Buying a Starter Home in the Bay Area

Starter homes usually mean competitive prices. Yet shopping around the Bay Area might make you wonder if such a concept exists.

There’s no denying that this slice of Northern California has some of the most coveted real estate in the nation. Moving here gives you an unbeatable package that includes access to Silicon Valley, some of the most tech-forward cities in the world, like San Jose and Fremont, and a wealth of outdoor and recreational activities. 

Naturally, residents in the area value their homes highly for the perks they provide in exchange. But the steep price points shouldn’t mean you won’t be able to find a starter home in the Bay Area.

Below, we'll break down the top things you need to know about buying a starter home in the Bay Area, from where to look to how to save money when you buy.

Buying a Starter Home in the Bay Area

• What is a starter home?
• Should I buy a starter home?
• Getting pre-approval
• Preparing a budget
• Hiring a real estate agent
• Using commission rebates to save

What is a starter home?

Simply put, starter homes are typically competitively priced homes with less space and square footage. 

They can be great investments for first-time buyers who haven’t experienced homeownership and for anyone deciding to jump from renting to buying.

The Bay Area’s coveted housing market may challenge the "competitive price" aspect; Silicon Valley’s presence and Bay Area’s world-class cities all contribute to the demand and value of the area’s real estate. 

But even so, starter homes can be your best bet in getting yourself through the door into the Bay Area homeownership club. 

Should I buy a starter home?

Consider the essential pros and cons of starter homes: there’s a good chance the house is more affordable but has limited outdoor and indoor space. You can start building equity, but you may have to settle further away from SFBA’s primary attractions.

Every homebuyer’s scenario is different, but the pros and cons that come with starter homes are usually similar.

In most cases, the choice often comes down to your financial situation and the state of the market. If you’re comfortable in your career and ready to ditch the rent check, it makes sense to consider buying a starter home. 

Get a mortgage pre-approval

In today’s market, it doesn’t matter if you’re buying a starter home or a multi-million dollar house with private beach access; you need to get a mortgage pre-approval.

Sellers want to review an offer and know that the buyer submitting it is qualified and ready to buy. This is especially true in the Bay Area’s market, where almost every slice of the region’s housing stock is in demand.

The same holds true for starter homes. Even if you’re shopping for a simple house without a wealth of amenities, a seller still needs proof they are not wasting time. And the best way to show a seller you are serious is to submit your offer with a pre-approval letter.

Be sure to explore multiple mortgage lenders to get an idea of your available options. This will also help put your budget in perspective and give you a clearer picture of how much you can spend.

Preparing a budget

Ideally, you want to have a budget before exploring neighborhoods and homes. 

This is why getting a pre-approval is an excellent first step; it prepares you for making a solid offer and helps you narrow down a specific budget. 

Most first-time home buyers will focus their efforts on saving for a down payment; though a crucial step to your final budget, they aren’t the only item you should be budgeting for. 

You’ll also have to prepare for closing costs, inspection fees, and unexpected expenses from purchasing a new home. Preparing your budget early can help ensure you won’t be surprised when it comes time to close or inspect the home.

Hiring a real estate agent

A buyer agent’s knowledge of the Bay Area’s neighborhoods and price points is essential to help streamline your search. Having a trusted guide point you in the right direction from the get-go is much easier than doing all the detailed research on your own. 

Local brokers also have access to Multiple Listing Services (MLS) that they can use to make a comparative analysis of homes in your area of choice. This information can be key to preparing successful negotiations when you’re ready to submit an offer.

Considering a starter home can often come with many questions and doubts, specifically regarding resale value and price. Working with an agent with experience with your situation can help assuage those doubts and help you feel more comfortable before taking the plunge.

If you’re still on the fence about working with a buyer’s agent, consider this: they can help you save money when you buy a home.

Using commission rebates to save

Affordability is one of the main challenges most homebuyers face. Many ways can help make a home purchase more affordable, but few can rival having extra cash in your pocket after closing.

If you work with a buyer’s agent that offers commission rebates, that extra cash can become a reality.

Commission rebates are essentially a portion of your broker’s commission fee given back to you as savings once you close on a home. Modern brokerages like Prevu Real Estate invest in salaried agents to make this a reality and unlock rebates for buyers.

For instance, Prevu currently offers the largest rebate in California, allowing homebuyers to potentially save up to 1% of a home’s purchase price via the Smart Buyer Rebate once they close on a home. These savings can be essential to create affordability for Bay Area home buyers.

The extra cash can help offset closing costs and serve as a way to rebuild savings or help jumpstart a furnishing budget.

Interested in buying a home in the Bay Area? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.