patrick.net

I'm currently in contract to buy a home and live in Bay Area. I believe many people here have been searching and offering for over a year; unless you were to bid whatever the RE agent says (which is probably going to be high). Go out and look at properties and bid low to get some experience. You're probably going to need to switch agents because they do get frustrated after you lose bids several times because you did not bid what they wanted you to bid. This is of course assuming you are trying to buy in a hot area; which in the Bay Area, it probably will be.

If your low offer actually gets accepted, you can then decide to see if you want it. You can always back out. Keep your own records of what you offered and what it really sold for so you get your feel. I've always hated how it showed the price only after the transaction closed. And even then, the info stays exclusive to RE agents for quite some time before the public can see it.

another website is Trulia i sort of despise it but if you ask the same question there youll probably get some good answers mostly from realtors but they can definitely fill you in on the process.

Same with me, but looking around Grover Beach or Palmdale. This site has me scared away from buying even now, I think things are coming down, but I also pay $925 in rent and wouldn't mind that going to a house instead.

1. Never trust a word from the realtor. Two that I've talked to are constantly on the "I heard there's another offer, make your highest offer" or "The bank has a verbal with someone, but if you come in with a strong offer they might take it". They don't seem to understand that I want a deal, there's no reason to get in a bidding war over any particular property in this market, and if one owner isn't willing to consider a low big, there's a house right down the street for sale that you can offer on. As soon as I told one agent I didn't want to make an offer if there was a second bidder, that bidder mysteriously disappeared and I heard about how they mis-heard the information and there wasn't anyone else.

2. Everything I've read about short sales makes me write them off. Unless your realtor is really on top of them and has special contacts with the banks, I'm not willing to wait around 3-6 months to hear anything.

3. There's a lot of really rough foreclosures. I'm looking at a place that has been unlived in for 6 months now, huge yard completely overgrown, empty pool with some appliance tipped into it. I ought to have a little left over for rehab after 20% down so I'm interested in a cheap house that could use a little work, but realize there can be a huge gap between "Owner occupied move-in-ready" and "foreclosure" where the second had bad tenants and is empty for months.

4. I browse around Zillow and Trulia, both are pretty rough and often list different information. I'm finding that pulling a couple properties from there and showing them to a realtor and saying "I like this, find me something similar but better or cheaper" is really not working at all.

I was close to making a new post like this as I'm wringing my hands and stressing out over it. I live in Grover Beach, but houses here are completely crazy still. A realtor wanted to show me a 320K with foundation issues that had a 45K bid. 1950s tear-downs are 250K. Really considering buying a three-plex for 480K and just living in one unit, but that's still expensive and I'd have to borrow a ton of money. I'm also seriously considering moving to Palmdale where you can get a really nice house for 200K, but that's still way expensive for living with horrible weather. When I with a downpayment and decent salary am having so much trouble finding a decent house for a decent price, I have to think that prices have to fall more for the average salary with a family.

Half of me just wants to pack all my stuff in storage and spend a year traveling around, subletting someplace in a couple cities, and let all this sort out even more. I seriously hate life decisions that lead to wildly diverging life paths with no objective way to choose between them...

Everything Finnian said is spot-on, especially with realtors. Go into it assuming everything they tell you is a lie and you'll be ok. For me they're like leeches, I ask about a property that's a good deal and if it's already a pending sale, they continue to contact me to tell me about other houses that are overpriced. I only correspond through email now so at least they can't spam my phone.

I also agree you should have some extra money on hand when buying foreclosures for the inevitable repairs you'll be doing.

Arbitrarily desperate to buy = you're gonna get screwed.

Ugh, I'm in the same boat. South Bay Area (San Jose, Campbell, Mountain View, etc.). I've been looking for several months now. It's not going to be easy to find a place in my budget. You don't mention yours, but if it's like mine (less than $500,000) you may have to settle for a crappy school district.

The best school districts (in San Jose) are Cambrian & Evergreen. The way the school districts are divided make very little sense, so you will have to look up on each districts home page to see if the house is in the good school region.

