Whether relocating for a new job or competing in a seller’s market, many buyers need to move quickly. When time is of the essence, some may make an offer on a home without touring it in person.
Although this sounds complex, it’s nothing new, and the practice saw a resurgence during the COVID-19 pandemic: In 2020, 63% of homebuyers made an offer to buy sight unseen, Redfin reported.
Thinking about buying a house sight unseen? Here are six tips for navigating risk in the remote real estate market.
1. Get Preapproved for a Home Loan
Before making an offer, prospective buyers can do some front-end work to expedite the purchase process if they need financing. Becoming pre-qualified for a home loan is a quick first step to get an estimate of how large a mortgage a buyer would likely qualify for. This helps house hunters focus their search on homes they can reasonably expect to obtain financing for.
Lenders determine prequalification according to basic financial information, such as income, debt, and assets. Often buyers simply self-report their finances at this stage.
Then there’s mortgage preapproval, a much deeper dive into qualifying for a mortgage. Becoming preapproved often requires bank statements, proof of assets, and a look at credit history.
When buying a house sight unseen, especially in a hot market, getting preapproved can reasonably assure sellers that buyers can get financing for the amount they’ve offered.
In a superheated market, with bidding wars, cash offers, and skipped inspections, some agents suggest going through full underwriting, with only the appraisal left in order to close the deal.
If you’re buying a vacation home or investment property, you’ll be evaluated by lenders in a similar fashion to your first home loan.
💡 Quick Tip: You deserve a more zen mortgage loan. When you buy a home, SoFi offers a guarantee that your loan will close on time. Backed by a $5,000 credit.‡
2. Research the Neighborhood
Whether you’re looking to buy in your favorite vacation destination or have never set foot in the area, there are resources available to better inform your search.
While listings can do a good job of capturing a house in its best light, they do not give buyers the full picture of the property’s curb appeal and neighborhood. To get the lay of the land, Google Maps and Google Earth are easy tools for exploring the property and neighborhood via street view and satellite imagery. Walk Score is useful to determine a home’s proximity to amenities like grocery stores, restaurants, and coffee shops.
Other apps can give insight into community characteristics and local happenings. NeighborhoodScout provides localized information on crime, school rankings, and real estate prices. Another option is Nextdoor, which lets users connect with neighbors, local businesses, and other resources.
A look at housing market trends in select cities can help you home in popular neighborhoods, home prices, demographics, and more.
3. Find a Trusted Real Estate Agent
Once you’ve taken care of financing and focused your search geographically, finding a reputable real estate agent can help take the guesswork out of buying a house sight unseen.
Since you won’t be able to tour the house in person, a buyer’s agent can act as your eyes and ears on the ground. Without their assistance, the sight-unseen house cost could rise significantly, thanks to unforeseen repairs and upgrades.
Finding a real estate agent who is familiar with the area can be advantageous for evaluating sight-unseen house prices. Their experience in the local market makes it easier to find comparable listings and weigh options.
When interviewing potential agents, you can ask if they’ve helped clients buy sight unseen before. Because your relationship will be virtual leading up to inspection or move-in day, it’s important to consider communication skills and style.
4. Take a Virtual Tour
Starting with online listing photos and virtual walk-throughs is helpful to determine if a house is worth a closer look. What’s more, photo editing and wide-angle shots can misrepresent a space, so organizing a guided virtual tour with a friend, relative, or real estate agent onsite may serve a buyer well.
Using FaceTime, Zoom, or similar video chat apps can let buyers ask questions in real-time and get a more intimate sense of the property. Seeing the space firsthand (albeit virtually) may give a more realistic impression than measurements and square footage alone can convey.
💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.
5. Touch Base After the Inspection, If You Have One
A home inspection is common with most real estate transactions.
A home inspector examines a house’s physical and interior structure, as well as major systems like plumbing, HVAC, and electrical. The resulting inspection report highlights any visible problems, necessary repairs, and potential risks.
When buying a house sight unseen, it can be beneficial to have your real estate agent attend and video call to walk you through any notable issues that arise.
A home inspection contingency in an offer generally allows buyers to pull out of the purchase if major issues are found. It may also be possible to negotiate with the seller to have repairs addressed or costs deducted from the purchase price.
In a supercharged market, buyers may choose to waive the home inspection contingency to improve their candidacy in a multiple-offer situation. Those who take this path may still be able to arrange a pre-offer home inspection. The results won’t be negotiable or permit backing out without losing the deposit.
Waiving the home inspection is a risk that may be best reserved for buyers with sufficient cash for repairs.
6. Arrange a Virtual Closing
If you have to buy sight unseen and can’t attend the closing in person, there are options for closing remotely, depending on the state and lender.
Certain documents, such as the deed and affidavit of title, need to be notarized to finalize the home purchase. Remote online notarization allows buyers to sign closing documents with an electronic signature and allows all parties to meet virtually.
The process is authorized in most states, but certain documents, including promissory notes, may need to be signed in person. Also, be sure to check if your state requires a lawyer to be physically present at the closing.
Lenders will usually need an appraisal of the property to finalize a home loan. This process can be arranged from afar or coordinated through your real estate agent.
At a virtual closing, closing costs can be paid electronically with a bank-to-bank or wire transfer.
Giving your lender, real estate agent, and the title company ample notice that you intend to close virtually can help seal the deal without a hitch.
The Takeaway
Do people put offers on homes without seeing them? Some do, yes. Having your mortgage financing in order, working with a knowledgeable real estate agent, and doing virtual research can be helpful when buying a house sight unseen.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
Photo credit: iStock/MicroStockHub
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will provide you $2,000.^ Terms and conditions apply. This Guarantee is available only for loan applications submitted after 6/15/22 for the purchase of a primary residence. Please discuss terms of this Guarantee with your loan officer. The property must be owner-occupied, single-family residence (no condos), and the loan amount must meet the Fannie Mae conventional guidelines. No bank-owned or short-sale transactions. To qualify for the Guarantee, you must: (1) Have employment income supported by W-2, (2) Receive written approval by SoFi for the loan and you lock the rate, (3) submit an executed purchase contract on an eligible property at least 30 days prior to the closing date in the purchase contract, (4) provide to SoFi (by upload) all required documentation within 24 hours of SoFi requesting your documentation and upload any follow-up required documents within 36 hours of the request, and (5) pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. The Guarantee will be void and not paid if any delays to closing are due to factors outside of SoFi control, including delays scheduling or completing the appraisal appointment, appraised value disputes, completing a property inspection, making repairs to the property by any party, addressing possible title defects, natural disasters, further negotiation of or changes to the purchase contract, changes to the loan terms, or changes in borrower’s eligibility for the loan (e.g., changes in credit profile or employment), or if property purchase does not occur. SoFi may change or terminate this offer at any time without notice to you. ^To redeem the Guarantee if conditions met, see documentation provided by loan officer.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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