Searching for the right accommodation is one of the top concerns when moving to a foreign country. Finding that perfect place to live can make your life in a new place a great experience. California is the third-largest state in the US — and a space so vast that each region and city comes with its unique feel and culture.
Wherever it is you are moving to in California, the first decision you will probably need to make is whether to buy or rent. This is a guide to the general process of renting and buying in California, but as California is an incredibly varied place, you must always consider local conditions and trends that might factor into the rental market.
Purchasing property in California
If you decide to invest in buying property in California, you will be happy to know that the purchasing process is quite straightforward. With that, you should engage the services of a real estate agent to make sure you are getting a good deal, and your buyer's rights are protected. Here is a sample breakdown of the nine steps you must take care of when purchasing a property in California.
Step one: Define your budget
Consider all related expenses to determine your budget for buying a home in California. Ensure you have a credit score of at least 620 for most loans. Plan for a down payment of at least 20% of the total home price and budget for 2% to 5% in closing costs, which could amount to $15,000 to $37,000 based on the average home price of around $750,000 in California. Maintain a debt-to-income ratio of no more than 36%, including mortgage payments. Additionally, it accounts for annual home maintenance costs of approximately $17,000.
Step two: Pick the right neighborhood
Research and invest time in selecting the right neighborhood for your home. Consider average home values, property appreciation trends, proximity to essential locations like work or schools, commute options, and available amenities. Be prepared to compromise – finding a place that ticks all the boxes is hard.
Step three: Hire a real estate agent
Even in the straightforward California housing market, a reliable real estate agent is essential. Look for an agent with experience in your preferred neighborhood, property type, and price range. Check reviews and complaints, and conduct interviews to choose the agent who best suits your needs. Before signing a buyer's agency agreement, you can attend showings with different agents to ensure a comfortable working relationship.
Step four: Get pre-approved for a mortgage
In the US, many property sellers require a mortgage pre-approval before showing homes. Obtaining a pre-approval letter indicates to home sellers that you are financially prepared to commit.
Step five: Start house-hunting
The exciting part begins as you view different properties. To make the most of your house-hunting experience, list priorities, from essential features to desirable bonuses, for your new home.
Step six: Make an offer
Once you've found your dream home, it's time to make an offer. In 2022, the average time it takes to sell a home in California is around 72 days, which includes 37 days to receive an offer and an additional 35-day closing period. Knowing this, it's essential to consider market trends and act promptly to secure your desired property. Beyond the price, you can also make your offer more appealing by being flexible with contingency clauses and other terms. With a well-informed approach, you can increase your chances of a successful home purchase in California.
Step seven: Sign the contract and make a deposit
Once you've agreed on the price, you'll be asked to pay an escrow deposit, also known as earnest money, to demonstrate your seriousness as a buyer. The earnest money will be held until closing and will become part of your down payment and overall closing costs. If you break the contract, the money will be kept by the seller. However, if certain contingencies aren't met, you can get a refund on the earnest money. These contingencies typically include financial, inspection, and appraisal aspects.
Step eight: Appraisal and inspection
After your offer is accepted, it's time for due diligence. This involves inspections to uncover hidden damages and an appraisal required by your lender to ensure the property's value aligns with the amount you're borrowing.
Step nine: Closing
The final step is the closing process. Before finalizing the contract, you'll conduct a final walkthrough to ensure the property is in appropriate condition with no damage. During the closing, you'll sign a lot of paperwork, so having your real estate lawyer or agent present can help explain each document and handle any remaining questions before completing the purchase.
Renting property in California
Renting in California can be a practical choice if you're not ready to buy a property. The availability and prices of rental options vary hugely depending on your desired location in the state, with coastal cities like LA, San Francisco, and San Diego having some of the higher rents. You can use this rental price tool to hunt out more affordable options. Although the cost of rent will vary, the general renting process in California is relatively similar in most cities.
To start, you'll need to find a house or apartment that suits your needs. You can explore neighborhoods in person, looking for "For sale" or "Open house" signs and contacting agents for more details or immediate viewings. Alternatively, you can use online platforms and local newspapers to narrow down your search based on criteria like price, location, number of rooms, and amenities. CraigsList, Zillow, and other online tools are very helpful.
Once you've found a place you like, contact the property manager, owner, or real estate agent to schedule a viewing. If you're interested in renting the property, you must fill out an application. The owner will review your application and conduct a credit check, which requires a social security number. If you have a little credit history as a new expat, providing references, wage slips from your employer, and a bank statement can be helpful.
In many cases, you'll also need to show proof of earnings. Larger rental companies may require your monthly earnings to be three times the rental amount, while smaller ones may be more flexible. If you're unemployed, you might need to provide a higher initial deposit.
After reviewing your application, the landlord or management company will decide on your tenancy, and you should expect to hear back within a few days to a week. Depending on where you are renting, the market can be very competitive, with many other potential renters showing up for viewings. If this is the case, try to make yourself stand out from the crowd, or look to different avenues to find your new place – like Facebook groups, word of mouth, and so on.
Flat-sharing in California
Sharing a flat in California can be a great option if you're on a tight budget and want to save on rent. By sharing an apartment or house with other tenants, you can split the rental costs and even divide household responsibilities.
If you're a student or working in California, contact your classmates or colleagues to see if they are looking for a roommate. If you're new to the area and don't have a social circle yet, you can explore online platforms dedicated to roommate searches, such as SpareRoom.com and Kangaroom.com, among others.
When considering potential roommates, be cautious and conduct interviews to ensure a good fit. Pay attention to any red flags and prioritize finding someone reliable and compatible to share your living space with.
Find out more about searching for accommodation in Los Angeles.
You can also opt for subletting a room, which is common for short-term rentals when you have just moved to a new place. People often advertise their sublets on CraigsList or share them on social media, so it can be helpful to ask around if you don't yet have a network there.
Other short-term options include finding an Airbnb or hotel that offers longer stays.
Useful links:
Zillow www.zillow.com
For Rent www.forrent.com
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
