Buying a House in San Jose: The Ultimate Step-by-Step Guide
Buying a home in San Jose is different than in many areas. The San Jose Housing market is unique and the average house prices in San Jose are high. The offer process here is fast-paced and competitive, which can overwhelm buyers.
Even so, buying a house can be straightforward, especially if you go into it armed with knowledge and the right team. At Homeowner Experience, our mission is to make your real estate experience seamless through education, transparency, and an unwavering commitment to your success.
That’s why we’ve created this step-by-step guide to buying a home. It’s designed to help you understand the 5 phases of the process so that you’ll be ready and prepared. This step-by-step process is based on our 20+ years of experience buying and selling homes in San Jose. We’ve learned a lot by listing and selling 190+ homes and helping 200+ families get into their dream homes. To date, we’ve sold $230M+ worth of real estate in San Jose.
By following each step in order, you will avoid common home-buyer mistakes and minimize the stress and time spent on the process. Though you may be tempted to skip some steps, you’ll have the most success if you follow these steps in order. Trust us!
Remember– you’re not alone. With a phased approach, strategic planning, and thorough research, we’ll be beside you every step of the way to ensure a seamless transition to your next home. Tell us a little about your home search using this questionnaire.
It might be time to buy a house. But does it make sense for you? The first phase in buying a house is to do some research, understand your finances, and decide on some potential neighborhoods. The decision is an emotional one, as well. Are you ready to commit to buying a house and staying in the area?
Generally, we recommend making a seven year commitment. This is based on data that says seven years is long enough to weather the ups and downs of the greater market and still come out on top. For example, if you bought at the peak of the market in 2007 right before it crashed in 2008, your home would still have appreciated in value if you stayed for seven years. In the past 20+ years in the Bay Area, homes have appreciated for every seven year span.
As part of your research, you should estimate your home-buying budget using a mortgage affordability calculator. This tool will give you an idea of what you’ll be able to afford based on your savings, income, and a few other financial factors. We like this calculator from Realtor.com because it only requires four inputs and then outputs a price range so you know what is affordable and what is stretching your budget. It also shares potential property options including the number of bedrooms and bathrooms typical in your price range and targeted area.
Once you’ve figured out a general ballpark, start an online search of areas that fit your estimated price point. Gain an understanding of what you might be able to afford, the tradeoffs you might be making, and the neighborhoods that best suit your budget. Review the most affordable and most expensive San Jose neighborhoods and read about which neighborhoods might be right for you. Tell us about your home search using this questionnaire.
FAQs in Phase 1
- How much money do you need to buy a house in San Jose?
- Have you saved up for your down payment & closing costs?
- What is your purchasing power including your debt to income ratios?
- How do you estimate your home buying budget? Use our favorite mortgage affordability calculator
- Which San Jose neighborhood is right for you?
By addressing the financial aspects, considering emotional factors, and thoroughly researching the location, you will be well-prepared to make an informed decision when buying a house.
Once you’ve done some research into neighborhoods, established a budget, and determined that you’re ready to buy a house, it’s time to set up your team. There are two main players that you’ll work with throughout this process: (1) your real estate agent and (2) your mortgage lender.
To make this process as smooth as possible, we recommend educating yourself on Home Buying Vocabulary so that you understand phrases like “going into escrow,” as well as the nuanced differences between a buyer’s agent and a seller’s agent.
Find and interview real estate agents
Your goal when choosing an agent is to find someone that has the knowledge and expertise to help you with this gigantic financial decision. You’ll want to pick someone working in your immediate area, preferably an expert in the neighborhood or city you want to buy in.
This agent should have excellent communication skills, a well-defined process, and plenty of recent experience in the neighborhood. You’ll want to choose an agent who has bought and sold 12+ properties in the past 12 months, not someone who’s done just a few deals, as they won’t have a pulse on the ever-changing market.
Avoid the mistake of choosing a real estate professional based on the assumption that all real estate agents are the same. Here are some of the mistakes we see:
- Some buyers sign with the first agent to come along, only to realize too late that they should have "shopped around."
- Others choose an agent from an online real estate website and see several agents throughout the process without one that’s committed to their success.
- Some go see a property on their own and use someone the listing agent recommends, reasoning that the “double dip” method gives them an inside track. But these agents don’t have your best interests in mind– they just want to make a quick deal.
- We’ve had clients come to us with stories about past transactions where agents didn’t do a thorough job helping them understand the property and they wound up on the hook for funds they didn’t expect.
To choose an agent, make a list of agents to interview. You might find agents via online searches, recommendations from friends, or from a helpful Youtube Channel focused on your local area. Once you’ve compiled a short list, come up with some questions to ask to find out if an agent is best for you.
Pay special attention to agents who offer formal buyer consultations, as these are the agents most likely to be dialed into exactly what you want. Schedule some buyer consultations and decide which agent is best for your home-buying journey. While you’re doing the consult, get the agent’s perspective on your budget versus your ideal property, as well as their perspective on the best neighborhoods for your budget.
FAQs for Phase 2 - Hiring a San Jose Real Estate Agent
- Why use a buyer’s agent?
- How much does a buyer's agent cost?
- How do you find the right real estate agent in San Jose?
- What questions should you ask a real estate agent to find out if they're a fit?
- How do I schedule a home buyer consultation meeting?
Find and interview mortgage lenders
Your mortgage lender will help you secure the loan on your property– a good one will not only get you the best rate but also educate you on loan options and ensure the process is seamless once you make an offer and go into Escrow.
To find a lender, gather a list of lenders to interview. Your agent will have recommended lenders for you to reach out to. You can also ask friends and family who have recently made a home purchase (not a refinance, that’s different) who they used and what they liked about them.
