How to Buy a Home in California, Part VII: Shopping For Homes and Making Offers

How to Buy a Home in California, Homes for Sale in San Diego, Making Offers

We've covered most of the basics so far in our multi-part blog series on How to Buy a Home in California. By now, you know what your loan options are, how much you're going to owe each month at different price points, and you have a stellar agent advising you. You're finally ready for the fun part—shopping for homes! In this post we'll be talking about what to consider when you're evaluating homes, how to know what to offer, and what comes next. If you want to browse through the topics in this series, please use our handy Table of Contents.

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Searching For a Home

First of all, you better not be relying on those public real estate websites anymore. By this point, you should have a great agent and a direct connection to the San Diego MLS. If you don't have this yet, sign up below immediately. We'll set you up with a personalized portal to the San Diego MLS where you can create as many searches as you want, and set automatic email notifications to arrive however often you like—every day, week, month, or the instant new listings hit the market. Not days or weeks after. Plus, you can organize your results by marking properties as favorites, possibilities, and rejects, and make notes on listings for yourself or your agent.

Get Your Free San Diego MLS Client Portal!

When you find a home that looks promising, start by driving the area at different times of day. Go during rush hour, in case it's on a high traffic street, and go at night. See if the neighbors are loud. Make sure you feel safe. If after this you feel great about the location, ask your agent to set up a showing. You can tour open houses too, but let the agent holding the open house know that you already hired an agent you love, and they (hopefully) won't harass you.

Beware of the listing agent promising to give you a great deal if you let them represent both you and the seller (thereby getting a double commission). This agent has already pledged their fiduciary duty to the seller, promising to get the seller as much money as possible and get the house sold as quickly as possible. This is a huge potential conflict with your interest in getting the best possible deal and making sure you get complete disclosure of any issues with the house. Do you think this agent is going to support you if you discover something wrong with the house and don’t feel totally comfortable moving forward? Or are they going to pressure you to keep the deal on track because that’s what they promised the seller (and that’s how they get their anticipated double-dip commission)?

It's legal and in certain circumstances, double agency can be good for both buyer and seller, but those circumstances are unique. You're probably better off hiring an agent who can pledge their undivided loyalty to protecting your best interests. Click the link for more about how to make sure you hire a great agent. 

Keep Your End Goal in Mind

Keep your goals in mind as you begin to search and compare homes. It's easy to get distracted and veer off course when reviewing so many home options. A good way of framing your goal: the top 5 qualities you'd like to get in a home, at a monthly payment amount you're comfortable with. As you start searching you'll see if your goals are realistic, and you may have to adjust along the way, either stretching on price or compromising on features. 

How Do I Know What to Offer?​

As you're searching the market and touring homes, you'll start to learn which types of homes go into escrow quickly. You'll get a sense of the negotiation leverage you have depending on how many other buyers are bidding for the homes you like. ​When you find a home that you like enough to make an offer, your agent will prepare a detailed home value analysis based on the comparable properties currently for sale, currently in escrow, and recently sold. This generally takes 2-4 hours and is very complex. You will then consider this market data in the context of your search experience—how many other buyers you expect to be bidding on the same home, what other homes could be alternative options, how soon you need to move, etc.

Your agent will usually not tell you specifically what to offer. It has to be a personal decision, based on what you feel comfortable paying. We'll always identify a range of possible prices for our clients, and give a professional opinion about the probable outcomes at different offer amounts. You always want to be able to defend your offer price with market data. It increases the chance that the seller will accept, or at least not be offended if your offer is much less than they want, because at least it's based on objective data. Sometimes sellers have a hard time accepting their home's true value, and it takes a buyer who is willing to explain the basis for their offer in order for the seller to come around. Click the link for a more detailed discussion about fair market value

Offer and Acceptance​

When you make an offer to purchase a home, it generally expires in 3 days. If the seller accepts within that time, you have a legally binding purchase contract. (Click the link for more background on the standard home purchase contract in California.) As we'll see, you as the buyer have many options in the contract whereby you can cancel the deal without penalty. But you still have a legally-enforceable contract, and if you fulfill all of your obligations under the contract, it's very hard for the seller to cancel the deal. 

Keep in mind that in today's market, no seller will consider an offer unless it is accompanied by a letter from a lender stating that you are preapproved for a loan at the purchase price, and proof that you have money to cover your downpayment and closing costs.  If you haven't found a great lender yet please see our post here on shopping around for a great loan

Often, the seller will not accept your offer as written, but instead will make you a counteroffer. This puts the acceptance power back in your hands. You can either accept the terms of the seller's counteroffer, or walk away. Sometimes you'll go back and forth with the seller many times before coming to terms that everyone will accept. Once you do, it's time to open escrow!

Read more in our next installment about what happens when you open escrow. Hint: this is where the real work begins! Thanks for following this blog series and sharing with anyone who might be interested! Please leave us any comments or questions below. 

Lauren Empey, San Diego Realtor, Pacific Beach Real Estate Broker and Attorney

About the Author

Lauren Empey, real estate broker and attorney specializing in San Diego real estate sales and investments. I love sharing about this gorgeous San Diego life, real estate, finance, the law, and all things in between. Founder of Empey Realty. Follow us on Facebook, Twitter, YouTube, and Instagram!

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