A First Time Home Buyer's Guide – Sean Weinstock

A FIRST TIME

HOME BUYER’S GUIDE TO SAN FRANCISCO

Why I Wrote This Pg. 4

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SEAN WEINSTOCK

THE FIRST THREE QUESTIONS TO ASK

When Buying a Home in San Francisco

HOW MUCH HOUSE CAN I AFFORD

SEVEN QUESTIONS TO ASK

In San Francisco?

At San Francisco Open Houses

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Pg. 9

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Pg. 5

THE TEN VITAL SAN FRANCISCO REAL ESTATE

Disclosures Pg. 11

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For A Mortgage Pg. 14

THE SIX KEYS TO A SUCCESSFUL ESCROW PROCESS

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THREE KEYS TO GETTING PREAPPROVED

FIVE STEPS TO CLOSING ESCROW Pg. 18

SEVEN POINT CHECKLIST

For Moving Into Your New Home

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Pg. 20

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WHY I WROTE THIS: My focus as a realtor is helping clients buying or selling their first home. The life stage is very specific and has its own sensitivities which demand deep empathy. Since starting my

S E A N W E I N STO C K R E A LTO R ®

408.768.1305 sean@seanweinstock.com DR E#0 2 01973 0

own practice, I’ve guided clients through nearly $40,000,000 in such transactions.

Over the course of those home sales, many of my buyers have asked the same types of questions. I thought that, to make the process a bit easier, I would write a guide to get everyone on the same page. No pun intended.

What follows is a deep dive into the various stages of searching for, bidding on, and moving into your first home in San Francisco. I hope you find it useful.

If you have any questions or comments, please reach out to me by email at sean@seanweinstock.com or phone/text at 408.768.1305.

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T H E F I R ST 3 Q U E ST I O N S

TO A S K W H E N B U Y I N G A H O M E I N S A N F R A N C I S C O

Buying your first home is a big step. Buying your first home in the super-hot San Francisco real estate market can feel like a giant leap. The best way to approach a challenge is with preparation. Here’s what you can expect when you jump into buying San Francisco real estate.

1.

O W M U C H I N V E N TO R Y I S AVA I L A B L E O N T H E S A N F R A N C I S C O H R E A L E S TAT E M A R K E T ?

The number of houses available for sale follows a surprisingly consistent pattern. San Francisco homes on the market increase each month in the first half of the year, peaking around May or June. A big spike in September is followed by a steep drop-off in inventory during the winter. By December, it’s slim pickings.

NUGGET OF WISDOM:

If you want the widest range of options, your best times to go house shopping for San Francisco real estate are late Spring and early Fall.

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2.

H O W LO N G W I L L I T TA K E M E TO B U Y A H O U S E ?

Most San Francisco real estate does not sit on the market longer than four to six weeks. This is particularly true for the middle to lower end of the market (below $2.5 million). Higher priced homes may take longer to find a buyer.

If you’re buying San Francisco real estate, the question of how long you can expect to spend house shopping before you find success is harder to quantify. If you’re on a tight budget, you might have a longer search before you find a situation where your offer can beat out the competition.

Trudging to open houses every weekend can turn quickly from fascinating to exhausting. The best way to shorten your search for a San Francisco home is to work with a great agent: someone with deep understanding of the San Francisco real estate market, who can help you craft a winning offer. (Hint: I might know just the person. Call me.)

Once you have an accepted offer, expect another 4-6 weeks for escrow to close and then it’s move-in time!

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NUGGET OF WISDOM: If you see a San Francisco house you like, be ready to put in your offer quickly.

It won’t last on the market long.

H O W M U C H D O I H AV E TO OV E R BI D O N S A N F R A N C I S C O R E A L E S TAT E ?

W hether you’re buying a condo or a single-family home in 2018, over the last 5 years, the chances

were good that you had to bid over the asking price to buy San Francisco real estate.

Many agents price properties deliberately low, to generate interest and create a bidding war. So if you thought you could only afford two bedrooms and you see a sweet deal on a three bedroom, don’t get too excited. Chances are that house will sell for at least 10% to 20% above the list price.

As San Francisco real estate prices rose in 2017, the percent that people overbid increased as well.

Unless your agent can tell you that the market’s turned a bit (happens usually in the Summer and Winter), expect to make an offer above the list price, unless you’re buying a brand-new condo.

