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Buying a House Sight Unseen

Posted by Sarah Steen on February 13, 2019
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According to a Redfin survey, 35% of all home buyers last year made an offer on a house sight unseen. What does that mean? These buyers committed to a house before seeing it personally. This post will explore the pros and cons of purchasing a home this way. We’ll also discuss best practices if you find yourself in a situation where you can’t see a house personally before making an offer.

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Why is buying sight unseen such a big trend?

Low inventory and a fast real estate market are the biggest reasons to purchase a home sight unseen. After the market bottomed out in 2011, Colorado Springs has seen home price increases every year. These price increases have accelerated over the past 4 years, with annual jumps of 10% or more. This real estate climate means that if buyers finds a home they want, they have to move quickly and aggressively to buy it. This sometimes results in a situation where they’ll have to offer on a home without ever personally setting foot in it.

The Colorado Springs real estate market started seeing an increase in the number of sight unseen buyers several years ago. Listing agents were initially hesitant to accept offers in these situations because they thought it could possibly create a “shakier” deal. This mindset has changed. Colorado Springs agents have learned that this has become a normal part of the market, and it does not necessarily mean the buyer will be more likely to terminate the contract. In fact, most buyers in these situations breathe a sigh of relief because they finally snagged a home in a competitive market.

The military installations in Colorado Springs also increase the number of buyers making offers sight unseen. In person showings are often just not an option if a buyer lives out of town, out of state, or even outside of the United States like many of our military home buyers.

A Client Perspective:

Our client, Leah Kasper, purchased her house sight unseen last year while her family was stationed in Germany. When they decided that they would buy a home in Colorado Springs, they realized they would have to go through most of that process while they were still overseas: “Our orders came in pretty quick that we were leaving, and we had to make a decision on whether to rent or to buy [in our new duty station]. Buying was more economical for us. To rent out here was expensive and it was pretty much as much as paying a mortgage.”

Leah and her husband have two sons. Buying a house sight unseen was a better option for them than the alternative possibility of not securing a place to live as soon as they moved from overseas.

Related Reading: Colorado Springs Relocation Guide

Tips for Long Distance Buyers

1. Don’t buy sight unseen unless it’s really your only option

If you have a friend, acquaintance, or colleague in town, send them along with your agent to get another (hopefully) unbiased opinion.

2. Find a trusted real estate professional

Statistics tell us that home sellers interview several real estate agents, while home buyers work with the first agent that speaks with them when they are ready to buy a house. Hiring the first agent you meet may seem convenient, but it doesn’t always result in the best service and experience.

It’s especially important to do your research for a real estate agent if you are planning to purchase a home sight unseen. Here’s what to look for:

  • Your real estate agent needs to know technology! There are many available apps for communication, and it’s important that the agent is familiar with these to make sure you are given the most detailed information possible.
  • Is your agent flexible when it comes to work hours? We all need sleep, but special circumstances require special actions. While our buyer, Leah, was house hunting from Germany, it was important to her that I was available very early in the morning so we could communicate on showings.
  • It’s important to have a real estate agent by your side that works in real estate full time, and who knows the area you want to purchase in! A knowledgeable and experienced agent can provide firsthand information on the neighborhood, future plans for the neighborhood and surrounding area, and specific guidance on how to research.

Related Reading: 12 Reasons to Hire Us

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3. Know your credit score

It is very important that you know your credit score. If you don’t want to take a “hit” on our credit, you can use Credit Karma, or see if your credit card offers a free FICO credit score (USAA, Discover, and Citi Card do), to give you a ballpark indication.

Don’t assume that you can’t qualify for a mortgage just because your credit score seems low. You might be surprised. Whatever you do, don’t take a guess at your credit score. It’s important to get the exact number to avoid roadblocks in your buying process.

The lender will also want to calculate your debt to income ratio. Prepare a list of all your regular income and common debts before you call lenders.

Related Reading:
Home Buying 101: Getting Started
Home Buyers Frequently Asked Questions

4. Find a lender

Talk to your real estate professional for suggestions and interview at least 3 lenders. It might seem appealing to just work with a bank you already have an account with, but make sure to shop around for the best deal.

  • How easy or difficult is it to work with this lender?
  • Do they have a good reputation? Ask friends and family for recommendations.
  • Are they available on the weekends? That’s when real estate transactions are likely to happen, but banks and bigger lenders like USAA or Navy Federal may be unavailable. In a tight sellers market like Colorado Springs, this can cause headaches for buyers .
  • Are they local? A local lender is ideal because they understand local peculiarities.  A local lender also means the agent can physically go to their office and talk to face to face if necessary.
  • Do you feel comfortable with your lender on a personal level? Do you feel taken care of? Do you trust this person?

