There’s something special about helping a client unlock the door to their new California home for the first time. After more than two decades as a real estate broker here in the Golden State, that moment still gives me goosebumps. I’m David Martinez, and from my office in Pasadena to showings across Los Angeles County and beyond, I’ve guided hundreds of buyers through California’s unique home buying journey.
The California real estate landscape in 2025 continues to have its own distinct rhythm and rules. Whether you’re relocating from another state or just moving across town, understanding our process step by step is crucial to your success. Let me walk you through what it really takes to buy a home in California today, based on what I’m seeing on the ground with my clients.
Before You Begin: The California Pre-Search Preparation
The biggest mistake I see buyers make? Jumping straight to home shopping before they’re truly prepared. In California’s competitive market, that’s a recipe for disappointment.
1. Assess Your Financial Readiness
Before you even think about browsing listings, you need a crystal-clear picture of your finances:
- Credit score requirements: Most conventional loans in California require a 620 minimum, but you’ll need 680+ for competitive rates in 2025. FHA loans can work with scores as low as 580, though many California lenders prefer 620+.
- Debt-to-income ratio: Lenders typically want to see this below 43%, though some California programs allow up to 45-50% for otherwise qualified buyers.
- Down payment reality: While there are programs that accept as little as 3% down, the average successful California buyer in 2025 is putting down 12-15% in competitive markets.
One client of mine—a software developer relocating from Austin to Burbank—was shocked when I explained that his pre-approval from a Texas lender wouldn’t carry the same weight with California sellers. Our market demands stronger financials and local lending relationships that understand our unique conditions.
2. Get a True California Pre-Approval
Notice I didn’t say “pre-qualification.” In California’s competitive market, a pre-qualification letter isn’t worth the digital paper it’s printed on. You need a full pre-approval where a lender has verified:
- Income documentation (tax returns, W-2s, pay stubs)
- Assets and down payment funds
- Credit history and score
- Employment verification
My wife Elena works in mortgage lending, and she’ll tell you that California sellers and their agents have become incredibly sophisticated about evaluating buyer financing. A strong pre-approval from a respected local lender can make the difference between your offer being considered or tossed aside.
For jumbo loans (above $1,089,300 in high-cost California counties as of 2025), the pre-approval process is even more rigorous. Expect to provide additional documentation and possibly reserves equivalent to 6-12 months of housing payments.
3. Understand California’s Unique Costs
Our state has some distinct costs that buyers from other states might not anticipate:
- Property taxes: Generally around 1.25% of the purchase price annually, but can vary by county and special assessment districts
- Mello-Roos taxes: Common in newer developments to fund infrastructure
- Supplemental tax bills: California reassesses property when ownership changes, generating a supplemental tax bill
- HOA fees: Particularly high in California’s coastal communities and newer master-planned developments
- Earthquake insurance: Not required by lenders but worth considering given our seismic activity
I remember working with a lovely couple moving from Chicago to Valencia last year. They had carefully budgeted for their mortgage payment but hadn’t accounted for the $350 monthly HOA fee and $125 monthly Mello-Roos assessment. That’s nearly $500 in additional monthly costs that would have strained their budget had we not identified it early.
Beginning Your California Home Search
Once your finances are in order, it’s time to start looking—but in a strategic way that acknowledges California’s competitive landscape.
4. Find a California-Savvy Real Estate Agent
This isn’t just me promoting my profession—it’s genuinely critical in our state. California’s disclosure requirements, regional peculiarities, and competitive dynamics make local expertise invaluable.
Look for an agent who:
- Has at least 5+ years of experience in your specific target area
- Can explain California’s unique purchase agreements and disclosures
- Has relationships with local lenders, inspectors, and escrow companies
- Demonstrates knowledge about local schools, development plans, and neighborhood trends
When I first started selling real estate back in 2003, things were simpler. Today, between our complex disclosure requirements, varied regional practices, and competitive offer strategies, having an experienced local guide is more important than ever.