Here are some links I use:
Sanata clara tax assessor. Good to lookup current owner address and deed type. The assessed value is interesting but doesn't match redfin very often.

http://eservices.sccgov.org/ari/home.do

Cambrian Page:
http://www.cambrian.k12.ca.us/District/Parents/Residence.html

Evergreen Page:
http://evergreen.ccsct.com/page.cfm?p=2455

How to look up API scores:
http://www.cde.ca.gov/re/sd/index.asp?stype=standard

You will find that houses in the Cambrian district will be $50K to $100K more than a neighbor on the same street that is not in the district. Also, district lines are divided on sides of the street. In other words check even/odd #'s not just street names.

I wish you luck, your gonna need it :(.

dup

Make sure you run your numbers too. I hear people on here talk about how a family making $80K can afford a $450K home and my number say otherwise.

Here is my spreadsheet (I've posted it several times in the past):
https://docs.google.com/previewtemplate?id=0AiAvJJV-QcyXdHU0NkVYTUR0bzV5eXdjYVlpX0tnWmc&mode=public

It's a work in progress so take ROI number with a grain of salt (everything else should be mostly accurate).

You are not the only one:
Check out:
http://patrick.net/?p=619872
&
http://patrick.net/?p=599784

Go lowballing, and stick to your guns, and realize you could very well be paying more than you would have to pay if you'd waited a few years. Don't ever fall in love with a house, because that's a sure fire way to overpay. Once you buy the house, try not to stress over market value when (or if, if you're an optimist) when it falls below what you paid for it.

If you've got or are going to have kids, school districts matter, especially in the the elementary school.

I bought in 2009 with a lowball offer before the dead cat bounce fully expecting that my house would eventually be worth less than I paid for it, but kids/wife made pulling the trigger sooner than I wanted a likely occurrence, so I agreed to shop as long as I could lowball. We lost three houses over the course of six months before getting the one we got. The seller turned down 3 offers higher than ours over the course of the 9 months they had the house on the market. (They chased it down HARD! It was WAY out of our range when we first offered.)

In this market never bid higher then any other offer(if you can really know what is the highest offer!). Keep on lowballing. Offer didn't get accepted? No big deal move on to next. Good luck.

Don't buy in Evergreen, It's only served by one freeway exit on 680 (Capitol )and one freeway exit on 101 (Tully)

Such a large area and only 2 exits to get in and get out. You would be spending 45 mis every day to getout just on the exit and 45 mins just to get in and that too just on the exit. If you don't believe me you can drive by 680 or 101 and see a long line packed for Evergreen exit.

Finnian says

As soon as I told one agent I didn’t want to make an offer if there was a second bidder, that bidder mysteriously disappeared and I heard about how they mis-heard the information and there wasn’t anyone else.

LOL! so typical of this corrupt industry.

cloud13 says

Don’t buy in Evergreen, It’s only served by one freeway exit on 680 (Capitol )and one freeway exit on 101 (Tully)
Such a large area and only 2 exits to get in and get out. You would be spending 45 mis every day to getout just on the exit and 45 mins just to get in and that too just on the exit. If you don’t believe me you can drive by 680 or 101 and see a long line packed for Evergreen exit.

The exit at Tully is hell. It's gridlock traffic for about 20 minutes at 2:30pmish-3:00pmish. The Capitol exit on 680 is not much better than Tully. Tully used to be acceptable until they decided to redo the exit. The panhandlers at the exit get tons of money.

from what Ive seen lately lowballing will only work with properties that have been on the market for a long time which means A) its overpriced or B) theres something wrong with it.

so I wouldnt say lowballing is the way the go. The best deals are usually sold right out of the gate because theyre priced right from the start.

guys,
thanks for great replies.

how about on financial front? I have a decent downpayment and good (780+) credit scores. I haven't talked to a bank / mortgage-broker about a loan. When would be a good time to start loan-talks?

wondering if I should do a FHA loan (3.5% down) or another loan (20% down). any thoughts / experiences?

