Buying a Home in the Bay Area and Beyond: What First-Time Home Buyers Need to Know

7. The Location

The old adage that location is everything rings true when it comes to real estate. The closer you are to a good school district, shopping, downtown areas, and other local attractions will determine the value of a property. Seclusion can also be highly desirable, especially if there are views from the property. 

8. The Contract

There are so many factors to consider when putting in an offer beyond just the price. Your realtor should guide you through this process step by step. Be prepared to provide a deposit (an amount of money held by escrow until you close the deal). The deposit can range from zero to three-percent of the purchase price. 

Buyers often worry that they will lose this deposit, but there are many ways to ensure this doesn’t happen. However, understanding how to keep your deposit safe will revolve around your understanding of contingencies. Think of a contingency as a way to get out of the deal—an “out” if you will—to get out of the contract without losing your deposit. The fewer the number of contingencies there are in the contract, the happier a seller will be with your offer. 

There are three main contingencies to consider:

1. Inspection Contingency 

Your way out of the deal if you don’t like something about the property—seriously, anything about the property!

2. Appraisal Contingency 

The bank orders an appraisal to see what the value of the home is compared to the purchase price. If the appraisal comes back lower than the purchase price and you don’t have this contingency, you could be on the hook to cover the difference.

3. Loan Contingency

If for whatever reason you are not approved for the loan you’re seeking, this is another way to walk away from the deal.

You may enter into a deal non-contingent—in other words, without contingencies—but you run the risk of losing your deposit if things go awry. This is something to discuss with your realtor at length so that you have a full understanding of what’s required to obtain your desired home.

Your first property probably won’t be perfect, but hopefully you now have some insight into your own situation and have the answers to some of your questions about buying your first home. When you’re ready to start the process of buying a home in the  Bay Area—or anywhere else in California—call a REALTOR® you trust and turn your dreams into reality.