5. Define Your Search Parameters Realistically
California’s high prices mean most buyers need to compromise. I always have my clients identify:
- Must-haves vs. nice-to-haves: In our market, flexibility wins
- Neighborhood alternatives: Being open to emerging areas can save hundreds of thousands
- Commute tolerance: Traffic realities mean this needs serious consideration
- Renovation potential: Move-in ready homes command premium prices
I’ve helped clients find wonderful homes in neighborhoods they hadn’t initially considered. One family had their hearts set on South Pasadena but found their perfect home in nearby Highland Park at a $300,000 discount—with better walkability and an easier commute.
6. Understand California’s Disclosure Timeline
Unlike many states, California has a front-loaded disclosure process. Sellers typically provide a comprehensive disclosure package including:
- Transfer Disclosure Statement (TDS): Detailing property condition
- Natural Hazard Disclosure (NHD): Covering flood zones, fire hazard areas, earthquake faults, etc.
- Preliminary Title Report: Showing easements, restrictions, and encumbrances
- HOA documents: (If applicable) Including financials, minutes, and rules
- Supplemental disclosures: Often including previous inspection reports, permits, etc.
In competitive markets like the Bay Area or parts of Los Angeles, these disclosures are usually provided before offers are submitted. This means you need to review substantial documentation quickly before making one of life’s biggest financial decisions.
Between you and me, this is actually a good thing for buyers. I’d much rather have my clients know about potential issues before making an offer rather than discovering problems during their inspection period when they’ve already become emotionally invested.
Making an Offer in California’s Competitive Market
When you find “the one,” you need to move decisively but intelligently.
7. Develop a Competitive Offer Strategy
California offers often need to stand out beyond just price. Effective strategies I’ve used with clients include:
- Escalation clauses: Automatically increasing your offer up to a maximum amount if other offers come in
- Appraisal gap coverage: Agreeing to pay a certain amount above appraised value if necessary
- Flexible closing timeline: Accommodating seller needs for a quick close or rent-back
- Minimizing contingencies: In hot markets, successful buyers often waive some contingencies (though I always advise caution here)
- Personal letter to seller: While increasingly regulated due to fair housing concerns, these can still be effective when properly written
The effectiveness of these strategies varies dramatically by region. What works in San Diego might not work in Sacramento. This is where local agent expertise becomes invaluable.
I recently helped a young family buy a home in Eagle Rock after they’d lost out on four previous properties. Our winning strategy included a 21-day close, minimal contingencies, and a free 30-day rent-back for the sellers who needed time to find their next home. The price was actually $15,000 lower than the highest offer, but our terms won the day.
8. Navigate California’s Unique Offer Documents
California uses purchase agreements and forms created by the California Association of REALTORS® that differ significantly from other states. Key components include:
- Residential Purchase Agreement (RPA): The main contract, recently revised in 2023
- Buyer’s Inspection Advisory: Outlining your rights and responsibilities regarding inspections
- Wire Fraud Advisory: Critical given the prevalence of wire fraud in California transactions
- FIRPTA forms: Related to foreign investment in real property
- Local disclosures: Many counties and cities have additional required forms
The standard California purchase agreement runs 16+ pages, plus addenda. This isn’t something you want to navigate without experienced guidance.
9. Understand Earnest Money Deposits in California
In California, earnest money deposits typically range from 1-3% of the purchase price and must be deposited within 3 business days of acceptance. This money is generally held by an escrow company, not by the seller or agents as in some other states.
What makes California unique is that deposits can become non-refundable after contingencies are removed, typically 17-21 days into the transaction. This creates significant financial risk if you change your mind after removing contingencies.
I’ve seen buyers from out-of-state be shocked by the size of California earnest money deposits. When you’re buying a 36,000. That’s serious money that needs protection through careful contingency management.
The California Escrow Process
Once your offer is accepted, you enter escrow—a neutral third-party process that’s handled differently in California than many other states.
