Close of Escrow

Today we closed escrow on our very first home! In addition, it also represents my first successful transaction as a real estate broker. All in all the process was extremely fast and smooth, undoubtedly due to my real estate brokering prowess :).

We first saw the listing for our house while our parents were in town for Ruby's birthday. Since we were quite busy preparing for Ruby's big day, we didn't have time to go see it in person until the following Friday, June 11th. After maybe 10 minutes of looking around, Shuyi and I decided that we wanted it. A mere 26 days later, the house is officially ours!

While both of us felt that the asking price was fair, it was at the very top of our range, a range that had already been increased many times since we first started looking at places back in 2007. Given that the house had just been put on the market a week before, we knew there was little chance the sellers would accept an less than asking offer at that time. While the national housing market is quite weak, the market for single family homes in good neighborhoods in SF has always been quite robust. In fact, we were quite concerned that the house would receive multiple offers and end up going for more than asking, which would have definitely put it out of reach.

Since we wouldn't be able to outbid anyone, we decided that our strategy would be to try to be the first to make an offer. While the listing agent was definitely steering us towards not making an offer until the following Monday or Tuesday, we sent the offer to the listing agent on Sunday morning. We would have sent it even sooner, but the seller was out of town until Sunday. There was another open house scheduled for that Sunday afternoon and the listing agent presented our offer to the sellers just a couple of hours before that. We had been planning to go shopping for some baby stuff in the Marina when we got the email saying that the sellers accepted our offer subject to a reduction in the amount of closing credit we had asked for. We were quite excited and decided to go to the open house and take a last look around before formally accepting the counteroffer.

The next day, Monday, was quite hectic. Not only was I opening escrow and coordinating with my loan officer to get loan approval, I was also handling various paperwork for my parent's purchase of a house in Vallejo, which had just entered into escrow the previous Friday. After more than 30 phone calls and emails in the span of a few hours, I really felt like a broker :). All that was missing was a bluetooth earpiece so that people would think I was talking to them when I was really talking on the phone!

After that initial rush of paperwork, things settled down fairly quickly. I scheduled a general property inspection for the next morning, which went quite smoothly. Only a few minor things needed repair, and the sellers quickly agreed to fix them before close of escrow. After that, all that was really left was to get our loans approved. Thanks to the down economy, government intervention, and the resultant low interest rates, we were able to get a 30 yr fixed jumbo-conforming (up to 729k in SF) loan at only 4.875%. Only a few years ago, even 6% was considered quite low historically (it was in the high teens in the 80s). Despite getting such a good rate, our total monthly payment (Principal, Interest, Taxes, Insurance) is going to be more than three times our current monthly rent! In fact, just the property taxes alone are almost as much as our rent. Like many first time buyers in San Francisco, we will be house poor indeed.

While our loan was approved about two weeks ago, it still takes some time for the loan documents to be finalized and prepared for escrow. That process is entirely up to the lender so buyers usually just have to sit by and quietly wait. After a few overly optimistic predictions from our loan officer came and went, our loan paperwork was finally in place last Thursday. We quickly set up an appointment with the escrow officer for the next day to sign all of the escrow documents (and there was a ton of documents, enough to make my wrists sore from signing them). Typically, loan funds are transferred into escrow the next business day after the signing (yesterday) and escrow can officially close the day after that.

Note how all this is quite contrary to what you see on TV shows like HGTV's "My First Place" or "House Hunters". In those shows, closing escrow just entails going to some office, handing them a check, signing some paperwork, and then you immediately get the keys to your new house. (What, reality tv isn't realistic? That just couldn't be ...) In reality, that process must take at least a few business days because money transfers into escrow must completely clear. (Also, checks can bounce so transfers are usually made by wire transfer.)

In the end, this purchase not only secured us a house for Ruby to grow up in, but it also provided me a lot of additional insight into and knowledge of the home buying process from the point of view of a buyer as well as that of an real estate agent. Maybe I will be needing that bluetooth earpiece one of these days. ;)