Buying San Francisco – 6 Things to Think About
Whether you’re thinking about jumping in or just dipping your toe in the water, here are 6 things to think about and some resources to help you get educated. Buying your first home is exciting, stressful, and one of the best investments you can make. San Francisco real estate has proven year over year that it holds its value. Even if you have bought property before, our market is unique in many ways.
Think about what you really need.
What does your dream home really look like? You will undoubtedly have a blue-sky wish list of everything you would love to have. Go ahead and dream, but remember this is San Francisco. The devil is in the details - get specific about what you really need. Take time to think about ‘why’ you need it. Remember this doesn’t have to be your forever home.
Do you really need three bedrooms or would two work? Three bedrooms can be a lot harder to come by.
Do you really need two bathrooms or could you make do with one and add one later?
If neighborhood and location are the number one priority and it is out of your budget, then you know you’ll need to go smaller in size.
If size is your priority, then know you may need to discover some new neighborhoods.
Explore and expand your horizons.
Many agents will tell you the first thing you need to do is get an agent. I don’t agree. It’s been my experience that if you want to buy a home, you just need to start looking. You need to get the lay of the land and understand what’s available, what things cost, and what you can afford. Explore the city. Adventure to new neighborhoods. See what your money can get you in unexplored locales. Every data point will lead you to your dream home, and you might discover a great coffee shop or vista along the way. I’m happy to set up an exploratory city tour for you anytime.
Know your budget, and understand ALL the costs.
Do your homework and figure out what you can afford. Remember that it’s not just the house. There are lots of additional costs from property tax and insurance, to building maintenance and utilities. You need to have a rainy day fund to cover any unforeseen expenses. Know the pros and cons of working directly with a bank versus a mortgage broker. Either way, get pre-approved and understand what type of loan you qualify for and can afford. In California, there are special programs out there for first-time home buyers like the California Dream For All that can help you achieve your goals.
Agents will always tell you to buy the house and date the rate. By knowing what’s going on in the economy you can determine what type of mortgage will work for you. Housing prices almost always go up, but mortgage rates are always fluctuating. Learn your options
Know what you’re really willing to take on.
Thinking of buying a fixer-upper? Be ready for the challenges of remodeling in San Francisco. Compared to other cities, the permit and approval process can be difficult and expensive depending on what you want to change. Understand the time and effort involved. Remodeling almost always takes more time and money than originally planned. When you talk to friends who live in other states or even other parts of California they will be shocked when you tell them the average build price per square foot of remodeling in San Francisco. IRL Story
In today’s market, a lot of buyers want to buy a property that is completely updated and move-in ready, but you will pay a premium for it. Buying a house at a lower price and customizing it to what you want can be a better investment in the long term, but know the time, effort, and added stress it will take. Learn more about remodeling in San Francisco
The type of property you buy matters.
Did you know that large apartment complexes and high-rise apartments account for over 47% of San Francisco’s housing?
Most large buildings will have an HOA fee in addition to your mortgage.
Usually the more amenities, the higher the HOA fee.
Make sure to read the rules and regulations that limit what you can and cannot do with your home.
Make sure the building has solid reserves and that it is well maintained.
Confirm what your HOA covers - some Co-ops cover all your utilities, while others may only cover garbage and utilities in common space areas.
Did you know that over 46% of housing in San Francisco was built before WWII?
Older buildings may not be up to today’s building regulations and standards.
When buying an older building you will want to understand if any foundation work has been completed - this work can be expensive and is important for safety.
We are seeing insurance companies that don’t want to insure older buildings.
Did you know that the type and size of a building can determine what you can do with your property?
Two-unit buildings if not already, can easily be converted into condos.
Three-unit buildings cannot be converted into condos and for the foreseeable future will remain TICs (Tenants In Common), this ownership structure limits the mortgages you can get, but also often can get you more bang for your buck.
Single-family homes are always in high demand and usually the most competitive to purchase.
The city has changed the rules for short-term rentals and AirBnBs - make sure that you understand the rules for your business type if this is something you want to do.
Be Patient.
Looking for a home in San Francisco can be exciting and fun. It can also be depressing and frustrating. We live in a market with limited housing, which often leads to competition. This is where a good agent can really help. Find an agent that you trust, that understands what you’re looking for, that knows the current market, and that you can see yourself hanging out with for a while. Finding a home can often be a journey where you don’t quite know the final destination.
We partner with the best agents nd brokers, offering a wealth of resources to meet all your home buying needs. Let’s find you the perfect match for your needs.