10. Open Escrow and Title
In Northern California, attorneys typically handle closings, while Southern California predominantly uses escrow companies. Either way, you’ll need to:
- Submit your earnest money deposit
- Review and sign initial disclosures
- Provide additional financial documentation to your lender
- Begin formal loan application process
California is an escrow state, meaning a neutral third party manages the transaction rather than attorneys (as is common in some eastern states). The escrow officer collects documents, funds, and coordinates between all parties.
11. Conduct California-Specific Inspections
While inspections are important everywhere, California has some unique considerations:
- General home inspection: Covering structural, electrical, plumbing, etc.
- Pest inspection: Addressing termites and other wood-destroying organisms
- Geological inspection: Important in hillside areas or near fault lines
- Mold inspection: Particularly in coastal areas with higher humidity
- Sewer line inspection: Especially important for older properties
- Foundation inspection: Critical for properties built before modern seismic codes
In California’s aging housing stock, these inspections frequently reveal issues that can become negotiation points. I always tell my clients: “You’re not looking for a perfect house—those don’t exist here. You’re looking to understand what you’re buying.”
I remember showing a beautiful 1920s Spanish-style home in Silver Lake to clients relocating from Chicago. They were enchanted by the character but hadn’t considered the earthquake retrofitting costs our inspection revealed. We negotiated a $45,000 credit for seismic upgrades, allowing them to make the home both charming and safe.
12. Review Title Report and Clear Contingencies
The preliminary title report will reveal any liens, easements, or encumbrances on the property. In California, this often includes:
- Property tax liens
- HOA liens
- Easements for utilities or access
- CC&Rs (Covenants, Conditions & Restrictions)
- Mello-Roos or special assessment districts
Contingency removal is a critical phase in California transactions. Typically, you’ll have:
- 17-21 days for inspection contingencies
- 21-30 days for loan contingencies
- 17-21 days for appraisal contingencies
Once you remove contingencies, your earnest money deposit is generally at risk if you fail to complete the purchase.
13. Navigate the Appraisal Process
California’s rapidly changing market can create appraisal challenges. In 2025, we’re seeing:
- Increased scrutiny from lenders on appraisals
- More conservative valuations than during the pandemic boom
- Regional variations in how quickly appraisers account for market changes
If an appraisal comes in low, you have several options:
- Renegotiate the purchase price
- Increase your down payment to cover the gap
- Request a reconsideration of value with additional comps
- Cancel the transaction if you have an active appraisal contingency
My wife Elena has seen a significant increase in appraisal gap coverage provisions in California contracts since 2022. This is where buyers agree in advance to pay a certain amount above appraised value if necessary—sometimes as much as 100,000 in competitive markets.
Final Steps to Closing Your California Home Purchase
As you approach the finish line, several California-specific processes come into play.
14. Conduct Final Verification of Condition
In California, buyers typically have the right to conduct a final walkthrough within 5 days of closing. This isn’t a time to renegotiate—it’s to verify that:
- The property is in substantially the same condition as when you agreed to purchase it
- Agreed-upon repairs have been completed
- All included fixtures and appliances remain
- The property has been vacated (unless a rent-back was negotiated)
I always attend final walkthroughs with my clients, bringing along the original disclosure documents and inspection reports for reference. This attention to detail has saved my clients from numerous last-minute surprises.
15. Sign Closing Documents
California’s closing process differs from many states:
- Buyers and sellers typically sign documents separately, not at the same table
- Signing often occurs a few days before the actual closing date
- Many documents can be signed electronically, though loan documents generally require in-person notarization
The closing package is substantial—often 150+ pages of documents. Key California-specific documents include:
- Estimated Closing Statement: Detailing all costs and credits
- California Deed: Usually a Grant Deed transferring ownership
- Preliminary Change of Ownership Report: For county tax purposes
- Natural Hazard Disclosure Statement: Final acknowledgment
16. Fund and Record
Unlike some states where funding and recording happen simultaneously, California has a distinct two-step process:
- Funding: Your lender sends the loan funds to escrow
- Recording: The deed and mortgage are recorded with the county
Only after recording is complete do you officially own the property. In most California counties, recording happens electronically, but some rural counties still require physical document delivery.