N U G G E T O F W I S D O M : Listings on Redfin tell only part of the story. Ask your real estate agent for the real price you can expect to pay for a house in San Francisco.

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HOW MUCH HOUSE CAN I AFFORD

IN SAN FRANCISCO?

When you start to think about buying a San Francisco house, one of the first questions you need to answer is what you can afford. With the selling prices of San Francisco real estate, the numbers can make you feel like you’re an unsuspecting ingénue in a Hitchcock film.

So how do you figure it out? You can make your best guess, based on your savings and monthly income. You can go to the bank and wade through a mountain of paperwork to find out what kind of loan you prequalify for. Or you can use my custom-built San Francisco mortgage calculator spreadsheet to help you quickly get a handle on your numbers. (Email me – I’ll send it to you!)

Let’s outline a few things that will help you understand what you can afford.

1. H O W M U C H C A S H O N H A N D D O I N E E D TO B U Y A SAN FR ANCISCO HOUSE?

Two numbers are most important in determining what you can afford when you buy a San Francisco house: your cash on hand (your down payment and reserves) and your monthly income.

The first one seems simple. If you have $200,000 saved up, you have your 20% down payment for a $1 million San Francisco house, right? Boom!

OPE – sorry, wrong. First, the bank will want you to have at least a couple months of reserves in the N bank, in addition to your down payment. Second, if your loan is more than the Jumbo Loan limit of $636,150 (and it will be with a San Francisco house, unless you have a large down payment or you luck into the deal of the century), the bank will want you to have around six months of expenses set aside.

On top of that, you should plan for $10,000 to $20,000 in closing costs. If you’re buying a fixer upper, you might need money for renovations before you move in. If your San Francisco house is a newly built condo, you’ll foot the bill for the transfer tax plus appliances and upgrades. In probate situations, you’ll likely be mixing and matching, buying a fixer that requires you to pay transfer taxes.

Each situation comes with its own set of variables.

BOT TOM LINE:

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F or a 20% down payment, you need that much cash on hand plus the extras outlined above. You can easily toggle these things around in my spreadsheet to outline bestand worst-case scenarios.

W H AT W I L L M Y M O N T H LY PAY M E N T S B E F O R A S A N F R A N C I S C O H O U S E ?

When you go to the bank for a mortgage, they will look at your debt-to-income ratio or DTI. Depending on your relationship with the bank, you’ll need a DTI of under 49% to under 43% to qualify for a loan.

Once again, figuring out your monthly payments isn’t as simple as calculating the monthly mortgage.

You’ll need to set aside money for property taxes, HOA fees (if you’re in a condo or TIC) or gas bills and other maintenance (if you’re in a house), insurance, plus all the other debts you’re paying off (such as a car loan or student debt). c o n t i n u e d >

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My spreadsheet gives you places to enter all this information, so you can understand what your >

financial life will look like after you buy your first San Francisco house.

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B O T T O M L I N E :

Understand your DTI in conjunction with your lifestyle requirements and savings goals and go for a realistically doable loan. Not to pitch the spreadsheet too much, but I made it to do most of this stuff for you :).

W H AT A R E T H E H I D D E N C O S T S O F A S A N F R A N C I S C O H O U S E ?

I’ve discussed some of the costs that might surprise you above: transfer tax and appliances in a newly-built condo, loan origination fees, and reserves you’ll need to have in the bank, etc.

Real estate is nothing if not surprising. As we get into disclosures later in this series, we’ll discover things like the pest report, which might reveal thousands of dollars in repairs on that stately Victorian you’re falling in love with - and you could be on the hook if you don’t want the seller to walk away with a more willing buyer!

BOT TOM LINE:

Know your financial limits and build in a margin for the unexpected.

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7 Q U E ST I O N S TO A S K AT SAN FRANCISCO OPEN HOUSES

If you’re looking to buy in a condo building with more than eight units, don’t be lulled into thinking that you don’t need to worry about major repairs. Although the Homeowners’ Association (HOA) is responsible for managing building maintenance, the owners (and that means you) have to pony up to pay for it.

Questions 2-4 are best for larger buildings – think 30+ units. Questions 5-7 are best for smaller buildings since the HOA will likely be more formal in bigger buildings and make sure these considerations are attended to.

