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How to Buy a House in California

How to Buy a House in California

by Ira Serkes, George Devine

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The most complete guide to buying a home in the Golden State

A thorough, practical guide to every aspect of buying a house, How to Buy a House in California will help you make informed decisions that can save you thousands of dollars. With this bestseller in hand, you'll learn how to:

choose a house and neighborhood
find the right agent


The most complete guide to buying a home in the Golden State

A thorough, practical guide to every aspect of buying a house, How to Buy a House in California will help you make informed decisions that can save you thousands of dollars. With this bestseller in hand, you'll learn how to:

choose a house and neighborhood
find the right agent
get the most up-to-date information on mortgage options and rates
take advantage of creative financing strategies - from seller financing to government loans
figure out how much down payment you can afford
make an offer and negotiate with confidence for the best price
buy a new house in a development
inspect a house for physical problems and environmental hazards
juggle buying and selling houses simultaneously
successfully go through escrow

The 11th edition is completely updated and provides an easy method for calculating how much house you can afford. Plus, you'll find the current rules for government-assisted loans and the latest resources.

List of Forms
Ideal House Profile
House Priorities Worksheet
House Comparison Worksheet
Family Financial Statement
Directions for Completing the Family Financial Statement

Editorial Reviews

Robert Bruss
Invest in this book...it is virtually impossible to think of anything they left out because they have anticipated every question home buyers might have.
syndicated real estate columnist. San Francisco Examiner
Laurie Brian
A valuable resource for California homebuyers and real estate professionals throughout its many editions.
San Francisco Chronicle , 7/4/2001
Los Angeles Times
One of the most detailed real estate books you will ever read...filled with practical advice...The emphasis is on strategies for getting the best price as well as not making costly mistakes.
Oakland Tribune
...brimming with information on buying a house in California.
Los Angeles Times
"This is the most complete book for the California home buyer."
San Francisco Examiner
"THis book can't be too highly recommended for home buyers and home owners. The rest real estte agents will also want to study it, so they can be of greater service to their clients."

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Read an Excerpt

Chapter 1:
Describe Your Dream House
A. You Know the House You Want to Buy

This book is full of practical, up-to-date information about the financial realities, legal rules and real estate industry customs you must understand to successfully purchase a California house. Two crucial things, however, no book can tell you-the location and type of house you want to live in. No matter how many experts you consult or how many opinions you get, you and only you are qualified to describe your dream house and ideal neighborhood.

Given your family's needs, tastes and finances, you probably already have a good idea of the type of house you want to buy. Indeed, if you sit quietly for a few moments, shut your eyes and let your imagination do the walking, you can probably conjure up an image of the house or perhaps, if you're a flexible sort, several houses that you would dearly love to call home.

Because this is true, we skip the typical first chapter in many homebuyers' books, in which the author compares such things as the joys of living on a dusty road in outer suburbia to the convenience of living in a townhouse in a major city. If you aren't focused enough to make these broad choices on your own, no book will help you much.

Tips on Where to Locate

Perhaps you've heard it said that choosing a house's location wisely is as important as picking a good house. In a state the size of California, it's a vast understatement to say you have a lot of locations to choose from. To help you think about specific California areas, we include Appendix 1, Welcome to California.

Despite the title, Welcome to California isn't meant only for newcomers to the state. Whether you're a San Franciscan moving closer to a San Ramon job, a San Diego family moving to Sacramento, New Yorkers (or Taiwanese) relocating to Los Angeles or simply unfamiliar with certain California areas, you'll find a wealth of information. From climate and air quality to earthquakes and schools, Appendix 1 presents valuable information to help you decide where to live. You can also get valuable information from the numerous online real estate sites described throughout this book and listed in Appendix 2. In addition, in Chapter 5 we discuss working with a local real estate agent to get essential information on neighborhoods. But keep this in mind: No matter how much help you get from secondary sources, there's no substitute for your own legwork. Ask your friends and colleagues, walk and drive around neighborhoods, talk to local residents, read local newspapers, check the library's community resources files, visit the local planning department and do whatever else will help you get a better sense of a neighborhood or city.

If you've already found the house you want to purchase and are mainly interested in the ins and outs of financing, skip the rest of this chapter and move on to Chapter 2, How Much House Can You Afford?