In Los Angeles County, where my office is located, recordings typically happen before noon. This means morning closings are common, with keys handed over by early afternoon. When I drive down Lake Avenue in Pasadena on recording days, I’m often headed to meet clients for that special key handoff moment.
17. Handle Post-Closing California Requirements
After closing, California homeowners need to address:
- Supplemental tax bills: Expect these 2-6 months after purchase
- Property tax reassessment: California properties are reassessed at purchase price
- Homestead exemption filing: Providing limited creditor protection
- Utility transfers: Including setting up earthquake and fire insurance if desired
I provide all my clients with a detailed post-closing checklist customized to their specific city and property type. The requirements in Burbank differ from those in Long Beach or Pasadena, and staying on top of these details prevents headaches later.
Special Considerations for California’s Diverse Market Regions
California’s real estate market isn’t monolithic—practices vary significantly by region.
Bay Area Peculiarities
The San Francisco Bay Area has some unique practices:
- Pre-emptive offers: Attempting to take a property off the market before the offer review date
- Disclosure packages: Typically provided before offers are accepted
- Very short contingency periods: Sometimes as brief as 7-10 days
- Higher earnest money deposits: Often 3% or more of purchase price
Southern California Practices
In Los Angeles, Orange County, and San Diego:
- Longer escrow periods: Typically 30-45 days versus 21-30 in Northern California
- Seller-provided inspections: Increasingly common in competitive markets
- Earthquake considerations: More emphasis on seismic retrofitting and foundation issues
- Celebrity home protocols: Special showing procedures and NDAs for high-profile properties
Central Valley and Inland Empire Approaches
In more affordable regions like Sacramento, Fresno, and Riverside:
- More traditional contingency periods: Usually the full 17-21 days
- New construction prevalence: More emphasis on builder contracts and warranties
- Different financing profiles: Higher percentage of FHA and VA loans
- Mello-Roos prevalence: These special tax districts are common in newer developments
I’ve sold homes from Ventura County down to San Diego and as far east as Palm Springs, and the regional differences can be substantial. What works in one California market might be completely ineffective in another.
My Personal Advice After 20+ Years in California Real Estate
After helping hundreds of buyers navigate California’s complex purchasing process, here’s what I tell all my clients:
- Prepare more thoroughly than you think necessary. California’s competitive market rewards the prepared buyer.
- Don’t skimp on inspections. Our state’s geological challenges, aging housing stock, and disclosure requirements make thorough inspections essential.
- Build relationships with local professionals. From lenders to inspectors to insurance agents, local expertise matters tremendously in our diverse state.
- Understand neighborhood microtrends. California neighborhoods can vary dramatically within just a few blocks. What applies in one part of Silver Lake might be completely different from another.
- Be flexible but know your deal-breakers. Successful California buyers know when to compromise and when to walk away.
My wife Elena and I still remember the stress and excitement of buying our first place near Old Town Pasadena years ago. The market was different then, but the emotional journey remains similar for today’s buyers. That’s why I approach each client’s purchase not just as a transaction but as a significant life moment deserving of careful guidance.
The California dream of homeownership has evolved, but it’s still achievable with the right approach and expectations. Whether you’re looking at a condo in San Diego, a single-family home in the San Fernando Valley, or a piece of land in the Sierra foothills, understanding our state’s unique purchase process is your first step toward success.
The journey to homeownership in California isn’t always easy, but I’ve never had a client tell me it wasn’t worth it. When you’re sitting on your new back patio watching a California sunset from your very own home, you’ll understand exactly what I mean.