Don’t be shy. Ask some nosy questions at San Francisco open houses. Your mama might call it rude, but they’ll help you get a feel for which homes are truly in your price range and expose what might otherwise be thousands of dollars in surprise costs after you buy.

1.

HOW OLD IS THE ROOF?

Roof replacement for a big building is a BIG DEAL. Even though the cost is shared among many owners, a new roof could still lead to a special assessment. Special assessments are additional amounts levied by the HOA board on top of your monthly HOA dues to pay for extraordinary expenses. Special assessments can be anywhere from a few hundred dollars to tens of thousands.

Pro tip: If the roof in more than 20 years old, ask if the HOA has enough in reserves to replace it. Also ask about any recent special assessments. Well-managed condo buildings should set the HOA dues at a level that allows for reserves to pay for major repairs.

FOR LARGER BUILDINGS:

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I S T H E R E C O N S T R U C T I O N D E F E C T L I T I G AT I O N, E I T H E R C U R R E N T LY O R O N T H E H O R IZO N?

Building owners who believe the builder did a shoddy job may file a construction defect lawsuit. You need to know about this because big banks don’t like to write mortgages when buildings are in litigation. You will still be able to find a lender, but you could be asked for a larger down payment or offered a higher interest rate.

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P R O T I P : Ask when the building was built. In California, the time limit for filing a defect claim is 10 years after construction finished. If the building is near that age, there’s at least a 50% chance there will be litigation soon.

H O W M U C H A R E T H E H OA D U E S?

You’ll need to know the amount of your dues to calculate your monthly expenses after move-in. San Francisco HOA dues average around $500 per month but can go as high as $1,000 or more for luxury buildings.

PRO TIP:

E xpect to pay more if the building has extra amenities, such as a gym, pool, or roof deck complete with dog park.

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D O E S T H I S U N I T C O M E W I T H A PA R K I N G S P OT ?

A dedicated parking spot can add between $60,000 and $100,000 to the value of a condo. If the listing price doesn’t include parking, you’ll need to account for the cost (or get around town by bikeshare and Uber).

Find out if the building places restrictions on leasing parking spots. You can often lease a spot from another owner in the building or lease one to another owner if you PRO TIP: end up with an extra.

FOR SMALLER BUILDINGS:

5.

W H AT F I X E S W E R E S U G G E S T E D I N S E C T I O N 1 O F T H E PE S T R E P O R T ?

Pest Reports will be broken out into sections with different fixes. The lower the section number, the more urgent the fix. Section 1 will tell you whether your new roommates will have six legs and eat wood. The report will outline the steps needed to evict termites or other pests – another budget item.

ometimes the Pest Report recommends further inspections, particularly if there S were parts of the house the inspector couldn’t access. It’s a good idea to do these inspections before you buy. If the listing agent is open to it, you can even get the inspector out there before offers are due to stay competitive in contingency-free scenarios (more on that later in the series).

PRO TIP:

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H AV E T H E R E B E E N PL U M BI N G B AC K U P S?

Fixing backed up plumbing isn’t always as simple as unclogging a drain. It could be a symptom of a much bigger – and more expensive – problem.

A sewer lateral is the pipe that connects a building’s plumbing to the city sewer pipes in the street.

Maintaining the sewer lateral is the homeowner’s responsibility. Replacing a damaged lateral can cost you as much as $10,000. Ouch.

PRO TIP:

sewer lateral inspection only costs $250. If the seller hasn’t done one, consider A getting this inspection before you buy.

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H O W ’S T H E W AT E R T E M PE R AT U R E ?

You don’t have to ask this question; just run the tap and see how long it takes to get hot. If it only heats up to lukewarm, a water heater replacement may be in your future. That could run you as much as $5,000.

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PRO TIP: Check out the water heater at San Francisco open houses.

Bonus points for tankless water heaters because they save energy, take up less space, and are less likely to roll away in an earthquake.

A FIRST TIME HOME BUYER’S GUIDE TO SAN FRANCISCO SE ANWEINSTOCK.COM

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T H E 10 V I TA L S A N F R A N C I S C O

R E A L E STAT E D I S C LO S U R E S

When you find a San Francisco house you want to put an offer on, a big pile of scary-looking legal documents will land in your lap. San Francisco real estate disclosures can be anywhere from 150 pages to 400 pages long.

Honestly, they can seem like the definition of TL;DR, especially the boilerplate disclosures that you see in every package – but you should read them. Important nuggets are buried in all that legalese, and I’m here to help you dig through the topsoil.

