In a highly competitive seller’s market, homebuyers may have to do some unconventional things to stand out from the competition. While buying a house sight unseen is not as rare as you might think, it still breaks away from the traditional fashion of touring the property in person.
Purchasing a house without touring the property can be risky, but it may help you secure the home of your dreams.
This article will discuss what it means to buy a house sight unseen and the step-by-step process of submitting a blind offer. Additionally, we’ll highlight some of the advantages and disadvantages to help you determine if this approach is right for you.
What Does Buying A House Sight Unseen Mean?
Buying a house sight unseen means purchasing a home without touring the property in person. While you’re not there in person, you may view the property through various means such as a virtual tour, pictures and videos. Homebuyers who use this approach might also conduct thorough research on the neighborhood and the surrounding area.
According to the most recent data from Redfin, 63% of Americans who purchased a home in 2020 made an offer on a property they hadn’t seen in person. While that figure may be slightly skewed due to pandemic restrictions, the rise of remote work, technological evolution indicates that this trend is here to stay.
Step-By-Step Process To Buying A House Sight Unseen
Buying a home sight unseen isn’t much different from the standard way of purchasing a house. Instead of touring the property, you’ll be scanning pictures and watching videos to determine if the house is an ideal fit for you.
Here is our step-by-step breakdown of buying a home virtually.
Step 1: Select a qualified real estate agent
It’s always smart to choose a good real estate agent when purchasing a home, but it’s even more important when buying a house sight unseen.
When researching your ideal real estate agent, you should consider their knowledge and expertise in remotely purchasing a home, their technology skills (especially since they’ll be communicating with you remotely) and extensive knowledge of the local area and market.
Almost any real estate agent should understand the ins and outs of remotely purchasing a home. However, you should choose one who you feel has the best chance of helping secure the home at a reasonable price.
Step 2: Obtain a mortgage preapproval
The next and most crucial step before you start house hunting is to receive a mortgage preapproval from a lender. Mortgage preapproval is where the lender reviews your income, credit score and assets to decide how much house you can afford.
Moreover, the preapproval letter will outline the amount the lender is willing to extend you, the loan terms and the interest rate.
Obtaining a mortgage preapproval has several advantages:
- Showing the buyer that you’re serious: Many sellers and agents will not consider your offer on a house until you can show a preapproval letter outlining that you can afford the property.
- How much home you can afford: A preapproval letter clearly states how much the lender will provide you to buy a home. With that knowledge, you can narrow down your search and make an offer on a property that fits within your budget.
- Allows for financial planning: Since the preapproval letter contains information like an estimate for your monthly mortgage payment, the preapproval process may help with future financial planning.
Step 3: Schedule a virtual tour of the house
Since you’ll be unable to view the property in person, a virtual tour or viewing photos and videos are essential in determining if the house is an ideal fit for you.
Before you schedule a tour, it’s important to understand that there are several options for a remote viewing experience. Your visit may be constructed in one of the following ways:
- 3D walkthrough: This type of tour is a virtual rendering of the property, allowing prospective homebuyers to see what the house would look like with or without furniture.
- Virtual tour: Your agent may host a tour via video streaming platforms such as FaceTime, YouTube and Instagram live. The experience is similar to an in-person tour where the agent will take you from one room to another, creating an immersive experience. Often, real estate agents will host open houses where buyers can ask specific questions regarding the property or ask to get a closer look at certain parts of the house.
- 3D tour: A 3D tour is similar to a 3D walkthrough, but a 3D tour allows for a more interactive experience. Viewers can move objects like the furniture to see the house’s appearance with various layouts. Additionally, 3D tours often provide homebuyers the opportunity to get a 360-degree view of the home.
After you’ve viewed the property remotely, and if you have family or friends who live in the area, you may want to ask them to tour the property in person to provide you with some additional insight on the quality of the home.
Step 4: Hire a home inspector
In a competitive seller’s market, you may be tempted to waive the home inspection in hopes of getting a leg up on the competition. Whether you’re purchasing a home the traditional way or sight unseen, the home inspection can ultimately aid your decision to move forward with an offer or continue your search.
A home inspection can save you thousands of dollars to repair structural damage and any other problems that may arise soon after closing.
The home inspection may help you when it comes time to negotiate the price. According to a survey by the Porch Group, respondents reported saving an average of $14,000 on the home’s final price after negotiation based on the home inspection.
Step 5: Submit a sight-unseen offer
A sight-unseen offer isn’t much different from the traditional home offer. You’ll need to submit the offer letter in writing. Your name, current address, the price you’re willing to pay and more information should be included. You should also have a note regarding the deadline for the seller to respond to your offer.
Generally speaking, you’ll need to include an earnest money deposit, which shows you’re a good faith buyer. The earnest money deposit is usually between 1% to 2% of the home’s purchase price.
Once the offer letter is received, the seller can opt to accept it, reject it or make a counteroffer.
The most significant difference between making an offer sight unseen and traditional is that you may want to rely heavily on contingencies. Contingencies can vary depending on the property and your needs. You may want to add a contingency for the home inspection, a title contingency or anything else you deem necessary.
Step 6: Close on the property
Once you and the seller agree on the final offer, the last step is to close on the home. There are various aspects and costs associated with the closing process. Make sure you have everything in order before meeting with the seller and notary at the house or a neutral location.
How To Determine If Buying A House Sight Unseen Is For You
Virtually viewing and purchasing properties has advantages and disadvantages. Let’s look at some pros and cons to help you determine whether this approach is right for you.
Pros of buying a house sight unseen
- Easily accessible to view multiple properties from any location.
- The home inspection may reveal serious issues with the house. You can move forward with the house search without seeing the property in person.
- While it may not always be the instance, you may be able to avoid a potential bidding war due to the quick process.
Cons of purchasing a house sight unseen
- Structural issues may exist that you didn’t notice during the virtual tour.
- Unable to visit the surrounding neighborhood and area to get a sense of what is nearby.
- Not able to capture the essence of the home, such as smells, noise and some of the lighting in the house.
Ultimately, choosing to buy a house sight unseen comes down to personal preference. There are some instances where it may be necessary, such as if you’re planning to move to a different state or across the country.
Secure Financing Through Arizona Central Credit Union
Buying a house sight unseen is simply another approach to purchasing a residential property. Sometimes it may be necessary, depending on your situation. If you’re ever in a situation where you may need to purchase a home virtually, the steps outlined in this piece can help you navigate the process.
Are you on the horizon of purchasing a home? Consider getting preapproved through Arizona Central Credit Union. Contact us when you’re ready, and one of our mortgage specialists will help guide you through the entire process.
