfer of funds – Instantly or a few days, depending on the method
- Walk-through and handover – 1 hour
If you’re serious about buying a house in the Bay Area, the tips above will put you on the right track. When you’re ready to buy, enlist the help of the best. We, the Chawla Real Estate Team, have the experience and expertise to help you close on beautiful Bay Area homes for sale. Call us at 510.406.4836 or send us an email at JouJou(dotted)Chawla(at)ChawlaRealEstate(dotted)com for a seamless home buying experience.