The San Francisco Bay Area is one of the most expensive real estate markets in…
Making an offer on a house in the San Francisco Bay Area requires careful research, forethought and planning. If you make a strong offer based on current market conditions, there’s a higher chance the seller will accept it. A weak offer, on the other hand, could cause that house to slip through your fingers.
This article provides some time-tested tips and strategies you can use when making an offer to buy a house in the Bay Area.
Making a Smart Offer on a House in the Bay Area
The San Francisco Bay Area is a fast-paced real estate market where multiple-offer scenarios are common. As a home buyer, you want to make the strongest and smartest offer when the right house comes along. Here are five tips and strategies for accomplishing that goal.
1. Have a budget on paper before making an offer.
The purchase offer process can happen quickly, especially in a real estate market like the Bay Area. So you’ll want to make sure you have your financial ducks in a row before you taking the plunge.
It’s wise to have a basic housing budget on paper before making an offer. The last thing you want to do is offer more for a house than you can realistically afford to pay. And that’s where the budget comes into play. It gives you a price “ceiling” when it comes to negotiating with the seller.
2. Validate the seller’s asking price by using “comps.”
When making an offer on a house in the Bay Area, it’s important to validate seller’s asking price. The goal here is to determine if the list price is realistic or far-fetched, based on current market conditions.
In other words, it’s a “sanity check.”
To accomplish this, you can look at recent and similar home sales in the area where you are planning to buy. These are also known as comparable sales, or “comps.”
The real estate market determines what a particular house is worth at a particular time. It’s all based on supply and demand. And the best way to gain this kind of insight is by looking at recent sales or comps.
When reviewing recent sales, pay particular attention to homes that are similar to the one you’re trying to buy. Those are the most accurate and useful comps, when it comes to making an offer on a house in the Bay Area.
3. Understand current market dynamics.
Does the real estate market where you are planning to buy a home currently favor buyers or sellers? What’s the inventory situation like in the area? How long are homes staying on the market, on average, before going under contract?
Knowing the answers to these types of questions can help you make a smart offer on a Bay Area home. The goal here is to understand current conditions within the local housing market, and how they affect you as a buyer.
Your real estate agent can answer a lot of these questions for you. (See tip #4 below.) But you can also gain some insight by researching online.
This kind of research will pay off later on, when you’re ready to make an offer on a home. For one thing, you’ll know if it’s better to make a full-price offer, or to go above or below the asking price. When it comes to buying a house in the Bay Area, research and planning can pave the way for your ultimate success.
4. Leverage your real estate agent’s knowledge.
In the San Francisco Bay Area, as in most housing markets, it’s usually the seller who pays the real estate agent commissions. Because of this, there’s really no reason for a home buyer to fly solo. An experienced, knowledgeable real estate agent can help you make a smart offer on a home in the Bay Area.
Agents spend much of their time negotiating back and forth between buyers and sellers. As a result, they understand which way the market “leans” and how to succeed when making an offer on a house.
Ultimately, you have to make your own decision as to how much you’re willing to pay for a particular property. But it’s always good to have some professional guidance when making such decisions.
5. Know when to walk away.
Sometimes, a home buyer and seller will negotiate back and forth and eventually find common ground. In other cases, the two sides might be too far apart on the purchase price and other terms of the sale.
There might come a time when you make your biggest and best offer on a house in the Bay Area, only to be rejected by the seller. Maybe they’ve overpriced the home and are unwilling to budge. It happens.
This is one of several negotiating scenarios you have to prepare for, as a buyer. The bottom line is, there may come a time when you simply have to walk away and find another house to purchase.
Disclaimer: This article explains how to make an offer on a house in the Bay Area, based on best practices and common scenarios. Every real estate transaction is unique and different. As a result, portions of this article might not apply to your particular situation. We encourage Bay Area home buyers to work with a knowledgeable real estate agent who can guide them through the process.