B. Don't Be Talked Into Buying the Wrong House

Although we skip the conventional discussion on the types of houses available in California, this doesn't mean we have nothing to say about the mechanics of buying a house you'll be happy with. You need an organized house-buying method to translate your dream into reality. This is particularly true in today's high-priced market, in which most buyers face an affordability gap between the house they'd like to buy and the one they can afford. Without an organized approach, there is a good chance you'll be talked into compromising on the wrong house by friends, relatives, a real estate agent or even yourself.

"Not me, I know my own mind," you say. "Nonsense," we reply. In today's market, almost everyone must trim their desires to fit their pocketbook, and it's easy to buy the wrong house in the wrong location. So easy, in fact, that every day many confident and knowledgeable people become so anxious and disoriented in the process of searching for a house in California's confusing real estate market that they purchase one they later come to regret buying, sometimes bitterly. In outline, here is our method to all but ensure that you buy a house you'll enjoy living in, even if it's substantially more modest than your dream house:

Firmly establish your priorities before you look at a house. Insist that any house you offer to buy meets at least your most important priorities.

Do this even if, in buying a house which meets your priorities, you must compromise in other areas and purchase a house less desirable than you really want.

The reason this method works well should be obvious. If your priorities are clearly set in advance, you're likely to compromise on less important features. If they aren't, you may become so disoriented by the house purchase process that you buy a house without the basic features that motivated you to buy in the first place.

In the following sections, we provide an efficient method to help you consider a range of house features, establish your priorities and compare potential houses.

C. Identify Your Ideal House Profile

When you're looking for a house, it's easy to become confused by the huge array of choices. This is understandable, given that houses themselves are so different. Then, there's the issue of location-houses come in all sorts of neighborhoods, school districts and potential hazard zones (fire, earthquake and flood, to name a few). And, of course, price and purchase terms are crucial considerations for most homebuyers. To cope with all these and at least a dozen other variables you'll want to consider so you end up with a house you really want to live in, it's essential to establish your priorities in advance and stick to them. The first step is to identify house features most important to you by completing our Ideal House Profile, which lists all major categories such as upper price limit, number and type of rooms and location. A sample is shown below, and a tear-out copy is included in Appendix 4. If you're buying with another person, prepare your list of priorities together, so that each person's strong likes and dislikes are respected. Otherwise, your living arrangement is bound to have problems. For example, you might care most about a modern kitchen, at least three bedrooms and a space large enough to do woodworking. If so, you'll surely be miserable if you allow your mate to talk you into buying a two-bedroom cottage with its original 1950s kitchen, because it has a rose garden and a great view.

Getting price and financing information.

Most people will have an upper limit on the house they can afford to buy and the maximum down payment they can make. If you need advice on these issues, be sure to read Chapters 2, 4 and 8 before completing the Ideal House Profile.

1. Must Haves: Mandatory Priorities

Use the Ideal House Profile to identify the essential features you're looking for (must have) in a house, such as a particular city or neighborhood. Since price is an obvious consideration for most people, fill in the top section first. For example, under Upper price limit, you might note $400,000, and Maximum down payment of $60,000. Then fill in the rest of the form.

If you have two kids, you might note that three bedrooms, excellent public schools and a street with lots of children are "must haves."

Pay close attention to the School needs category if you have, or plan to have, children. Buying a great house at a great price in a lousy school district may mean years of paying for private schools. By contrast, paying a little more for a good house in an excellent school district may be a bargain in the long run. See Appendix 1, Welcome to California, for advice on checking out schools.

In most cases, it will be obvious where to note your priorities. For example, if extreme quiet is important (you don't want to be near a freeway offramp), or you want walking access to a park, list these under Desired neighborhood features. If you're not sure where to list a particular "must have" such as a hot and dry climate, ocean view, the siting of a house (feng shui) or garage parking, put it in the Other desired features category on the Ideal House Profile.

2. Hope to Have: Secondary Priorities

Once you've run through your list of "must haves," jot down features that you'd like but aren't crucial to your decision of whether or not to buy. For example, under Type of yard and grounds, you might note patio and flat back yard in the "Hope to Have" column. Or under Number and type of rooms, you might list finished basement or master bedroom with bath. Take a second look at your "Must Have" column. If you're typical, you may wonder how you will ever afford a house with the features you've listed. Don't despair-at least, not until you understand the strategies (discussed in Chapter 3) to help you buy an affordable house. For now, you might need to change a couple of "must haves" to "hope to haves." Focus on the maximum number of features you consider essential. For example, if your "must have" list includes a sunny exposure for your beloved garden, a big yard for your even more beloved dog and an extra guest room, but you don't entertain as often as you garden, consider eliminating the guest room.

