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Welcome to the BeSmartee blog. Enjoy a wide selection of articles related to mortgages, the industry, and real estate.

How to Buy a House Sight Unseen

By Laura Agadoni · Feb 17, 2016 · Real Estate

How to Buy a House Sight Unseen

Image courtesy of BeSmartee, House Shopping on the Internet

In the HBO TV series, The Leftovers, characters in the show spend all their savings to buy a house, sight unseen. But they were dealing with a post-apocalyptic world and just needed a house, any house, no matter its condition.

maybe you should visit the house

Some people in our comparatively idyllic world, however, also buy houses sight unseen. In fact, according to a SurveyMonkey poll conducted by Redfin, one in five Americans who have bought a house in the past two years did so before they ever saw it in person. The two biggest groups to do this were people buying a home that cost over $750,000 and millennials. People have their reasons for doing this.

  • They might be trying to buy in a hot market and need to put in an offer ASAP, or miss out on the deal.
  • They might not be local, and it would be a hardship to travel to see the house.
  • They might be an investor who doesn't plan to live there anyway.
  • They might be buying into a new development and can see only renderings or maybe a model home before putting in an offer.
  • They might be young and are comfortable (maybe too comfortable) using the Internet to buy a house.

Is this ever a good idea?

If you've ever looked at property listings on the multiple listing service (MLS), or on sites such as Trulia, Zillow, or Realtor.com, and have found the "perfect" house only to be completely disappointed after viewing said house (the same one that looked so great online), you'd agree that it's best to see the property in person before you buy it.

The bedrooms and the backyard, for example, might appear much bigger online than they really are. Plus, the sellers didn't mention that the house reeks of cigarette smoke, that the next-door neighbors have dogs that bark nonstop, or that the guy down the street created a hoarding situation that's spilled over and onto his front yard. Hello rats. You get the idea.

But there are occasions where buying sight unseen is your only option. If that's the case, you can take measures to help ensure you aren't making a bad move. As long as you realize that a certain amount of risk is involved, you're going in with the right mindset. Here are five steps to take.

1. Call the listing agent

Contact the listing agent and tell them that you're interested in buying the house but that you first want some information. Ask about any features that are important to you, such as whether there's a bathroom, or at least a half-bath, on the main level, or whether all the bathrooms are upstairs. Find out how old the heating, ventilation, and air conditioning (HVAC) system is. Ask how old the roof is. If it's 20 years old or more, there might be some water damage in the house caused by an old, leaky roof.

2. Hire a real estate agent

If you like what the listing agent has to say, hire a buyer's agent. Don't rely on the listing agent anymore to help you. They work for the seller. Plus, you don't pay a buyer's agent; the seller does.

You will want a buyer's agent who is working for you. Look for a real estate agent who specializes in the area you're interested in and in the type of home you're looking for. This person will be your eyes and ears. They can send you particular photos that might not be online, such as close-ups of the kitchen cabinets, water stains on the walls or ceilings, and a view of underneath the sinks. You can then show photos of any problem areas to a contractor to get a ballpark estimate of how much it might cost to fix the problem.

3. Find out all you can about the neighborhood

community watch

Check out the crime report. You can do this online. CrimeReports, for example, lets you know how many crimes and the types of crimes that have occurred in the area. The demographics of the neighborhood are also important. You can get a detailed report that breaks down ZIP codes into 67 possible demographic types at Esri, from students to retirees to everything in between. Your real estate agent can also give you information on the neighborhood, the schools, and the amenities.

4. Make sure you have a contingency clause

If everything looks good so far, you might want to put an offer on the house. If you do, be sure you do so with a contingency clause that makes the sale dependent on whether the house passes an inspection. You then would typically need to arrange for an inspection pronto, usually within a week's time. If the seller won't agree to a contingency clause, take that as a huge red flag. You would probably be wise to keep looking if that happens.

5. Hire an inspector

You'll need to shell out some money to hire a housing inspector, but it will probably be worth it. The price varies, depending on your geographic area and on the house itself, but expect to pay about $400 for a 2,000 square-foot home.

If the inspection reveals that the house has some minor problems (there's always something) but otherwise looks good, you might want to move forward, and buy it. But if the inspection reveals some major problems with the house, such as with the foundation, plumbing, wiring, or that leaky roof, you might want to pass on the house, which you can do if you have a contingency clause in your contract. You could also offer less and spend the money you save to fix the problems, or you can ask the seller to fix the problems before you buy the house.

Bottom Line

Although it's not ideal to buy a house sight unseen, circumstances sometimes put you in this position. If you do some due diligence, you can minimize your risk.

Image Source: Vacant House, Community Watch

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Foreign real estate investment in the United States, both commercial and residential, is a huge phenomenon that is only expected to accelerate, maybe even to skyrocket, in 2016. Read more.

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Whenever there is money to be made or money to be spent, some unscrupulous folks will take advantage, trying to game the system or commit all-out fraud. Read more.

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Your DTI is used by mortgage lenders to determine whether you qualify for a loan, and if so, for how much. Improve your DTI with these 16 tips. Read more.

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5 Tips on Getting a Mortgage Loan after Bankruptcy
By Veronica Nguyen · Apr 15, 2015 · Mortgage

A bankruptcy will make it very difficult to attain a home loan. These 5 tips will help you re-establish your credit quickly in order to qualify for a home loan. Read more.

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