The coronavirus pandemic has had an unprecedented effect on the real estate market. Due to lockdowns, social distancing, and a depressed economy, home sales dropped greatly in the US during the height of the pandemic. According to a study by OJO Labs, 80% of would-be property buyers had either delayed or completely abandoned their housing search in April 2020. 54% cited concerns about the inability to see properties in person. The situation was especially dire in cities adversely affected by the coronavirus like San Francisco, Washington DC, and New York.
Related: How the Coronavirus Will Affect US Home Prices in 2020 and Beyond
Fast forward to June 2020… and many buyers and sellers have returned to the real estate market. Still, experts recommend that all players follow good practices to avoid contracting and spreading the coronavirus. The good news is that technology has made it possible for buyers to look for and close on a real estate investment remotely amidst the COVID-19 pandemic. This kind of transaction is known as “buying a house sight unseen.” Although it’s not necessarily a new concept in the real estate industry, a recent report by the National Association of Realtors revealed that buying a house sight unseen has increased significantly during the global pandemic.
If you want to take advantage of low mortgage rates while keeping yourself and others safe, this may be the best approach for you during these times. That’s why we’ve put together this complete guide for real estate investors.
What Is a Sight Unseen Offer?
A sight unseen offer involves making an offer on a home for sale without seeing it in person. This usually happens in long distance real estate investing or when buying a rental property out of state. In such cases, real estate investors rely on technology like virtual open houses conducted via platforms like Skype, FaceTime, and Zoom to make the final decision.
So, How Do You Buy a House Unseen?
Here are some tips for buying a house sight unseen:
1. Know what you want
Before you begin the process of buying a house sight unseen, you should be clear about what you are looking for in a real estate investment property. Would you like to buy condos, single family homes, multifamily homes, or apartments? You should also consider details such as the number of bedrooms, number of bathrooms, etc. Also think about how close you want the investment property to be to the transit system, good schools, hospitals, and other amenities. Remember to make all of these decisions with two things in mind:
- What you want should be what prospective tenants would want
- What you want should be what will make you the highest return on investment in the real estate market
2. Hire an experienced real estate agent
Since you cannot see the investment property for sale in person, working with a real estate agent is advisable. Look for a trustworthy agent that knows the area very well and has experience dealing with customers buying sight unseen. You can start by checking online reviews of agents in the area where you are thinking of buying property. Make a shortlist and conduct interviews.
Here are some of the questions you could ask before hiring a real estate agent:
- Is this your full-time job?
- How many sales have you facilitated in my target neighborhood?
- What is your fee?
- What services do you offer?
- Can I get references from your last five virtual real estate investing clients?
Find a talented real estate agent in the city of your choice now.
Related: The Best Ways to Find a Real Estate Agent
3. Research the neighborhood
If you have never visited your target neighborhood before, buying a house sight unseen means you are investing in totally unfamiliar territory. This is why it is very important to learn as much as possible about an area before buying a house for investment. Tools such as Google Streetview and Google Maps can come in handy for remote neighborhood research. Type in the address of the potential investment property and look at the restaurants, grocery stores, community centers, and green spaces that line the area. You should also check how close the rental property is to the highway, schools, malls, gas stations, and other vital amenities.
Since Google Maps and Streetview only provide static images, you could ask your real estate agent to shoot a video while driving or walking around the area. This will give you a better idea of what the area is like. Ask him/her questions about things such as crime rate, traffic congestion, availability of parking, noise levels, air quality, and the friendliness of neighbors – some of this, you can easily look up online yourself.
Neighborhood research before buying a house sight unseen should also involve checking the long-term plans of the area. Ask your agent to visit the local city council to find out about developments planned for the future. You could also visit the council’s website to do your own due diligence.
4. Analyze the potential profitability using online software
Besides researching the neighborhood, you should also use real estate investment tools to analyze the potential profitability of the area. Mashvisor’s heatmap analysis tool will help you identify the most profitable locations for buying a house sight unseen. You can conduct neighborhood analysis on locations using metrics such as property listing price, rental income, cash on cash return, and Airbnb occupancy rate.
Once you’ve found a good neighborhood for buying a house sight unseen, you can use Mashvisor’s investment property calculator to analyze individual homes for sale. This rental property analysis tool will show you the cash flow, rental income, cap rate, and cash on cash return that you can expect from a rental property.
Both the neighborhood and investment property analysis are done from the comfort of your own home. There is no need to meet with sellers, property managers, agents, or landlords to gather data – Mashvisor does all of this for you. Stay safe and make a good real estate investment with Mashvisor when buying a house sight unseen. Sign up now and get 20% off!
5. Organize virtual tours
When it comes to buying a house sight unseen, you can’t just rely on the photos and descriptions on the home’s listing. You will need a detailed virtual walkthrough to get a good idea of what you are buying. To get as much information as possible, ask your real estate agent to organize a live video-chat tour. This will allow your agent to provide commentary as they walk around the investment property. At the same time, you can ask questions such as:
- Can you zoom in? At times, you might need your agent to zoom in on specific features so you can have a better view.
- Can you hear any noises from the house? Maybe there are train tracks behind the home or a factory close by.
- What can you smell outside and in the house?
- How large is this room? Video tours can distort a room, making it difficult for you to estimate the size.
- What color is that? Quite often, the digital representation of color is not always accurate. Your real estate agent can help clarify specific colors.
- Do any features or appliances look outdated? Don’t be deceived by the new coat of paint.
6. Arrange for virtual home inspections
A home inspection is a must when buying a house sight unseen. For your safety, your home inspector will probably ask that you not attend the inspection anyway, allowing you to continue with the process of buying the house sight unseen. However, some will arrange a phone/video call during the inspection to discuss findings.
Besides the general home inspection, you should also conduct specialized inspections for issues such as pests, radon, lead paint, asbestos, mold, sewer system, and HVAC. Though these inspections can be quite costly, they will save you many headaches down the road. Extra inspections are especially important if you don’t plan on seeing the investment property before purchasing it.
Related: 10 Real Estate Technology Trends You Can Expect in 2020
7. Close Remotely
Once you’ve done your due diligence and are happy about the investment property, you can then make payment and close remotely. You will receive all the documents in your inbox, which you can then sign electronically. Where physical signatures are needed, you submit the paperwork via FedEx. Funds can be transferred via wire transfers or bank transfers.
Bottom line
Can you buy a house without looking at it? Yes, but buying a house without seeing it comes with many risks. Besides doing your due diligence, you can minimize the risk by including contingencies in the contract. This will protect you from any problems that may emerge during the transaction.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.