Check out view ordinances.

If you're drawn to a house for its great view, call the local mayor or city manager's office and ask if any view ordinance specifically protects a homeowner's rights to a view. Check whether local regulations require homeowners to trim trees to protect their neighbors' views.

3. Absolute No Ways

Be sure to list your "absolute no ways" (you will not buy a house that has any of these features) at the bottom of the Ideal House Profile. Avoiding things you'll always hate-such as a house in a flood zone, poor school district or high crime area-can be even more important than finding a house which contains all your mandatory priorities. If you're moving into a new house development or condominium, be sure to check into covenants, conditions and restrictions (CC&Rs) that may be quite detailed and restrictive on everything from the color of your house to your landscaping. (CC&Rs are discussed in more detail in Chapter 7, Section G.)

Can any of your priority items be added after you move in? A new kitchen, deck or patio or hardwood floors, and sometimes even an extra room, can also be added a few years down the road (assuming local zoning laws allow the change). Of course, replacing a small dark yard with a large sunny one can't be done.

Once you've completed your Ideal House Profile, you're ready to create a House Priorities Worksheet which will help you see how each house stacks up with your priorities.

D. Create a House Priorities Worksheet

Now it's time to use the information collected in your Ideal House Profile to create a House Priorities Worksheet for each house you visit. Start by making several copies of this Worksheet to allow for mistakes or the eventual scaling back of your priority list if it turns out you can't afford all the features you would like. Then, enter relevant information on a master copy of the House Priorities Worksheet under each major category-"must have," "hope to have" and "absolute no ways." A sample is shown below, and a tear-out copy is included in Appendix 4. Once you have completed your House Priorities Worksheet to your satisfaction, make several copies (or install the form on your laptop computer if you'll be taking it househunting). Take the Worksheet with you each time you visit a house.

For each house you see, fill in the top of the House Priorities Worksheet. Enter the address, asking price, name and phone number of the contact person (listing agent or seller, if it's a for sale by owner) and the date you saw the house. As you walk around each house and talk to the owner or agent, enter a checkmark if the house has a desirable or undesirable feature. Also, make notes next to a particular feature if it can be changed to meet your needs (an okay kitchen could be modernized for $25,000).

Add comments at the bottom, such as "potential undeveloped lot next door" or "neighbors seem very friendly." If you look at a lot of houses, taking notes such as these will help make sure you don't forget important information.

You should seriously consider only those houses with all of your "must haves" and none of your "no ways." Be strict about this. If you visit a nice, reasonably priced house which doesn't come close to matching your list and can't be easily changed to do so, say no. Take the time to find a more suitable house; you'll be glad you did.

Beware of the "Staged" House

House "staging" is now a regular practice in home sales. It used to be that a good scrub down, a sheet of fresh cookies in the oven and a vase of flowers on the table were considered clever ways of getting potential buyers to see a diamond in the rough. Not today. Newspapers, magazines, TV shows and an army of self-styled staging consultants stand at the ready to help spit-shine the seller's property into a glittering jewel. The right paint, furniture, music and smells can create illusions that would make Martha Stewart and Houdini jealous. The point is to optimize the charms of a house while distracting potential buyers from its flaws. Often all or most of the seller's furniture and personal possessions are removed to make the house look more spacious and to encourage buyers to visualize themselves in it. Imperfect walls are painted a distinctive color to distract the eye while ridiculously small closets are cleared except for a few small, strategic items to make them look more spacious. And it's not unheard of for a real estate agent to rent specially designed undersized furniture to make a small room appear larger. So if you visit a house that just reeks of charm-look behind, above and below. You may be surprised at what you find.

Set up a good filing system. As the list of houses you look at grows, you will need a method to keep track of the information you collect. Failing to adopt a good system may lead to revisiting houses you've already seen and rejected or making decisions based on half-remembered facts. For each house that seems like a possible prospect, make a file that includes a completed House Priorities Worksheet, the information sheet provided at the open house, the Multiple Listing Service information, ads and your notes. Or if you are more digitally inclined, use your computer to set up a simple database with key details on each house you visit. For advice, see "Organizing Your House Search" in Chapter 6, Section A.

