Thinking about buying a home in California? The process can feel like a maze-especially if this is your first time. Between contracts, deposits, and disclosures, it’s easy to miss details that can cost you money or delay your closing. Here’s a clear, step-by-step breakdown of what to expect so you can approach your purchase with confidence.
Start with the Offer and Purchase Agreement
In California, your offer does more than state the price you’re willing to pay. The California Residential Purchase Agreement (RPA-CA) is a binding contract once the seller accepts it. Every term you agree to is enforceable, so take it seriously.
Key points for buyers:
- Make your offer in writing. Verbal agreements don’t hold up in real estate sales.
- Include your earnest money deposit. This deposit shows you’re serious and is usually held by the broker or escrow company. You must deposit the funds by the third business day after your offer is accepted.
- Be ready with funds. Getting money for your deposit or closing costs is not a contingency. If you can’t provide the funds, you risk breaching the contract.
- Watch the timelines. The contract sets deadlines for inspections, disclosures, and contingency removals. These run on calendar days from the date of acceptance. Missing them can jeopardize your deal.
Understand Contingencies-Your Built-In Safety Nets
Contingencies protect you if things don’t go as planned. They allow you to cancel the contract without losing your deposit when certain conditions aren’t met.
Here’s what to know:
- Loan contingency. Your purchase depends on securing the financing listed in the contract. You remove this contingency either by a set date or when your loan funds. Be cautious about removing it early. If your lender later denies your loan, you’ll still be obligated to buy the property, putting your deposit at risk.
- Appraisal contingency. This protects you if the property appraises for less than the agreed price. Even with loan approval, you’re not required to move forward unless you choose to.
- Investigation contingency. You usually have 17 days from acceptance to inspect the property’s condition. Hire professionals to check the structure, plumbing, electrical systems, and more. Based on the results, you can request repairs. If the seller refuses, you can cancel before your contingency expires.
All contingency removals must be in writing. If you don’t act by the deadline, the seller can issue a “Notice to Buyer to Perform,” which gives you a short window—often 24 hours—to comply before the seller can cancel the contract.
Know How Escrow and Title Work
Once your offer is accepted, escrow opens. This is a neutral third-party process designed to protect both you and the seller.
- Escrow holder. The escrow company follows written instructions from you and the seller. They coordinate with your lender and title company, disburse funds, and record ownership documents. All information is confidential.
- Title insurance. A Preliminary Report shows ownership details, liens, easements, and other encumbrances. Review this report promptly. If you object to something, you must do so within the allowed time.
- A Lender’s Policy protects the lender.
- An Owner’s Policy protects you and your equity. Buying an Owner’s Policy is strongly recommended.
- Holding title. Decide how you’ll hold title (Joint Tenancy, Community Property, or Tenancy in Common). Each has different legal and tax implications. Speak with a legal or tax professional before deciding.
Seller Disclosures-Your Right to Know
California requires extensive seller disclosures to protect buyers.
- Duty to disclose. Sellers must reveal any known material facts affecting value or desirability. “As is” does not excuse concealed defects.
- Key forms:
- Transfer Disclosure Statement (TDS): Lists the seller’s knowledge of the property’s condition.
- Natural Hazard Disclosure (NHD) Statement: Alerts you if the property is in a flood zone, earthquake area, fire hazard area, or other risk zones.
If you receive these disclosures after signing, you can cancel the transaction within three days of personal delivery or five days if mailed.
Prepare for Financial Responsibilities Beyond the Down Payment
Closing on a home involves more than your down payment. Budget for these costs early:
- Closing costs. Expect 3% to 7% of the purchase price. These cover appraisal fees, loan origination charges, escrow fees, and title insurance.
- Property taxes and supplemental bills. Under Proposition 13, your property will be reassessed at its new market value. Initially, your tax bill may reflect the seller’s lower value. Later, you’ll receive a “supplemental” bill to cover the difference. Set money aside to avoid surprises.
- Mello-Roos taxes. Some properties are in Mello-Roos districts, which levy special taxes to fund public improvements. These can last up to 40 years. Sellers must disclose if the property is in such a district.
Takeaway for First-Time Buyers
Buying a home in California involves strict timelines, legally binding contracts, and significant financial commitments. Knowing what’s expected of you at each stage helps protect your deposit, your financing, and your peace of mind.
- Keep your funds ready before making an offer.
- Read every document carefully and ask questions early.
- Don’t remove contingencies until you’re sure.
- Review disclosures and title reports promptly.
Looking Ahead
Every step in the California home-buying process serves a purpose—from the offer to escrow, contingencies, disclosures, and taxes. Understanding these pieces before you sign gives you a stronger position and fewer surprises at closing. If you’re unsure at any point, speak with your real estate agent, inspector, or a legal or tax professional.
What parts of the process feel most confusing to you? Knowing your own sticking points is the first step to getting the right support and making a confident purchase.
