Being mobile is also a requirement for most employees and employers today, probably a truer statement than everywhere else in Silicon Valley in the Bay Area.
Over the past few years, I have had the pleasure and the privilege to help relocate international executives for some of the top Silicon Valley companies and assist them in their search for their dream homes in Silicon Valley.
I thought I would share my experience with those of you still abroad but who are considering a job in Silicon Valley and might be interested to know more about the intricacies of buying a home in Silicon Valley from abroad.
Note that this blog is not meant to be exhaustive but to provide tips and answers to the most frequently asked questions about buying a home in Silicon Valley from abroad.
FAQ #1: How To Make an Offer for a Home
When buying a home in Silicon Valley, pretty much like anywhere else in the world, you will need to put an offer in writing on the property. For that purpose you will sign a Residential Purchase Agreement defining your rights and duties to the sellers and vice-versa.
Your Realtor will be responsible for presenting the offer to the seller's agent (aka the listing agent) along with the following documents:
- The Disclosure about the Real Estate Agency Relationship stating who your real estate agent is;
- The Proof of Funds for the initial down payment (aka the initial deposit)
- A Pre-Approval Letter from your lender(s) if you are financing your acquisition with a loan.
These documents are required to prove that you are first and foremost a “ready, willing, and able” home buyer.
FAQ: #2 : What to Do if Your Offer is Accepted
Once the purchase offer presented by your Real Estate Agent is accepted, here are some important steps not to miss if you want your offer to go through, minimize your liability to be at risk and/or cancel the contract if necessary.
Step #1 : Determination of the date of the Close of Escrow
The date of the close of escrow (aka COE) is the date on which the property will be legally transferred in your name by being recorded in the State public records.
If you finance the acquisition of your home with a loan, the COE usually take place within 30 to 45 days maximum after the acceptance of your offer.
If you pay cash, the COE can take place as soon as 15 days after acceptance of your purchase offer.
Step #2: Payment of Initial Deposit
You should know that you do not need to open a bank account in the US to buy a home in San Jose or anywhere else in Silicon Valley, even from abroad.
For the payment of the initial deposit, you just need to wire the funds directly onto the account of the title company chosen by the sellers within 3 days after acceptance of your offer.
The title company will provide you with international wiring instructions in order to transfer legally the money from your country to the US. Typically, the initial deposit equates to about 3% of the total amount of the purchase price.
Step# 3: Removal of Contingencies
A contingency is a provision in a real estate contract that specifies that the contract would cease to exist upon the occurrence of certain events.
There are 3 types of contingencies in the Californian Residential Purchase Contract, namely the property, loan and appraisal contingencies.
- The "Property contingency is to be lifted by the buyer within a maximum of 17 days of the acceptance of the purchase offer. In practice, the removal of this contingency is usually made between 7 and 10 days after acceptance of the offer. During this period of time you are able to conduct any investigation you want in order to assess the physical condition of the property. The most common inspections include pest inspection, roof inspection, general inspection, the chimney and pool inspection if applicable. If as the result of these investigations you discover issues that you want to be addressed before to close escrow, you can either ask the sellers to pay for the repairs (unlikely to happen if buying a short sale or a a foreclosure) or bail out of the transaction without losing your initial deposit.
- Both "Loan" and Appraisal" contingencies must be removed within a maximum of 17 days after acceptance of your offer. To remove these contingencies your lender will have to confirm that the loan will be granted (aka final loan approval) and that the amount you intend to borrow to purchase the property is justified based on the bank's appraiser report.
Remember that these 3 contingencies are your only way out to the contract.
You should also be aware that you will need to notify the cancellation of the contract to the seller(s) before the expiration of their deadline. If you don't, you are at risk to lose your initial deposit.
Step #4: Final Signing and Payment of the Balance of Purchase Price
Once all the contingencies have been removed by the buyers and all disclosures pertaining to the property have been signed by both parties, buyers and sellers will sign the final documents at the place of business of the title company.
If you are unable to attend the signing in person, you will need to go to the nearest US Consulate and/or Embassy in order to have a specific Power of Attorney (PoA) notarized by a US representative in your country. The PoA will allow a third party to sign the final documents on your behalf.
It is highly recommended that at least one of the buyers be present in person at the final signing.
The balance of the purchase price will need to be wired directly onto the account of the title company at the latest 3-5 days before the scheduled date of the Close of Escrow, either by the lender or by the buyer when the property is paid in cash.
FAQ #3 : How should I correspond with my US Realtor / Agent ?
The first step is to have an initial conversation with your Real Estate Agent over the phone or in person if possible.
Topics I would be looking to address during this initial conversation include among other things:
- required or nice to have features of your dream home,
- differences between buying a single family home, a condo, a townhouse or a multi residential family home,
- differences between buying a short sale, a regular sale or a Real Estate Owned home (aka bank-owned homes)
- being pre-approved vs. pre-qualified,
- trends of the real estate market in your area of interest in Silicon Valley,
- recommended search strategy,
- resale value of your property.
With answers to the above mentioned questions, I will be able to initiate a customized home search and share relevant properties that fit your criteria on a daily basis.
I will also provide you with a simulation of buying costs as well as information regarding the different ways to acquire title in Silicon Valley.
Finally, please bear in mind that all tax implications of your real estate investment(s) should be assessed by your personal tax advisor in your country and/or a local Certified Public Accountant with experience in international real estate transactions. You may also want to hire the services of a local Silicon Valley attorney to understand legal implications of purchasing real estate in the US.
I look forward to assisting you with your relocation and any of your real estate needs in Silicon Valley in the Bay Area.
Do not hesitate to contact me or call me (+1 408 717 2575) should you require any additional information about the home buying process in the Bay Area.