Spend a week or two interviewing ~3 lenders and decide who will be your top two options. Then, gather the paperwork for your loan application and get pre-qualified. Check to make sure that your pre-qualification matches the online calculator estimate you completed during the research phase. If it doesn’t match, make sure you understand why.
FAQs for Phase 2 - Finding a Mortgage Lender
- How do I choose a mortgage lender?
- What’s the difference between loan pre-qualification and loan pre-approval?
- Why do you need a home loan pre-approval before going home shopping?
- Who are some local San Jose lenders we can reach out to?
Once your home-buying team is set up, it’s time to narrow down your focus and go shopping.
Ready to set up your team? Schedule your home buyer consult today so we can talk more about your home-buying goals.
Now that you’ve done your research and formed a team, it’s time to narrow down your focus and start shopping.
Start by working with your agent to create an Ideal Property Profile, which outlines exactly what you’re looking for. At this stage, you’ll decide on things like ideal square footage, neighborhood, school systems, and whether you’re looking for a condo/townhome, single-family home, fixer-upper, or new construction. Remember there are factors besides cost that matter in home buying.
It’s time to start driving through neighborhoods, as this will give you a sense of the overall feel of the place where you want to buy. How far away are the schools? Where’s the nearest convenience store? How are the houses kept and how busy are the streets? If you’re relocating to the area, you can get a sense of the neighborhoods in San Jose via our videos.
You’ll also want to study the hyper-local market in your chosen neighborhoods. Are homes seeing multiple offers? Are houses selling over asking or below asking? How many times per month or year does your ideal property become available? Here's some more information on how to understand the real estate market in a specific San Jose neighborhood.
If you’re working with an active agent, they’ll know about properties about to come to market or opportunities that could be purchased off-market. An active agent will also know what is happening in the market in the past few weeks, not the past few months.
It’s also time to take the next step with financing: you need to gather all your financial paperwork and apply for home loan pre-approval and if offered, full loan underwriting. You’ll need to submit to your top lender choice for them to pre-approval 2-3 days, then work toward full underwriting of your loan which takes roughly one week. Your pre-approval typically lasts for 90 days.
Once your pre-approval letter is in hand, start actively home shopping! Visit potential home matches on a regular basis. We suggest touring homes one or two times a week with your agent. If you’re not in the area, Homeowner Experience can provide video walkthroughs for you.
Once you’ve found a property you like, it’s time to submit an offer.
Before you send in the paperwork, be sure to research disclosures and inspections. In San Jose, 95% of homes provide property and termite inspections upfront. Californias has statutory disclosure, as well. These include Lead, Natural Hazards (such as earthquakes, floods, and wildfires), a Transfer Disclosure Statement with agent visuals, and a Seller Property Questionnaire which provides more detail about the property and location.
Compare notes with your agent and ask the listing agent questions. You may also want to call inspectors or other tradespeople to get estimates and advice at this time. You’ll want to know what repairs will need to be dealt with right away vs. what can wait a year or two.
Based on the property and the state of the market, you may decide to add contingencies to your offer. You’ll typically have 2-5 days to research the property in question. Historically, San Jose has very low inventory. As a result, the market is typically competitive and moves fast. Homes that are updated and priced right will likely have multiple offers and buyers will need to come in right away with a strong offer. Sometimes properties are underpriced on purpose and an offer date is set. There are different strategies to get into a property because the market moves fast to try to build competition, which is more of a reason to have a knowledgeable team by your side.
You’ll also want to research the home value for the appraisal– this is the price that the bank values your home. If the appraisal is less than the offer price, this means that a buyer may need to come up with additional funds beyond the bank’s value.
Once you’ve done your due diligence and decided that the home is a great option, work with your agent to submit an offer. This step can be stressful as you’ll likely wait 24-48 hours to hear back from the seller. After that, it may take another day or two to negotiate the offer with counteroffers before ratifying a Purchase and Sale agreement.
FAQs for Phase 4
Once an offer is accepted, you will go into Escrow. But first, take a moment to celebrate. Congrats on getting into contract on this property!
This part of the process is exciting and can be overwhelming, but an understanding of the roadmap minimizes the stress and leads you through the steps to minimize the unknowns.
Your first responsibility is to take care of your 3% earnest money deposit. This is typically due within one business day and needs to be wired into escrow immediately. You will also need to provide information and loan paperwork to your mortgage lender to get the loan process going. These items are top priority and critical.
Once you’ve sent over funds and information to your lender, it’s a good idea to consider hiring your own professional inspectors even if the seller provided one. If you're not familiar with the house or homes in the area, you can hire an inspector to get a lesson or custom walk-through of your house. If you don’t do this correctly, you could face a lot of unexpected costs and create gigantic headaches.
You can also use this as an opportunity to check out the neighborhood even more closely and potentially meet and chat with some of your neighbors.
Now is the time to research and set up homeowners’ insurance. We recommend starting with the carrier of your auto insurance as they can often bundle the policies. Your agent may have some other good options to consider.
In order to get your loan approved, the appraisal will take place at this time. Basically, your lender will send an appraiser to review the home and decide on how much it’s worth. After the appraiser comes, they’ll typically send over the appraisal within 7-12 days.
Now, it’s time for the final stretch. You’ll need to finalize your packing and move plan, sign your loan documents as well as your property deed, and send your remaining down payment to escrow. On the last day of escrow– also known as closing day— you’ll get the keys to your new home.
FAQs for Phase 5
Congratulations! You own a home.
You’ve reached the end of your home buying journey. Settling in typically takes a few months to feel comfortable in your new routine. Now it’s time to…
Move! Read our San Jose Moving Guide
Get settled in and unpack things
Work on home repairs or updates you planned
Reach out to your real estate agent for guidance on service providers, property taxes, and more
Refer your friends and family to your real estate agent!