The guys knocking evergreen must be rich. It's all trade offs. I have a 3 year old and want a good school district.

Where would you go with the following restrictions:
1. $500K limit
2. Good schools (900+ API)
2. 30 minutes of Santa Clara (where most of the jobs are and where I currently work)
3. SFH (no condos or townhomes or anything with an HOA)

?

There really aren't any choices just Cambrian and Evergreen. Cambrian is MUCH more than evergreen which means all you can get for 500K is crap 50 year old houses or slightly less crappy condos....

The bay area is still crazy unfordable for single income families. I have 350+K in the bank (mostly retirement) & make six figures, but I can't afford any "good" homes.

permanent_marker what are your requirements? What price range what level of school, etc... If you have too many (like I do) its going to make things very difficult.

permanent_marker > avoid brokers. Stick to credit unions ;) That's my take.

I've found star one to be pretty good. Or if you have access the navy federal credit union:

https://www.starone.org/
https://www.navyfederal.org/

I went through Star One last year when I made an offer, they can do an online approval in a matter of minutes and multiple agents have wanted me to have that printed out when they submit an offer because so many escrows fall through on funding these days. They were kind of a pain with the amount of info they wanted, but I don't know that it was that much more than what Wells Fargo might want to hand out a mortgage.

When you put in an offer on a house you may want it to include a printout of your bank account to prove you have a downpayment, proof of your salary, and proof of pre-approval or approval of a mortgage lender. Kind of crazy, but it may help a lowball offer if they are certain it's going to go through.

RG I live in the Cambrian area and love it. I am not rich but would echo the sentiments about Evergreen. Our babysitter lives close to that area and the traffic situation is a nightmare. Plus I feel like you have to drive through a lot of kind of sketchy areas to get to the nice parts.

But what is the rush to buy? Why don't you rent in a good school district and wait...prices are only going lower from here in the near term and will probably be virtually flat for several more years. Our plan is to wait and see and possibly approach our landlord about buying the place we are renting in a few years.

toothfairy says

priced right from the start.

LOL.

RG says

permanent_marker > avoid brokers. Stick to credit unions That’s my take.
I’ve found star one to be pretty good. Or if you have access the navy federal credit union:
https://www.starone.org/

https://www.navyfederal.org/

+ pentagon federal credit union. Very good rates most the time + no closing if really close on a specific property.

In my case it's because I'm tired of the uncertainty of renting. Landlords raise the rent and you have to move. If I can lock in my rent for the next 10+ years, I'll be ahead both financially and mentally ( yes, I'm stressed about rent increases). I've worked in the bay area for 12+ years and doubt I'll ever move anywhere else. If I can find a place I like in my price range, then I'll jump on it. I'm not really super worried about prices dropping. From a money standpoint all I care about is if I can afford the place with a decent cash flow cushion.

wgrenter, you may not be rich, but you don't own your place either ;). And of course the term "rich" is relative. Most of my friends from the east coast think I'm rich because I have >$250K in the bank. A thirty something with wife and child and one (good) income can't afford a home in any nice areas here... It's pretty ridiculous.

But I'm not really in a rush. I've been looking on and off since my son was born in 2008. Just now is the time to look because we want to start our son off in pre-school. I don't want to have to move him every year because the pre-school is too far from our latest rental. Having kids puts time pressures on everything.

RG says

If I can lock in my rent for the next 10+ years, I’ll be ahead both financially and mentally ( yes, I’m stressed about rent increases).

Are you saying by buying a house you're locking in rent? I keep thinking that's exactly the reason to keep renting, but I've had almost no rent increases in over eleven years of living in San Francisco.

Otherwise, it seems like buying represents a much higher incidence of variable costs. If I buy, it will be because I've found exactly the area, place in which I want to live. Hopefully if a place shows up, I'll also have the money. I'm saving away in the meantime.

