How To Buy A Home


Picking Your Area:

What are the most important issues for you. The selection process is usually a matter of trade-offs unless you are wealthy enough to get everything that you want -- maybe later. You must decide what is most important. The following are some of the important issues involved in picking an area:

SCHOOLS: There are huge variances among the performance statistics of Schools in the East Bay Area.  Some of the best performances are in Central Contra Costa County. Many high schools achieve above 90% in state ranking. Some are as high as 98% state ranking. The school district borders are generally not the same as those for the cities. In some border areas the high school assignment can make a price difference, and district borders can change.   For example, some parts of Lafayette attend Martinez schools.   In some cases students may not be attending the closest schools, even at the elementary level.

RECREATION: Most areas in Central Contra Costa offer a wide degree of recreational opportunities. Some towns more than others. Martinez has a marina, Lafayette a lake, Walnut Creek and Danville have Mt. Diablo State Park, the more urbanized cities have many leisure and entertainment opportunities. Golf courses abound. Most areas have very developed youth athletic programs. The area is laced with jogging and biking trails many on old railroad rights-of-way.

POLICE/CRIME: The older cities, have their own police departments, and the newer cities generally have contract departments, where the officers are provided on a fee basis by regional departments (e.g., Lafayette contracts with the Sheriff's Department where Walnut Creek has its own department). Some areas have city postal addresses but are outside the city limits, these areas are policed by the Sheriff's Department. Most departments have crime statistics available by city and sometimes by neighborhood. The state requires that a sex offender database be accessible to the public in most areas.

PRESTIGE: This is a highly personal choice. Some communities have greater prestige in most people's eyes. To some people this is not an issue. Others are willing to pay the price. There are prestige areas in most cities, however, Blackhawk, Diablo, and Orinda are traditionally acknowledged as "prestige towns". These are also the locations of well established country clubs. With $800,000 you can buy a palace in Concord, or a small "rebuild" in Diablo.

We have City Profiles available on the major cities of Contra Costa County.

LOT SIZES: Lot sizes are frequently an area factor. Some areas were developed with larger lots than others. In some cases larger lots were offered to entice buyers away from established areas; now the new area has become highly desirable and new homes in it are offered with smaller lots. With the increasing scarcity of east bay land, lot sizes seem to be shrinking again. Lot size is controlled by planners and by the demand in the market.

HOME SIZES & STYLES: Larger homes tend to be built in the prestige areas, and areas tend to become prestigious when they have large homes. Planned communities tend to have relatively consistent home sizes. Smaller free standing homes, under 1,000 square feet are generally found in older areas.   A large home in the 1960’s would be considered average today.

Picking Your Home:

Try to look past minor issues that bias people against potentially great homes. Clutter, ugly furniture, messy kitchens, and smells: tobacco, fish dinners, pet dander, litter boxes. These pretty much leave with the owners (and some cleaning), but they do turn-off buyers. Ugly colors of paint, carpet and window coverings are also changeable. If you can look past these issues you might get a great deal. If you can get big enough discount, you can afford to buy all new stuff and get the house painted.

Look at the fundamental factors of the homes you evaluate. The first several times out with your agent should be a learning experience for both of you. The agent should be educating you about areas and homes and learning about you by asking lots of questions about your preferences.

The following are many of the attributes, which vary from home to home:

STYLE: This is the largest determining factor for people buying a home. Style encompasses the placement, construction, colors, roofing, height, layout, and so much more. Age and style are closely linked. There seems to be a revolt against the styles of the 50's through 70's and a return to more traditional attributes e.g., high ceilings, crown molding, rounded (bull-nose) corners, and built-in cabinetry.

AGE: Many buyers are revisiting older areas, because of the convenient locations and the allure of hardwood floors, crown molding, double-hung windows, and brick fireplaces. I have found many beautiful oak floors hiding under red carpet in a run-down rental property. Newer homes offer many of these features with more amenities e.g., large kitchens, bathrooms, and master suites. Family rooms are rare in 1940's construction, but have been growing in prominence ever since. Floor plans are more open today, and the kitchen is central to the living area rather than hidden in a back corner. I have had several clients recently who only wanted homes older than 1950 or newer than 1990. Generally 1950s through 1980's homes are comparatively utilitarian. In popular older areas e.g., Lamorinda (Lafayette-Moraga-Orinda), a tremendous amount of homes are being substantially rebuilt to modern styles and standards, and the value is often there to justify the costs.

SIZE: Typical middle income tract homes built from the 1950's on tend to be between 400 to 500 square feet per bedroom. Homes with less than 800 square feet were generally built before 1940. As the bedroom count increases so does the other living area. There is a high demand for 3 bedroom homes from 1,500 to 1,800 square feet, especially for first time buyers and "empty nesters". Family homes are growing. With a large family room, four bedrooms, an office, and modern proportions, 2,500 to 3,000 square feet is a comfortable home size.