Before we get started, take this as a rule of thumb – read through the boilerplate San Francisco real estate disclosures at least once. The government forces owners and agents to tell you a lot about San Francisco and California. Given that those will hold true for each home in your search, spend most of your time afterwards on the property specific documents. My effort below is to help you understand what you’re looking for there.

1.

T R A N S F E R D I S C LO S U R E S TAT E M E N T

Every San Francisco disclosure package will have a Transfer Disclosure Statement (TDS). Keep in mind that Trust sales, in which the Seller didn’t live on the property and therefore doesn’t know too much about it, are exempt from filling these out. Otherwise, the TDS tells you what third party inspections have been done and gives a detailed description of the house, including any significant defects.

W H AT T O LOOK FOR:

2.

Do you need to factor repairs into your budget? As an example, if the TDS reveals that the roof is more than 20 years old, you know you have a $10-20k project in your near future.

S A N F R A N C I S C O S E L L E R D I S C LO S U R E

Some San Francisco real estate disclosures are specific to SF. The San Francisco Seller Disclosure (SFSD) gives you a picture of seller’s finances and any financial or legal encumbrances on the property. The SFSD also includes information about the neighborhood, the condition of the property, the eviction history and information on tenants for income property.

For condos and TICs, the SFSD will include information on the bylaws and CC&Rs, i.e. if there are any. Investment properties like multi-unit buildings will have a load of important information on tenant status helping you better understand your rights as a landlord in that particular circumstance.

The answer to many of the questions on this and other San Francisco real estate disclosures is often “Don’t know.” Sellers write this because they don’t have the information or have been advised to say as little as possible, relying instead on 3rd party disclosures like the Property Inspection to tell your relevant details. That doesn’t mean that there isn’t valuable information in the disclosure package – so keep reading!

W H A T T O L O O K F O R : Any boxes checked “Yes”. Those will be accompanied by descriptions of circumstance on the lines provided below the section or, if necessary, in a separate addendum.

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3.

P R O P E R T Y I N S P E C T I O N: This is the big one: the actual reports from third-party inspectors.

What to look for: Read these professional reports to determine the condition of the foundation, exterior siding, roof, attics, electrical, plumbing, and seismic safety. They’ll often call for additional inspections like the “Pest,” so be ready to read a bit more!

4.

P E S T I N S P E C T I O N: This one isn’t just about bugs (though they are included). The pest

inspection will also tell you about dry rot and fungus. What to look for: “Section 1” fixes or “Additional Inspections” are going to cost you immediately, so take those into account when thinking about how much cash you’ll need to purchase.

5.

S E W E R L AT E R A L I N S P E C T I O N: A little rarer, but this speaks to the health of the pipe

connecting the house to the city’s sewer system. What to look for: Ask the agent if it’s a clay pipe or steel – clay is an older format and tends to break, costing you ~$10k in replacements.

6.

L I S T I N G A G E N T ’S V I S U A L I N S P E C T I O N D I S C L O S U R E : It gives you a good

rundown of any material issues an agent should be able to spot in the normal course of business.

Usually, things like paint scuffs find their way here, but sometimes more serious issues that you didn’t see are disclosed.

7.

P R E L I M I N A R Y T I T L E R E P O R T: This tells you who the legal owners are and how title is held, plus any liens against the property. What to look for: Will the seller get enough from the sale to pay off all encumbrances? If not, make sure your sales contract specifies that you are not responsible for any additional amounts the seller owes – check #11 and #48 on the SFAR Purchase Agreement for this one.

8.

N AT U R A L H A Z A R D S D I S C L O S U R E : You’re looking for 2 things – whether the house is more susceptible to natural disasters than others and if there are any weird tax assessments particular to the property or neighborhood that end up costing you annually.

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S Q U A R E F O O TA G E D I S C L O S U R E : Expect to see various numbers reported from various sources. Listing agents will often market against the highest because it translates to the highest sales price.

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10. S A N F R A N C I S C O R E A L E S TAT E D I S C LO S U R E S F O R C O N D O S A N D T I C S There are some condo-specific documents in your San Francisco real estate disclosures that you should pay attention to. The bylaws and CC&Rs will tell you whether you have to trade your pack of wolves for a couple Great Danes. Associated documents like the Community Handbook provide more color on issues like rooftop use an moving instructions.

