Experience of a Silicon Valley Buyer
I recently bought a single family home in the west valley area for about $1.4M, somewhat below our budget, with a conventional 30-year loan. We were first-time buyers and somewhat micro-managed by nature, which I feel is a necessary attribute to have to be successful at buying here. Even then, we were looking for about 3 months.
Selecting a lender
This is the first step here since Realtors will not take you seriously unless you are at least pre-approved, as in a lender has reviewed your financial documents moderately closely. We engaged two banks and a mortgage broker. We ended up choosing one of the banks (a big bank that gets a lot of grief on this sub, interestingly enough) because they offered the best rate and could close in less than 30 days, the latter of which helps us compete better with the pervasive all cash offers in our area. We ended up closing in < 4 weeks, so they followed through on their word and were very communicative with both us and our realtor through the process.
I know it's a data point of 1, but the mortgage broker really wasn't competitive on rate even though they came as highly recommended by our agent. Maybe it was because we had pre-existing relationships with both banks we contacted, but both lowered the interest quite a bit from the advertised rates due to a combination of our stellar credit scores and high cash holdings with them at the time.
Selecting a realtor
We interviewed a few realtors we found through open houses (there's usually a table for cards), and then also a local Redfin agent. Knowledge of the area and perceived work ethic were the main deciding factors. The Redfin agent was very appealing, especially with the cash back, but we're glad we didn't go with them because we'd probably still be looking. Our realtor was able to get us upcoming listings well ahead of their appearance on Redfin, and ultimately one of those was our house.
Home search process
Not much to say here. I would basically compulsively check Redfin for new listings, and our realtor would occasionally give us a heads up on listings from colleagues that we should check out. Now that I can see what all of the 100 or so houses I tracked during our search sold for, I can say that a house that got listed on Redfin and had an open house probably went for 5-10% more than one whose owners took an early offer.
We offered on roughly one house per week during our search. If the house has multiple offers (basically guaranteed if there has been an open house), you will lose if you have contingencies. On one kind of dumpy house we put an extremely short (a day or two) inspection contingency because our inspector couldn't get there sooner, our offer was not accepted, and the house ended up selling within thousands of our offer price. Our job from then on was to figure out how to feel comfortable removing all contingencies, which ultimately involved a few things such as doing as much financial pre-work with the bank as possible to make sure they would get us a loan, making sure we had an extra 5% cash reserves to hedge against a low appraisal, and occasionally bringing inspectors or contractors to houses for guestimates of how serious certain damage was (this costs $$$s sometimes). Note that this final thing is extremely hard to do because most houses were selling within one week of listing.
We were extremely selective in the houses we chose to offer on because we were non-contingent most of the time. I would walk the neighborhood both during rush hour and at night, review permit records, and sometimes talk with neighbors. For seller-provided inspection reports, I'd often call the inspectors and ask clarifying questions.
The house we ultimately got was the result of our agent telling us about the listing, us rushing over to see it, and then following up with a very strong exploding offer the same day. I say a strong offer, but as I noted above, I can guarantee the house would have gone for 5-10% more had it stayed on the market for an open house. The great thing about the early offer too was that we actually had time to schedule inspections because the sellers were caught a bit off-guard and didn't have all of the legally-required paperwork ready.
Imagine that we went through the above process multiple times. If you are searching for a house in the area, expect that it will impact your professional life as you react quickly to new information from your lender, agent, Redfin, etc.
The Actual Cost to Move In
We had to come up with ~25% cash to close the deal - 20% of the appraisal price for the downpayment, and then roughly 5% of the purchase price (on top of 3% earnest) went directly into escrow to cover the short appraisal (ouch) and closing costs. Since we bought, a couple of more houses were sold in our area for over what we paid, and our house would likely appraise today at our offer price, but such is life in a hot area. "Luckily", on top of the ~$325k cash just to get the keys, we only paid about $5k outside of escrow for needed repairs, extra inspections, etc.