BEDROOMS: A bedroom is generally between 100 and 150 square feet, with masters being somewhat larger. Some older four bedroom homes in the 1,500 to 2,000 square foot range, are being converted to 3 bedroom with two smaller room combined into a master suite. This leaves a master, an office, and a nursery. Most intermediate family homes have the master close to the other bedrooms, ease of construction, keeping the young children close. Larger homes tend to have a private master suite away from the other bedrooms keeping teenagers and guests away from the master.

BATHROOMS: Consider placement for convenience and consideration. Bathrooms can create noise from showers, flushing, etc. They can also create noise buffers between bedrooms. Do you want the hall bathroom next to the master bedroom? Should the master bath be a buffer to the adjoining bedroom? In a larger home it is nice to have a guest bathroom or powder room away from the family living area or close to a pool area.

LIVING AREAS: Designers say the living room is dead. It is proportionally smaller in recent construction. The family room is where we live. The kitchen/family room combination brings everyone together. This is a big distinction between 1960's and 1990's designs, and the objective of many remodels. Openness is the trend. A friend just built a 3,500 square foot 2 bedroom house. A large open area with suites and garages at each end - no other partitions.

DINING ROOM: A must over 1,800 square feet, but do you need one in a smaller home? It is a matter of preference, priority, and needs. In a smaller home one alternative is a multipurpose room that can be used for dining in a pinch. Consider the room's proximity to the kitchen. Will your furniture fit?

LAUNDRY: Inside or in the garage? Do you have to go outside in the rain to get the clothes. Next to the bedrooms or the kitchen - both are convenient (I've seen both in some large homes)

CLOSETS & STORAGE: How much do you have now? Is there enough? How are the locations?  Hanging space in the laundry, pantry in the kitchen, appliance garages on the counters, tool closet in the garage, coats near the entry, linen near the bedrooms. His and hers in the master suite. Walk-ins, organizers, dressing rooms, vanity areas. How about a basement, attic, shed or second garage?

POOL/SPA: The conventional wisdom is that pools add little value, but they are a lot of fun and maintenance (oops). Spas are very popular. Location is important and wherever the previous owner put them never seems to be your first choice. You should consider the risks and the rewards. Many families with small children are leery of pools. There is a legal responsibility to keep them adequately fenced and supervised.

YARD & GARDEN: Is the yard too small for touch football, or is it too large for your maintenance preferences? Do you want more front yard or back yard. Large front yards give an estate feeling, but are rarely used. Is the yard private enough for an intimate spa or sun deck. Is there a spot for a vegetable garden? Will it get enough sun for a lawn?

DECKS: Decks are low maintenance high utility seasonal living areas. Consider each home's potential for decks. I like small decks and French doors off any room.

VIEWS: Valley, city-lights, water. Freeway, refineries, ugly buildings

SECOND UNIT: Income, relatives, office space.

Assessing the Value

Price your offer according to recent comparable sales in your area. What is a comparable sale? Houses and neighborhoods are unique. Picking good "comparables" is very subjective. It may not be the house next door, which is too different, or a house two streets away may be too far. There may be five sales in the neighborhood that work, or the best comparable may be a mile away.

Automated market analyses provided by title companies and the MLS system are frequently fancy hokum -- like toilet paper, they come in fancy packages, quilted with meaningless data for extra thickness. Unfortunately, computerized data analysis can not factor in the unique attributes of neighborhoods and homes. This is why appraisal calculations are performed manually, and the analysis is so subjective.

You should be part of the offer price decision. Your agent should show you "comparables" and the criteria used to adjust the prices for the variables in each criterion. That should not be a hard question to answer if the agent has done their homework and understands the process. A good property valuation should take several approaches, which reach a similar conclusion. The conclusion should be a price range, because this is not a pure science.

There is a saying "you can go up but you can't go back down." Don't price too high.

On the other hand, you need to have a credible offer. Too low an offer will not be accepted as serious and you may lose credibility with the seller in the negotiations.

Consider the seller's motivation to sell. Does he or she need to sell that fast? Why? This can be great leverage in a slow market. Unfortunately there are few great deals in a frenzied market.

Making an Offer:

The offer is usually written on a 6 page form. This becomes the purchase contract. It is usually modified throughout the process by counter offers and addenda. Counteroffers are used during the negotiating process leading to escrow, and addenda are usually used to fine tune the agreement based on new information discovered by inspections, etc.

The Escrow

Escrow is a process where items are placed with a third party pending the fulfillment of a contract. Your deposit is placed with the escrow company in the beginning. Toward the end the home, the lenders money, the sellers money, and the rest of your money flow into the escrow. At the end, you get the house, the lender gets a note, and the seller gets the money. In practice escrow is the time period where pest control and home inspections are done and funds are secured. It's kind of like a circus. The inspectors make the seller jump through hoops and the lenders make you crawl through fire. 

Escrow is usually performed by a title company, which also issues a title insurance policy.  These policies protect the buyer and are generally required by lenders.