FunTime says

RG says

If I can lock in my rent for the next 10+ years, I’ll be ahead both financially and mentally ( yes, I’m stressed about rent increases).

Are you saying by buying a house you’re locking in rent? I keep thinking that’s exactly the reason to keep renting, but I’ve had almost no rent increases in over eleven years of living in San Francisco.
Otherwise, it seems like buying represents a much higher incidence of variable costs. If I buy, it will be because I’ve found exactly the area, place in which I want to live. Hopefully if a place shows up, I’ll also have the money. I’m saving away in the meantime.

My landlord raises my rent 3% every year here in Oakland.

well, my rent has gone from $550 to $2100 in 12 years. So, yes, I'd say buying a house does lock in the rates. I take into account many variables to make a decision to buy. This is just one. Schools are also a big one. All the good regions have very high rental rates too.

The argument most people make for NOT buying is the same one I'm using FOR buying. The ability to move . I don't want to move ;). I want to stay in one place. Renting inevitably mean I will move. I've never lived anywhere for more than 2 years. The landlords always push me out with rent increases or the bigger case.... I got married and had a kid. Living with 4 roomates in 1200 sq ft AND a wife and child just doesn't work.

To top it off the rental increases will mean I have to move and may not keep my child in the same school. That sucks. I'd rather buy what I can afford now in a reasonable school district and have my kid grow up with the same people then move my family every 2 years...

Otherwise, it seems like buying represents a much higher incidence of variable costs

This can be true of maintenance and property tax. Both are unknowns. On the maintenance side, you can usually defer it, property tax not so much. If prices do go sideways, then property tax should remain constant. But prop 13 puts a max on how much they can go up in any one year. I've had 15% hikes in year when renting. That won't happen with property tax (except for some corner cases). The maintenance is the real unknown. Till I find a place and look at it I won't know but I have 1% per year in my spreadsheets. That will probably cover everything.

Your rent's gone up that much in the same place?! My rent's gone up that much, but because I've gone from renting an in-law studio to renting a 3/2 SFH.

I'm actually working on the idea of never moving from my rental. I agree, it's hard to plan on that, but it seems like it's hard to plan on that in an owned home too. My friends who own have moved as much or more than me, but that's also been in the crazy real estate market of the last ten years and probably also connected to our time of life. My wife's not buying my first suggestion that we can eventually have two kids upstairs and live in the downstairs sorta in-law as a master bedroom. ; ) I'm going to keep selling it though.

Landru3000 says

My landlord raises my rent 3% every year here in Oakland.

I've had exactly three rent increases in eleven years. One at my first place and two at my second place. They were all at the prescribed San Francisco increase amount, or whatever it's called, meaning they were all less than 2%. I never even blinked at them as they represented a couple hundred dollars a year, I was living alone, and I was experiencing salary and bonus increases of many times that amount.

I got a little lucky and moved during opportune times with the exception of moving to San Francisco in 1999, which was expressly not opportune. I lived simply.

RG says

This can be true of maintenance and property tax. Both are unknowns.

Yeah, your description is exactly why this has always seemed way more complicated than renting. I've had a pretty simple renting situation, as I've described. I definitely see it as more mental stress than my renting experience, though.

That said, I can see it being worth the extra mental stress. I've just not put the reason together yet.

Another thing to think about. Rent increases are just increased burdens on you with no benefit. Maintenance may be an unknown variable, but at least you are getting something for it. Plus you can improve the place anyway you want. Get as much off the grid as you want. Make it nicer, whatever. If you manage to make it the 30 years your costs will drop not so with renting ;). I'm quite certain that rent will always go up, but a mortgage will end some day. It's hard to do a true ROI on these things. But I'm sure I'll feel better at dropping an unexpected extra $2000 on house maintenance than I do about the same going to a rent increase...

RG says

If you manage to make it the 30 years your costs will drop not so with renting ;).