E. Prepare a House Comparison Worksheet

If, like many people, you look at a considerable number of houses over an extended period of time, you may soon have trouble distinguishing or comparing their features. That's where our House Comparison Worksheet comes in. Across the top of the form, list the addresses of the three or four houses you like best. In the left column, fill in your list of priorities and "no ways" from your Ideal House Profile and House Priorities Worksheet. Then put a checkmark on the line under each house that has that feature to allow for a quick comparison. A sample is shown below, and a tear-out copy is included in Appendix 4.

Ellen: How not to buy a house. I was a first-time purchaser on a relatively tight budget when I set out to buy an older, attached row house in San Francisco. I wanted two bedrooms, no (or a very small) yard, proximity to a downtown bus route and walking access to a neighborhood market and bookstore. I looked for many months at houses that were completely unsuitable, far too expensive or, with depressing regularity, both. So I broadened my search by reading the classifieds in the Sunday paper. When I saw that prices were more reasonable in the suburbs, I spent a sunny Sunday afternoon browsing in Contra Costa County. At the first open house I visited, I met an energetic real estate agent who spun a wonderful word picture of the joys of suburban life-lots of sun, room for a tomato garden and friendly neighbors. She showed me a split-level house with an apple tree in full bloom in my price range. Almost before I realized what I was doing, I signed on the bottom line. That was the fun part. Soon I was getting up at 6:00 a.m., driving to the train station and standing for the 40-minute ride to San Francisco. My fantasy about the joy of suburban life was just that. It's hard to believe now, but I seemed to have temporarily overlooked the fact that I'm allergic to direct sun, detest tomatoes and moved out of the suburbs to get away from overly involved neighbors.

Fortunately, I sold the house six months later, at a small profit. I went in with a friend and together we bought a house in San Francisco that meets my needs perfectly.

Meet the Author

Ralph "Jake" Warner stepped aside as day-to-day manager of Nolo in 2004, after 32 years as president of the company. Widely regarded as a pioneer of the self-help law movement, Warner founded Nolo with Ed Sherman in 1972. He began publishing do-it-yourself law books written by him and his colleagues after numerous publishers rejected them. When personal computers came along, he added software to many Nolo books. When the Internet arrived, he pioneered online marketing of books.

In addition to running the company, Warner was an active editor and author. He wrote many books, including Get a Life: You Don't Need a Million to Retire Well and How to Run a Thriving Business. Today, he serves as chairman of Nolo's board of directors. He has also embarked on a new business venture: TallTales Audio, an audio book production company devoted to children's storytelling, online and on CD.

In guiding Nolo, perhaps the greatest challenge Warner faced was an attack by the Texas legal establishment in 1998. Texas lawyers tried to brand Nolo as practicing law without a license. The ensuing battle galvanized Nolo, whose final victory has become part of Nolo legend.

Ira Serkes is a local Realtor with RE/MAX Real Estate (www.berkeleyhomes.com) and a Certified Residential Specialist. He and his wife, Carol, specialize in helping home buyers and sellers throughout the east bay. He is a founding member of The Institute for Luxury Home Marketing and author of Nolo's How to Buy a House in California and Get the Best Deal When Selling Your Home - San Francisco Bay Area Edition from Gabriel Publications. Serkes is also a graduate of Realtors Institute (GRI), a CertifiedInternet Real Estate Professional (e-Pro), a Seniors Real Estate Specialist (SRES) and one of only 4,000 U.S. an Accredited Buyer Representatives (ABR).

George Devine is a licensed real estate broker and a widely respected educator in the real estate field. He holds a B.A. from the University of San Francisco, and an M.A. from Marquette University, and has pursued additional studies at San Francisco State University, Seton Hall University, Fordham University, New York University, the University of California at Berkeley and other academic instututions. Currently, he teaches real estate at the McLaren School of Business at the University of San Francisco, where he was named the Outstanding Adjunct Professor. For several years, George wrote the popular "Real Estate Handbook" column in the weekly Real Estate Guide section of the San Francisco Progress. He is the author of For Sale By Owner in California and co-author of How to Buy a House in California

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