Buying a home sight unseen comes with risks but there is a way to do it right. Learn the four steps all homebuyers should take. (iStock)
As the coronavirus pandemic continues, some homebuyers are still uncomfortable with in-person visits. And with the demand for homes currently outpacing the supply, it’s essential to act quickly when you find a home you like.
That’s why in 2020, a record 63% of consumers purchased real estate sight unseen, according to Redfin. But if you’re considering doing the same, how can you reduce your risk and find the best deal possible?
What does buying a house sight unseen mean?
If you buy a home sight unseen, this means you close on it without seeing the house in-person first. You might research the surrounding neighborhood and schools and view the home online but you don’t take an in-person tour of the property.
There are a variety of reasons people will choose to do this. If you’re moving from another state, viewing the property in person may not be an option. And other homebuyers are resorting to buying homes virtually due to the ongoing coronavirus pandemic.
If you’re considering buying a home in the coming year, it’s a good idea to start seeing what kind of rates you could qualify for now. You can use a tool like Credible to compare rates and offers from multiple lenders.
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How to buy a house sight unseen
For many people, buying a home sight unseen feels like a bit of a gamble but there are steps you can take to reduce your risk. Here are four tips for improving your home buying experience:
- Apply for prequalification
- Take a virtual tour
- Do your homework
- Shop around for the best rates
1. Apply for prequalification
The first step to buying a home is to get prequalified for a mortgage. But this is especially important when you’re attempting to buy a home virtually. If you’re already prequalified, this shows the homeowners you’re a serious candidate and it will make your offer more competitive.
And once you know what type of home you’re approved to buy, this will give you a sense of what your monthly mortgage payments will be. An online mortgage calculator can help you estimate your potential monthly payments as well.
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2. Take a virtual tour
If you don’t plan to visit the property in person, you should take advantage of every online tool at your disposal. Be sure to look at any photos and descriptions provided by the sellers.
And if possible, have your real estate agent conduct a virtual tour of the home using Facetime. You may not be able to physically walk through the house but a detailed tour can help give you a better idea of what you’re getting into.
3. Do your homework
All home buyers need to do their due diligence before purchasing a home but this is even more crucial if you’re buying the house sight unseen. Have the home thoroughly inspected to ensure there are no significant problems.
You should also order a title report to ensure the title is clear at the time of closing. It’s impossible to eliminate all problems but by doing your homework first, you can hopefully keep these problems to a minimum.
4. Shop around for the best rates
One of the advantages of buying a home sight unseen is that you may be able to negotiate for a lower sales price. But even still, it’s important to shop around for the lowest rates and fees on your mortgage. Securing a lower interest rate will reduce your monthly payments and help you save money over the life of the loan.
With Credible, you’ll be preapproved for a mortgage within minutes and can compare rates from multiple lenders. And Credible does a soft pull on your credit, so you’re free to explore your options without worrying about it lowering your credit score.
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What is a sight unseen addendum?
You can buy a house virtually but there’s no getting around the fact that there are risks involved. Purchasing a home virtually is very doable but certain intangible elements can’t be communicated through a video walkthrough.
For that reason, you’ll most likely be required to sign a sight unseen addendum. This is a document stating that you’re purchasing the property sight unseen and accept the terms of the sale. If you move in and find problems that weren’t revealed during the virtual tour, there’s nothing you can do about it.
That’s why it’s crucial to work with the right team of experts when you’re buying a home sight unseen. Choose a qualified real estate agent to guide you through the process. And Credible’s team of expert mortgage lenders can help you find the best mortgage rates available.
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Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.
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