How Long Should Things Take?

Finding the right home can take some time. The more flexible your requirements are the faster you can settle on a home. If you have real specific needs, plan to spend some time looking.

Not all homes will sell quickly even in a frenzied market. The more unique the home is, the less likely that the right buyer will be looking just when the seller decides to sell. If you can adapt your needs to that type of home, and the seller is in a hurry to sell, you save more money.

Once you have made an offer, escrow should take about 30 days. In a frenzied market it may take longer. The professionals on whom you will rely are probably swamped with business: pest inspectors, home inspectors, lenders, appraisers, and escrow officers. The ranks of these professions grow and shrink in good and bad times respectively. Unfortunately, it takes years to become proficient at these trades, and when things heat-up the good people are in high demand. It is worth your while to deal with top people and endure a slightly longer escrow period

Strictly Business:

Keep the process in perspective. Your home is a very personal possession, but, buying your home might be your biggest business deal this year. What could have more impact on your bottom line? Think business, think smart, and put aside emotion if you can. Play to win, not to teach someone a lesson in manner etiquette or taste.

Don't over estimate the logic of the seller. This is an emotional process. Those who keep their heads will win the prize. Use this to your advantage.

Understand the contracts that you are signing. Counter-offers and addenda are part of the contract. These should not be treated like memos between agents (common). Sometimes it is best to abandon a sloppy contract of negotiation, and replace it with a comprehensive document which clearly states the intentions of both sides, when the negotiations are complete. Ambiguities cause arguments and worry lenders.

If you meet a seller in their home, don't try to start negotiations. Sellers are generally very sensitive to criticisms etc. The best approach is to be polite, complimentary and non-committal. Sell yourself -- their perceptions of you and your ability to afford the home are critical in a frenzied market. If they respect you they may respect your opinion.

Interview several top agents. Pick one who is experienced and knowledgeable in negotiations, contracts and the inspection/disclosure process. Be careful of agents whose knowledge is too narrowly based. A full-time realtor should have strong knowledge of a large geographic area. The larger an area you search, the more "good deals" there are available.

A good agent is probably more critical to a buyer than a seller, though important to each. The buyer's agent is the initiator of contracts and inspections, and coordinates with the lender and appraiser. Most of the duties in escrow fall on the buyer's agent. And this after an exhaustive search to find you the right area, neighborhood and home. A good agent works harder in buyer representation as opposed to seller representation, but the satisfaction of finding the right home is very gratifying.

Don't hire a rookie, but avoid "experience" that has lost touch with the modern marketplace. The recent requirements for complete disclosure and the trend toward detailed buyer inspections can make the buying process a technical one.

How do you know that the house you are looking at is worthy of an offer. Inspections are expensive. You don't want to spend hundreds of dollars until you have a house in escrow. An experienced agent is a valuable resource.  Your agent should guide you through a thorough evaluation of the home before you make an offer. Your agent should be familiar with construction standards, zoning regulations, and home values.

As with any emotional decision, a seller's course of action is subject to persuasion and perception. Use an agent who knows how to sell you and your offer to the seller. This is most critical in an active market, where there are multiple offers on popular homes.

Personality and communications truly are important factors. The seller is likely to meet your agent and the agent's presentation and credibility are important.

Ask to see examples of an agent's contracts and addenda from a past transaction, not just a blank form. Ask them to explain the process of those negotiations. Is the content clear? Are there loose ends? There should be no slang, sentence fragments, or ambiguities. If it isn't clear to you, it won't be clear to a arbitrator, judge or jury. These are binding contracts not notes between agents. Good fences make good neighbors, and good contracts make good deals. You don't want to give the seller any chance to back-out especially in a frenzied market.

Treat your home purchase like a business. How do you interview job applicants at work? How do you pick your employees? Should you check references? Absolutely.

Is a 'big name" brokerage an advantage. There are good and bad agents in big offices, in small offices and operating as one person shops. The type of brokerage affiliation really makes very little difference in buying your home. What is very important is that the agent is a member of the local multiple listing service, licensed by the state, and has a good reputation with the other agents in the community. Full-time agents are a better choice.

Most agents start with large brokerages to get some credibility when they have no experience. Large agencies offer office space and support staff for part-time agents - this enables clerical staff to fill-in when the agents are not available. Agents with a strong customer base often become independent to eliminate the brokers fees and commission splits. Agents should be evaluated on an individual basis.

The most important factor is the human relationship. The agent you choose should understand your objectives, and communication between you and your agent should be easy and candid. This is a very personal process, and liking the agent makes the process go smoother. You should also be able to trust the agent. This is not always easy, many people are skeptical about realtors.

You should find out how accessible the agent is. Does the agent have a smart phone, reliable email, home fax machine, online access, voice mail.  You would be surprised how many agents are ill-equipped for what should be a virtually all day and late night access by clients or sellers. In today's electronic age, those agents without communication are left in the dust, and so are their clients.