Steps to Buying a House in San Francisco

San Francisco’s real estate market is unique, characterized by high costs, intense competition, and diverse property types. The home-buying journey here is challenging yet rewarding, differing significantly from other U.S. regions. This journey demands careful preparation and strategic decision-making. Each of the city’s distinct neighborhoods offers a different character, price point, and lifestyle, adding to the market’s complexity.

Preparing Your Finances for San Francisco

Purchasing a home in San Francisco requires thorough financial preparation due to elevated property values. The median home sale price was around $1.48 million in July 2025, significantly higher than the national average. This high valuation directly impacts buyer financial requirements.

Property taxes in California are governed by Proposition 13, mandating a 1% tax rate of the assessed value at sale. This assessed value can increase by a maximum of 2% per year until the property is resold and reassessed. This means the actual tax bill can vary significantly depending on the property’s last sale date. Homeowners’ association (HOA) fees are also common for condominiums and Tenancy in Common (TIC) units, adding to monthly costs.

A substantial down payment is typically needed to be competitive. The median down payment in the San Francisco metro area was around 26% of the purchase price in December 2024, the highest among major U.S. metropolitan areas. For a median-priced home, this could mean a down payment well over $300,000. Buyers often utilize gifted funds or specific savings plans to accumulate this significant amount.

Closing costs generally range from 2% to 5% of the home’s purchase price. For a property valued at $1.5 million, these costs could range from $30,000 to $75,000. These expenses include:

• Lender fees
• Title insurance
• Escrow fees
• Transfer taxes

San Francisco has a graduated transfer tax rate, where the percentage increases with the property’s sale price, with the seller typically responsible for this tax.

Obtaining a strong mortgage pre-approval letter from a reputable lender is a key step before starting a property search. This letter demonstrates a buyer’s financial capacity and readiness in a competitive market. Lenders require documentation like income verification, asset statements, and credit history for pre-approval. This vetting helps buyers understand their borrowing power and present a credible offer.

Finding the Right Property and Agent in San Francisco

The San Francisco real estate market benefits from local expertise, making the choice of a real estate agent important. A knowledgeable agent should understand the city’s diverse neighborhoods, have experience with multi-offer situations, and possess a strong local network. Their communication style should align with a buyer’s preferences, ensuring clear and timely updates.

San Francisco’s neighborhoods vary significantly in price, property types, and lifestyle. Buyers should research different areas to align their preferences with their budget and commuting needs. Some neighborhoods feature Victorian homes, while others offer modern condos or unique structures.

The city offers several common residential property types. Victorian and Edwardian homes provide historical charm, while condominiums offer a modern, lower-maintenance option. Tenancy in Common (TIC) units are distinctive to San Francisco, involving co-ownership of a property with individual rights to specific units. These often require specialized financing and agreements among the owners. Cooperatives (co-ops) also exist, where buyers purchase shares in a corporation that owns the building, rather than owning the real estate directly. Understanding the implications of each property type, including financing options and ownership structures, is important for making an informed decision.

Property searches often begin with online resources and attending open houses to experience properties firsthand. A skilled real estate agent can also identify off-market opportunities, which are properties not publicly listed but available through professional connections. This comprehensive approach helps buyers explore all potential options in the dynamic San Francisco market.

Crafting a Winning Offer in a Competitive Market

Crafting a compelling offer is essential in San Francisco’s competitive real estate environment, where multiple offers are common. The strategic composition of an offer package can significantly influence its acceptance. The offer price is a primary component, often needing to be above the asking price; in July 2025, 50.1% of homes sold above asking.

Contingencies are another key element, including those for loan approval, appraisal, and property inspection. In a competitive market, buyers sometimes waive or shorten these to make their offer more attractive. While this increases appeal, it carries inherent risks, such as proceeding if financing fails or significant, undisclosed issues are found during an inspection.

The earnest money deposit signals a buyer’s commitment, typically a percentage of the purchase price held in escrow. This deposit demonstrates financial seriousness and applies towards the down payment. A shorter escrow period, such as 21 to 30 days, may appeal to sellers seeking a quicker transaction, especially if the buyer has strong financing.

Including a personal letter to the seller is common practice. This letter allows buyers to connect emotionally, sharing their reasons for wanting the home and potentially distinguishing their offer from others that are financially similar. This personal touch can sometimes sway a seller’s decision, especially if they have an emotional attachment to the property.

Before submitting an offer, it is important to review all provided seller disclosures and property reports. In San Francisco, pre-offer inspections are common, with sellers providing reports from various inspections (e.g., general home, pest, sewer lateral) to potential buyers. Thoroughly examining these documents helps buyers understand the property’s condition and any potential liabilities. An agent formally submits the offer, and sellers typically respond within a few days, after which negotiations may ensue.

Navigating the Escrow and Closing Process

The escrow and closing process marks the procedural steps that occur once an offer has been accepted, culminating in the transfer of property ownership. Escrow formally starts when the purchase agreement is accepted, with an impartial third party, usually a title company, acting as facilitator. The buyer’s initial deposit is placed into the escrow account. Escrow typically lasts 21 to 45 days, though all-cash purchases can close faster.

During due diligence, several activities take place:

• Professional home inspections are arranged if not completed pre-offer, including general, pest, and specialized inspections.
• The lender orders an appraisal to ensure the property’s value supports the loan.
• A title company conducts a comprehensive title search to confirm clear ownership and identify any existing liens.
• For HOA properties, reviewing documents like financial statements, covenants, conditions, and restrictions (CC&Rs), and meeting minutes, is important to understand community rules and financial health.

Loan underwriting is the final stage of mortgage approval. The lender verifies all buyer financial information, including income, employment, and assets, to finalize the loan. Buyers may need to provide additional documentation as requested by the underwriter to satisfy all conditions for loan approval. This step ensures that the buyer meets all criteria for the financing.

A final walk-through of the property occurs shortly before closing. This inspection confirms the property is in the agreed-upon condition, with any repairs completed and no new damage. It is the buyer’s last opportunity to confirm the property’s state before ownership transfer.

Closing involves signing all necessary documents, including loan agreements, promissory note, and the deed of trust. Funds, including the remaining down payment and closing costs, are transferred to the escrow account, typically via wire transfer, a few days before the official closing date. Once conditions are met and funds disbursed, the deed is recorded with the county recorder’s office, legally transferring ownership to the buyer.