The meeting minutes give you an idea for how your HOA makes its decisions and which important issues are currently under discussion. inancial disclosures will show you F what kind of reserves the association has for major repairs, any recent special assessments, the insurance policy on the building (for which there should be an additional and separate disclosure), and the ratio of rented to owner-occupied units (important for some lenders, especially in lower-priced assets, because renters’ lack of care may decrease the value of the property and therefore jeopardize the value of the mortgage).

ICs are an unusual ownership model T that’s specific to San Francisco and you’ll want to understand the structure of the legal ownership of the building if you’re buying into a TIC. maller Condo buildings and TIC’s often S won’t have professionally managed HOA’s, opting instead for 1 of the 4 owners to play that role and avoid management fees. That kind of structure is more flexible and may have less in reserve or operational budgets. Instead, everyone keeps their money until a special assessment like a roof comes due. Depending on how competitive the market is, you may want to consider asking the Seller for money to help pay for major assessments you know are coming up since they got the benefit of any feature’s useful life.

W H AT T O LO O K F O R : igh or frequent special assessments H could mean the building is poorly managed or in bad condition.

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3 K E Y S TO G E T T I N G P R E - A P P R O V E D F O R A M O R TG A G E

You’ve been to seven million open houses, seen everything you’re going to see, asked all the questions you need to ask, and you’re ready to buy a house in San Francisco. Now the real fun begins.

The first thing any listing agent will want to know is whether or not you have the money to actually make the purchase. To buy a house in San Francisco, you need to be ready with the answer to that question.

If you made a ton on Bitcoin, you might be ready to slap down a cool million in cash. In that case, all you need to do to make your offer is ask your banker to draft you a letter saying “Jolene has $1,000,000, available immediately. Believe me, because I work at Citi/First Republic/Blue Steel Asset Management, and we manage her account.”

If you made slightly less on a stock sale or, you know, by carefully saving your salary, you have a bit more work to do. You need to get pre-approved for a loan by the right bank (more on this below).

The bank needs to answer two basic questions about you before it pre-approves you: how much cash do you have, and how likely are you to repay your loan on time? It will take them a day or two to figure out the answers, so start the process ahead of time and get this done before offers are due.

The big banks finance your more vanilla transactions – livable, single-family homes and condos without any major issues. You’ll need to go to specialized lenders to finance a condo in a litigated building or a TIC. No matter what kind of property you place an offer on, the forms you need to fill out are largely the same.

1. B E F O R E Y O U B U Y A H O U S E I N S A N F R A N C I S C O, Y O U’L L H AV E TO F I L L O U T A F E W F O R M S…

The short answer to what information you’ll need to fill out the bank forms is: everything except your underwear size. Specifically: •

I f you are an employee, in addition to proof of income, the bank will also want to know how long you’ve worked for your current employer and how long in your current career. If you got your first professional ballet role last year, you could be out on your tutu in a hot minute. The bank would rather lend to the ballerina who’s been on her toes, professionally, for 15 years.

•

Pay stubs for the last two consecutive pay periods;

•

W2’s for the two most recent years; and

•

sset/bank statements: the most recent two statements for checking accounts, savings A accounts, 401k’s, IRA’s, and any other accounts you have with money in them, even if you’re not going to put that money toward your down payment.

•

I f you’re self-employed (even if you work for one company, if you’re a contractor and not an employee, this is your category), you’ll need to prove that you actually earn money and don’t sit around eating bonbons all day while telling everyone you’re a “consultant.”

•

All your 1099s from the last two years;

•

Signed federal tax returns, including all schedules, for the past two years; and

•

(Sometimes) A year-to-date profit and loss statement from the current year.

•

I f you’re currently renting, banks will want 12 months of cancelled rent checks or evidence of payment (Venmo receipts work too).

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2.

K N O W Y O U R S A N F R A N C I S C O M O R TG AG E L E N D E R S

Some lenders are more risk-averse than others. If you’re buying a home that comes with any kind of strings attached, you’ll have a smaller pool to choose from.

Standard Home or Condo: Here you have your pick of lenders. For many banks, a mortgage is a way to start a relationship with you. The more money you put into accounts with them, the more likely they are to grant you a higher debt-to-income ratio and offer a better interest rate.

Tenancy in Common (TIC): Most of the time, the listing agent will have a preferred lender. Several financial institutions provide loans for this only-in-San Francisco category.