Related Reading: Lender Recommendations

5. Don’t completely believe photos

Photos are marketing materials. Their job is to get as many people into the property. They are supposed to be pretty and represent a home in its best light. Be cautious. It is so much better if there is a 3D walk through available to give you a better perspective for the home’s layout. I believe nothing is better than the actual Facetime/Whatsapp/Facebook walk through with a trusted real estate agent to get a grasp on dimensions.

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6. Go house hunting from your phone or computer

Technology is your friend! I will do a walk through for you and I will talk about anything that stands out: the good, the bad and the ugly. If you like the home, continue (quickly) with more research.

Once you find a house you love, there are many programs that allow long distance buyers to submit paperwork electronically.

7. Include contingencies in your contract

In a multiple offer situation, you will want to make your offer as attractive as possible. Of course, a great price and the easiest financing (or cash) is a great way to do this. But sellers sometimes have other requests like wanting to remain in the property after closing. It’s fabulous if you can accommodate that. But keep in mind that you should NEVER take out the inspection contingency! Hopefully, contingencies will give you time to fly in and determine if this home is really for you.

Related Reading: Home Buying 101: They Accepted Our Offer. Now What?

8. Don’t hesitate to spend money on inspections

This is particularly true if you cannot be in town to look at the home before closing. General home inspection, radon test, sewer scoping, well inspections, sewer inspections are all available. If everything looks good: great! If not: you have the chance to make a decision to take it or terminate the contract. Most inspectors use online reporting so accessing an inspection report shouldn’t be a problem.

Related Reading: Home Inspection Insights

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9. Request property specific research from your agent

You REALTOR® will be able to pull information about past rental rates for homes like the one you are interested in. You might also want to see how the value of your home and your neighborhood have increased over the past few years.  How many homes are being sold in the neighborhood? Is there a lot of turnover? How many rentals are there? How does your home stack up compared to the rest of the neighborhood? You do not want to buy the most expensive home in the neighborhood unless there is a clear trend that your home value will soon be exceeded.

10. Do Your Research

Locality Features:
The most obvious and important research is to get a feel for the neighborhood. Go on a virtual stroll with Google Street View and Google Earth or Satellite View to research the area. Some things to consider:

  • Is there a busy street?
  • Are train tracks close by?
  • How close are neighbors?
  • Anything that would concern me?
  • Is there a school close by?
  • Am I ok with school traffic?
  • Is there a commercial or industrial area close by that would concern me?
  • How is traffic to and from your workplace?
  • Does the neighborhood look well cared for?

Other due diligence and research:

Here are suggestions for more research that you can do to make sure that this house is PERFECT for you:

  • ZONING: The present and future zoning and land use, laws, and regulations affecting the property (both immediate and surrounding). You can start here.
  • PROPERTY TAXES: The amount of real property taxes due in the year this contract is executed, subsequent year, and lots more information. Lookup here.
  • SCHOOLS: The adequacy and availability, now and in the future, of the public or private schools in the property’s neighborhood. Start here
  • FLOOD ZONE: Whether or not the property is located within a flood hazard area as defined by the Flood Hazard Boundary Map published by the Federal Insurance Administration, which operates under the Flood Disaster Protection Act of 1973. In the event the property is located within a flood hazard area, the buyer is informed that lenders may require flood insurance and such insurance may be desired by the Buyer, if available. Is my home in a flood zone? Look here  (the lender will look that up for you as well)
  • HOA: If there is a homeowners association you definitely want to know what’s allowed and what isn’t. How are the association reserves? You will receive all documents once you are under contract, but finding the association online means you can do a little research ahead of time.
  • POLICE COMPLAINTS and OTHER ILLEGAL or CRIMINAL NEIGHBORHOOD ACTIVITY: Buyer is hereby advised that it should investigate with local police officials to determine if any criminal complaints have been made regarding the contemplated Property, its owners, occupants and its neighbors. Buyer should also determine whether law enforcement agencies suspect any illegal activity within the Property’s neighborhood. Start your research here – El Paso County or myneighborhoodupdate.net or Community Crime Map

Facebook and Online opinions:

If you ask for other people’s opinion online (for example: in a Facebook Group), just be cautious and take it with a grain of salt. Folks with strong opinions are usually most likely to reply.

We are happy to work with you if you are thinking about buying a home, but can’t be here to house hunt in person. We can use our local knowledge and real estate expertise to make this process as hassle-free as possible. Email (susanna@co-regroup.com), call or text (719-321-0800). We look forward to working with you!


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