It just seems to me with a house it never ends and unpredictably and with renting it never ends but predictably. Going 30 years in a house seems to bring up a lot of expenses. I've never seen a full itemized chart of expenses to expect over thirty years of owning a home. There's a post from someone who just bought a place and did a lot of additional work before moving in that would serve as a start. Many tens of thousands of dollars on a place that cost around $250k.

Again, I've not had $2000 in cumulative rent increases in over eleven years of renting, so maybe I'm an exceptional case. I'm about to hit four years of renting the SFH with no rent increases. That said, I did rent at a time when I think rents were relatively high in San Francisco the summer of 2007.

Assuming you do maintain your home and budget for it, I'm pretty sure your costs will be much lower owning than renting in 30 years. It's all a gamble.

The one issue is the first 30 years. In the bay areas, it seems likely that renting will be a better ROI for those years. I should probably keep renting...

All these discussions seem to go 30 years but never look out through the time when you have no mortgage and are only paying property tax and upkeep on the house. While I'm not in a rush, I:

1. Want to own my place outright, be beholden to no one, and only have my expenses as property tax and maintenance. I could do this in 7 years buying a cheapo in Palmdale. Means I can't buy into a condo or HoA.

2. Want some privacy and the ability to be as loud as I want. Can't exactly set up a booming surround sound home theater in a temporary apartment with people next to and below me.

3. Hardly want to decorate with things I enjoy looking at when I know I will move within a year or two.

If I were still in the bay area I'd be looking at 400K+ houses and I don't think I could do it and would still be renting. Buying in cheap enough and only paying a couple hundred bucks a month more than my current rent while living in an acceptable sized house seems like a good trade-off, mostly averaging out costs with the period I'll be living in it without paying a mortgage compared to paying rent during those years.

Finnian says

Want some privacy and the ability to be as loud as I want. Can’t exactly set up a booming surround sound home theater in a temporary apartment with people next to and below me.

It takes a pretty expensive rental, but I do have just what you describe. Pretty booming. In big rental markets, like San Francisco, people paint and alter their rentals all the time with the permission of the landlords. If a landlord thinks your alteration is potentially valuable, great! As long as they don't think you're ruining the place, they tend to go along with a renter that has given them no problems.

Finnian says

All these discussions seem to go 30 years but never look out through the time when you have no mortgage and are only paying property tax and upkeep on the house.

Perhaps because so very few people stay in the same house for 30 years.

I've been a realtor off and on (now on) in several states (now North Carolina) and while I know there are realtors who may not be skilled in their field, the same goes for other fields. Find someone you think you can trust, who you like working with, and stick with her/him. As far as lowballing, if you want a certain school district, it must be a DESIRABLE area to you for whatever reason, and probably others think so too, so why would lowballing work here? Just because you think the price isn't worth it? I was around when housing prices started going through the roof (back in the late 70s in CA) and it has NEVER gone back to those days. If an area is desirable for whatever reason, it will command higher prices wherever it is. Better yet, take your business and move to another state where prices are lower, get your employees to move too, add to THAT economy and find your dream life. California is everybody's dream for a reason (at least NorCal) it's beautiful! I used to live there in Marin, but found another place for alot less - Asheville NC - smaller, but has soul, funk and friendliness -- and real estate costs a whole lot less...

AshevilleNCRealtor says

and it has NEVER gone back to those days

AshevilleNCRealtor says

If an area is desirable for whatever reason, it will command higher prices wherever it is.

If the fundamentals for an area do not change, then the prices remain the same. Free advice, no commission charge.

thomas.wong1986 says

AshevilleNCRealtor says

and it has NEVER gone back to those days

Pretty hard to find a proud realtor who knows what they're talking about.

renter (me)
borrower (have a mortgage like my parents) if the bank owns your house you're not an owner.
owner (owns the house, holds the deed like my grandmother)

Folks stop messing with my English language. if you want to borrow money go ahead but stop pretending you own anything. that's why you go to work BTW. The Bank really owns your labor and the house till you pay off the loan.

you're a debt slave remember this,....and you like it that way ;-)