Litigated Buildings: If there’s an ongoing lawsuit involving the building, many banks opt out, but the listing agent can usually provide you a list of lenders who have declared themselves willing to work with buyers in the building.

3. W H Y Y O U R L E N D E R I S I M P O R TA N T W H E N Y O U B U Y A SAN FR ANCISCO HOUSE

One factor the seller’s agent will look for in evaluating your offer is your pre-approved lender. If the bank you’re working with has a history of dragging out closings, she could counsel the sellers to choose an offer with a better lender. This matters if you’re going up against 5 or 10 other offers with similar terms, which is not uncommon when you are trying to buy a house in San Francisco, and it’s an entirely human-based equation: the more creative your mortgage officer, the more likely it is that your loan won’t hit snags.

If you’re buying in a litigated building or a TIC, you won’t have much choice, and the seller knows that. But, for the majority of properties, the competition is fierce to buy a house in San Francisco. You want every advantage you can get. Ask your realtor to guide you to a good lender – or give me a call.

I’m happy to help you out.

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T H E 6 K E Y S TO A S U C C E S S F U L

ESCROW PROCESS

Your offer was accepted – yay! And also: YIKES! You’ve entered escrow in San Francisco real estate and now it starts to get real. You’re about to make the biggest purchase of your life (unless you buy a yacht, but we won’t worry about that now).

I’ve got your back. Here’s the lowdown on escrow in San Francisco, so you can soar through the paperwork like the badass property owner that you are about to become.

1.

ESCROW OFFICERS

If you don’t currently believe in a God, a great Escrow officer might slide into that role for you. Also known as a Title Officer in Northern California, an Escrow Officer is the person who collects your money and makes sure that the financial pieces of your real estate contract land in the right place at the right time. Your escrow officer will work with your lender to get your loan funded and reach out to you for additional information about your work or financial situation the lender requests. These people deal with countless documents and make all the wheels move as fast as you need them to.

The escrow period is usually 3-4 weeks, but a competitive set of bidders at offer might drive that down while sellers needing rent-backs for 1031 exchanges or other moving concerns might make it longer. At the end of escrow in San Francisco, you might go to the escrow agent’s office or, for ~$200, they can send a notary to you. You’ll sign a big stack of forms, and boom! you’re a property owner.

But before you sign, there are a couple more things you need to know.

2. D E P O S I T S Real estate contracts for San Francisco houses, condominiums, and TIC’s usually require a deposit of 3% of the purchase price. You’ll have to pony up that cash right away because your deposit is due within two business days from the day the sales contract is signed by all parties.

If it takes you more than two days to liquidate your Bitcoin, the seller’s agent will send you a Notice to Perform and you’ll have two more days (including weekends) to fund your deposit or you could fall out of escrow.

Failing to get your deposit in on time starts off your escrow in San Francisco on a bummer. The other side starts to doubt whether or not you’ll come through and starts mitigating that risk by inviting back-up offers, so best not to do it. Make sure you have the 3% cash on hand and ready to go as soon as your offer is accepted. In other words, sell that Bitcoin now!

3. L E N D E R S As we discussed in my post on Lender selection, your Mortgage Broker really has the opportunity to kill a deal, especially in a competitive atmosphere like San Francisco. Overpromising and underdelivering is sadly much more common than you would suspect, and professionals, even seasoned ones, sometimes don’t take any ownership over their end of the process, positioning themselves more as hapless middlemen than as a resource to help get things done. A good Lender will be able to outline the steps of the process, on which days those things should be occurring, and the various pieces of documentation you’ll need to provide to keep things moving along. They should be able to tell you what a healthy deal looks like and how yours tracks against success. Staying in constant communication with your Lender is very important.

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4. C O N T I N G E N C I E S A contingency in a real estate contract is a buyer’s concern that needs to be addressed before she fully commits to buying the property – could be a property inspection, an appraisal coming through at the sales price, or any of a number of other details. Contingencies are less common when you’re in a competitive offer process as they delay a Seller’s certainty that the deal gets done. Buyers will step up their offers by removing contingencies and taking on calculated risks.

If you have a contingency on the deal, should the terms of that contingency go unmet, you can back out of a deal at no penalty to you. It’s rarely the case that this happens as sellers usually want to do everything they can to sell. What’s more likely the case is that delays on contingency fulfillment push back the Escrow timeline a bit as solutions are found.

