Home Searching Advice
Here are some tips on home searching that I picked up during my recent search. Much of this advice is from my father, who has built hundreds of houses as a contractor and architect in the Bay Area. You can see two houses he designed and built for himself at TrejoDesign.com.
- Subscribe to Redfin emails right now and just watch the houses go by, look at the photos, get a feel for them and let them motivate you.
- Limit your subscription ONLY by location and house type, not by any other criteria. Subscribe to your top three cities, for example.
- You should aim to see at least 30 houses before you start bidding seriously.
- When you've seen that many houses, you'll start to have an immediate feel for which ones you like.
- Source your list of homes from Redfin (best), Zillow (meh), and the MLS (sometimes it has fixers not listed on the others).
- Keep the following criteria in mind, ideally in a spreadsheet, as you tour homes: location; $/livable sqft; total lot sqft; potential to add 2nd story, basement, in-law unit; and whatever else you care about.
- Don't let small things eliminate a house for you–they may be easily fixed.
- Prepare yourself and your family to bid (and lose) a number of times.
- Don't look at lost bids as a loss–you are gaining valuable information about the market, 2 weeks to a month before anyone watching Zillow prices.
Picking and choosing your realtor
- Aim to interview at least three different realtors to see how you like them, then pick the best one
- Consider giving them a trial by going to see a few houses with them. Make sure to let them know it's a trial up-front, so you don't feel guilty about going with someone else
- Ask your realtor candidates what kind of advice they can offer. Some realtors don't give you any pricing advice. While at least they aren't giving BAD advice, it doesn't feel like they are being as helpful as they could be.
Positive qualities in a home
Of course, these are mine, as I was looking for a single family home in the East Bay.
- Location (close to work)
- Location (close to shops and groceries)
- Location (close to good schools)
- South-facing, sunlight, lots of windows
- Quiet street
- Slightly sloped property, allowing for a partially exposed basement
- A place where neighbors can't block your construction or delay it (e.g. SF)
Notice these emotions when you do a tour
- "I immediately hate this house"
- "This house is so ugly / falling apart"
- "OMG this house has the worst space layout ever, who thought this was a good idea"
All of these are telling you: no one will bid on this house, bid (way) below asking. Consider bidding only at the level you'd feel it was a great deal. Of course, if you want a house that's move-in ready, then definitely skip these homes.
And of course if you have good to neutral feelings about a house, consider bidding on it, once you feel you're calibrated (30+ homes seen).
A house that has a price increase OR decrease, or that has been on the market for longer than normal is signalling to you that...
- A. They didn't get an offer they liked within the first 9ish days of listing
- B. You should definitely bid below their asking price
- C. Something is probably wrong with the house, as always, read the disclosures
Also, a house that has a poorly constructed listing, or without photos, may be a great deal. Use street view to check on it, also, make sure to look at the livable sqft, as even if there's only one "bedroom", it might have other rooms that which add significantly to the sqft. This is why you don't want to limit your search by any criteria other than location.
- When you think you've seen enough places, put in a bid on a house you feel okay about.
- An early test bid will vet your team:
- How fast is your realtor? Do they prepare docs for speedy docusign/digital signing? Do they give good advice about how to put in a competitive offer?
- How fast is your broker? Do they give you a clear list of requirements? Do they tell you the prevailing rate for conforming loans? For jumbo loans? How many days do they need to close? How accurate is their estimate? Do they give you good advice about how it works to waive loan contingencies?
- How on-board is your family? Be sure to make it VERY clear to your contributing family members, where the money is coming from, and from who, and how much it adds up to. This will help to prevent last-minute miscommunication.
- Have your realtor call realtors for recently sold homes and ask for the prices they sold the houses at (they may not reveal this, but it's worth a try to get more price intelligence).
Comparison / estimation advice
- Use the recent e.g. 3-6 sales in the neighborhood to come up with a rough estimate of what your home is worth.
- If a home recently sold ("SOLD") near your target home ("TARGET"), but it has better finish, or more sqft, you can do a rough calculation to make it comparable:
($TARGET_PRICE_PER_SQFT_REDFIN_ESTIMATE * $TARGET_LIVABLE_SQFT) + ($DIFF_LIVABLE_SQFT * $COST_TO_BUILD_SQFT) + ($TARGET_LIVABLE_SQFT * $COST_TO_REACH_FINISH_LEVEL) === $SOLD_TOTAL_PRICE
where $COST_TO_BUILD_SQFT is $200-$300/sqft in the Bay Area, depending on your neighborhood. And $COST_TO_REACH_FINISH_LEVEL could be something like $50/sqft.
- Playing around with a formula like the above, and accounting for potential (2nd story/basement/in-law) will give you a feel for how much the target house could be worth to someone, at the top end, if it were "maxed out".
- Consider the profit you'd make if you were to re-sell the house in 1.5 years after performing different levels of improvement:
- Would you beat the stock market? Would you do way better?
- Don't pay so much for a house that it wouldn't be worth it to improve it and resell it.
- This profit is your comfort room, in case the market does poorly and you are in the unfortunate situation where you NEED to sell at a bad time.
In a seller's market, sellers care about speed and risk. The most competitive offer would...
- Waive contingencies for: inspection, loan, and appraisal (if it comes short, show you can cover the difference to reduce percieved risk)
- Fastest time to close, time to get appraisal (ask your broker for these when you first talk to them)
- Offer to get rid of whatever belongings are left in the home
- Offer to pay all the closing fees (50/50 is typical I think. Research what this amounts to for your area, closing fees and taxes are not insignificant)
- Include all your offer details on the same page as your personal letter to the seller. This way, there's no digging needed by a potentially lazy seller's agent, and the buyer can see the total value of the offer.
- Sum up all the value you have in your offer to create a number, and write it in. This number is bigger than what the house actually costs, because you're paying the fees).
- Have your realtor ask the seller's agent about what's on the seller's mind, both numbers-wise, and about the other offers, and about what conditions they care about. You might discover something important you can add that's easy for you to do but which matters a lot to the seller.
Note that your area may not be this competitive, however you can still use these tactics to win a bid while paying less for a house (because you've provided value in these other areas). By paying the fees yourself, you could theoretically have the highest offer value, but a lower purchase price, lowering the property taxes you pay.
Be fully informed when you make your bid
- Once you're calibrated, invite a friend who knows a lot about houses to join you on a 2nd tour of homes you want to bid on.
- If you don't have a friend, you could even bring an inspector with you (sounds like a pain to arrange / pay for to me though)
- Look in the attic
- Look at the roof with a ladder (or use google maps)
- Get under the house and look at the foundation with the flashlight on your phone. Watch for cracks, wet spots, mold, mud, dirt that obviously used to be mud and is now dry, earthquake reinforcement (or not), pipes (copper is best quality).
- Read all the disclosures and the inspection report, take note of the cost of repairs
Less orthodox strategies
There are other, less orthodox strategies for finding a home, although I won't go into them here. They really depend on how much of a fixer your family can handle. Be very careful that you've done tons of research about the process if you pursue foreclosed homes.
That's it! Wishing you patience.
Good luck and I'm sure you'll find a home you're excited about 😄
Email me ✉️
PS Thumbtack is quite nice for finding home service professionals, definitely easier than Yelp, and sometimes easier than asking for referrals.