Keep in mind that, once you waive all contingencies, you can’t drop out of escrow because of any problems you discover later.

5. C A S H Plan ahead so you don’t delay the close of escrow: get your cash contribution to the deal ready several days before closing. If you need to sell stock or pull money out of a retirement account, don’t wait until the last minute. Lenders will not fund a transaction unless they see that the Buyer has contributed all cash funds necessary to close the deal, and it’s better to get a couple of days lead time in case something as mundane as an incorrectly typed account number delays wiring from your bank to Escrow.

6. I N S U R A N C E Have your property insurance ready to cover you from day one. In condo buildings, the HOA insurance will generally only cover the building, not your specific piece of it. You’ll want to get a wallsin policy to protect your unit and your property. Typically, in that circumstance, you’ll be looking for an HO-6 policy. Check with your car insurance company; they will often give you a discount if you write a second policy. Otherwise, ask me! Happy to refer you to the right person.

Now that you’ve completed escrow in San Francisco, you’re ready to take possession of your new home – almost. Stayed tuned for more wisdom on buying a San Francisco house in my last two posts in this series.

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SUBJECT

5 ST E P S TO C LO S I N G E S C R O W

You’ve secured your San Francisco home and made it successfully through escrow. The inspections have been done, contingencies have been released (see my last post if you don’t know what contingencies are), and you’re about to close escrow. You definitely rock for making it this far, but you could potentially be out a lot of money if you don’t understand the ins and outs of closing escrow in San Francisco.

Let’s walk through the 5 steps involved in closing the deal and securing the deed. When you’re prepared, closing escrow in San Francisco can be a slam dunk.

1.

F I N A L W A L K T H R O U G H:

VERIF Y BEFORE YOU BU Y

A day or two before you sign the paperwork for closing escrow in San Francisco, you’ll do a final walkthrough of the property. This is to make sure that the stagers didn’t do any damage when they moved out and that the sellers have removed all their possessions. This is also the time to verify that any repairs the seller agreed to when you signed the contract have been completed.

2. BU Y A 1-Y E A R HOME WA RR A NT Y P OL IC Y

Check your contract to see if your agent is buying you a home warranty policy – it’s Point #28 on the SFAR Purchase Agreement.

This insurance policy covers things like appliances and the heating system, in case they break down during your first year in your new home. If your agent isn’t buying it for you, consider buying this valuable insurance before you close (and factor this amount into your costs for closing escrow in San Francisco).

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3.

OV E R F U N D Y O U R S A N F R A N C I S C O C LO S I N G C O S T S

At the start of escrow, you made a cash deposit - probably about 3% of the total sale price.

Before you can close on your home, you’ll need to fund the rest of your down payment plus the closing costs detailed in a Closing Statement your title officer will prepare for you. Buyers’ responsibilities when closing escrow in San Francisco can include title insurance, various insurance premiums (these will depend on your lender and your situation), the cost of the appraisal and inspections, fees for a notary handling the closing paperwork, and recording fees.

If you bought points on your loan, you’ll have to pay for that as well.

Your San Francisco closing costs will also include pro-rated property taxes from the date you become the owner and, if you’re buying a condo, you could owe a move-in fee and pro-rated HOA dues.

If you don’t have the funds available on time, you could be subject to penalties for delayed closing. This basically means that you’ll start paying the mortgage before you take possession of the property and that really sucks.

To avoid paying extra, make sure you have cash available about a week before escrow is scheduled to close. When in doubt, err on the side of overpayment. The title company will refund any extra money you paid after the sale closes.

4.

S I G N O N T H E D OT T E D L I N E O N T I M E

If you’ve been dying to trek the Amazon or take a slow boat to Tristan da Cunha, don’t do it while you’re in escrow. A few days before closing, there might be some additional disclosures for you to sign, and, of course, your title officer, or a mobile notary acting on her behalf, will sit you down and stop just shy of asking for your first-born child as you sign off on the home loans you worked hard to get. You’ll need to turn these around quickly, so you don’t hold up the process.

5.

C O L L E C T Y O U R K E Y S!!!

After all your closing costs are paid, there are a few more steps to closing escrow in San Francisco. The title company will have the deed recorded with the city. The seller’s agent will give your real estate agent the keys to the house, and, about two days after you fill out the paperwork, congrats! You are now a San Francisco homeowner. Welcome to a very exclusive club.

In my final installment in this series I’ll cover what you need to know about move in. But you don’t have to wait for that. Call me anytime. I’m always happy to answer your questions, about San Francisco closing costs or anything else that you’re stuck on.

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SUBJECT

7 P O I N T C H E C K L I ST F O R M O V I N G I N TO YO U R N E W H O M E

Congrats - you survived the blood sport of buying a new home in San Francisco! You made a winning offer, signed your name a thousand time, you got through escrow and now it’s time to move in. Yay you! Here are a few tips for moving in!

1.

PRO TIP: Give yourself at least two weeks overlap between your expected move-in and the date you turn in the key to your current apartment.

G I V E Y O U R L A N D LO R D N OT I C E

Most San Francisco landlords require 30 day’s notice that you’re going to move out, but there’s no harm in giving more notice or giving your landlord a general heads up that you will be moving out, even if you’re not sure of your exact move-in date for your new home in San Francisco.

2.

U N D E R S TA N D C O N D O M OV E- I N R U L E S

If your new home in San Francisco is a condo, and especially if it’s a large condo building, the Homeowners’ Association (HOA) probably has rules about that govern moves and may charge movein fees. Details are in the big stack of paper from the HOA that you signed off as having read but didn’t actually read. Time to read!

PRO TIP:

3.

Ask other residents of the building for advice. In addition to the written rules, condo buildings sometimes have unspoken understandings (“We just don’t do that around here”). Get the 411 on to make a good first impression.

F I N D A G R E AT M OV E R

Don’t call your friend who owns a pickup truck (believe me, she’s really tired of moving everyone’s junk) and don’t make 30 trips in your Mini Cooper. Take my advice and hire an insured and bonded mover to get you into your new home in San Francisco – you can thank me later. Get recommendations from your HOA, from friends, from your real estate agent, and from Yelp to find a good mover.

PRO TIP: The Lugg app is an easy way to connect with reputable movers. I’ve used it to move chandeliers out of multi-million dollar mansions and to pack up studio flats.

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4.

L E AV E T I M E TO PAC K U P Y O U R O L D H O M E

Unless your name is Marie Kondo, you probably don’t enjoy packing. What do you do with the boxes that you haven’t opened since your last move? So many tough decisions.

Leave yourself plenty of time to pack and start well in advance of your move. You can leave it till the night before the movers come, but you’ll be less organized and have to work harder on the other end.

PRO TIP:

5.

Ask your moving company what moving materials they provide and figure out what you’ll need to source yourself. Here’s a good reference list of moving materials that I like to give my clients.

S PI F F U P Y O U R N E W H O M E I N S A N F R A N C I S C O

W hen you give notice to your landlord, be sure to allow time for fixing up your new San Francisco home. Changing counter tops, putting in new carpets, and painting are all easier to do in an empty house.

The contractor you choose is crucial. Once again, your agent is a great resource to point you to the best person to do your remodel, and I’ve got a list of local providers to help. If you’re into an easy pick, Goodfellas does good work, they’re available quickly, and they’ll give you a realistic cost estimate.

PRO TIP: Cheaper is not always better when it comes to construction.

Choose a contractor who gives you an honest assessment of the costs and not the guy on Craigslist who says he can install cabinets on the cheap.

If you don’t do it right the first time, you’ll end up paying

6.

CLE AN UP YOUR NE W HOME IN

twice.

SAN FR ANCISCO

Ask your agent what kind of cleaning the seller did. The purchase agreement requires that the home be delivered broom clean – but this just means that the seller has removed all their belongings and trash and swept and vacuumed. If you want your new home in San Francisco to be pristine when you move in, you might want to give it an extra polish.

PRO TIP:

7.

Many cleaning services offer a special ceiling to floor cleaning service for just this situation.

Give me a shout, I’m happy to recommend some of the best cleaners in SF.

D O N’T F O R G E T T H E M A I L

It takes at least a week to start forwarding your mail, so make sure you let the Post Office know ahead of time.

There’s a delay with forwarded mail, so make a list of parties that send you sensitive materials through the mail (like your bank) and put your new address in your profile.

PRO TIP: ail forwarding is an imperfect M science. Leave self-addressed envelopes with your landlord or the new tenant, so they can send you important mail that slips through the cracks.

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