The Guide to Buying a Home Sight Unseen

While feasible, purchasing a home sight unseen requires more work and attention.

U.S. News & World Report

The Guide to Buying a Home Sight Unseen

Relaxed young couple using a laptop at home

If you're looking to buy a home sight unseen, take advantage of virtual tours and video chats with your real estate agent while he or she is at the property.(iStockPhoto)

In April, after Virginia enacted a stay-at-home order due to the spread of the coronavirus, Ruth Boyer O'Dea found herself alone in a three-floor, five-bedroom residence in Arlington listed for a little over $2 million. Except she wasn't really by herself. On the other end of a video phone call was a couple in Texas, seeking to relocate back to the Washington, D.C., metro area after a year away.

For an hour, Boyer O’Dea, a real estate agent with TTR Sotheby’s International Realty, walked through the home, narrating her surroundings for her clients as they watched remotely and asked questions. At the end of the virtual tour, the couple decided to make an offer. In a day, they had the home under contract.

“We still practice business, but the way in which we do (things) has changed,” Boyer O’Dea says, referring to the shifts the Covid-19 pandemic has prompted in the real estate market.

As the virus swept across the U.S., the country went into a de facto lockdown, which weaved a state-by-state patchwork of essential businesses, a classification that excluded some aspects of homebuying and selling, while permitting others. In New York City, for example, in-person home showing and open houses succumbed to a ban but moving was allowed.

As a result, available long before the onset of the pandemic, 3D tours and video walkthroughs quickly became the norm in a coronavirus-stricken housing market.

To sell one of the penthouses at 21 East 22nd Street in New York City’s Flatiron district, for example, Douglas Elliman agent Frances Katzen hosted a tour over Zoom, the video conferencing app, for an American buyer who, at the time, lived in Belgium.

While sight unseen deals have always existed, mainly among foreign buyers, investors and home shoppers who are moving long-distance, such arrangements might spike in popularity, especially as the coronavirus lingers on with predictions for a second wave of infections.

“We've always had remote buyers,” says Miltiadis Kastanis, director of luxury sales for Douglas Elliman in Miami Beach, Florida. “The new remote buyer is the local Miami Beach buyer (who doesn’t) feel comfortable coming out to visit a property.”

Lisa Sheppard, an agent with Sotheby’s International Reality’s Wine Country - East Napa Street Brokerage in Sonoma, California, echoed the sentiment that the Covid-19 pandemic might lead to an increase in sight unseen purchases.

“Although I have sold some properties virtually in the past, it's definitely not the norm,” Sheppard says. “But we're going to see more and more of that.”

According to a survey by home repair company Helitech that outlines the effects the coronavirus has wielded on housing, one in three respondents said they would consider purchasing a residence sight unseen.

Recently, Sheppard helped a couple from the District of Columbia buy a roughly 2,700-square-foot home in Sebastopol, California. It was a convoluted process that involved the sale of the couple’s D.C. home and a cross-country RV trip that was cut midway when the couple learned of a major structural setback – an inspection revealed the residence was a manufactured home – that threatened the whole undertaking.

In light of the pandemic, here is what buyers pursuing sight-unseen deals should know and do:

  • Do as much prior research as possible.
  • Aside from virtual tours, have video walkthroughs and consult floor plans.
  • Know what type of home inspections and appraisals are possible.
  • Be flexible with the available methods of signing sale documents.

Prior Research

As always, homebuyers should do their research before even venturing out to see houses.

In New York City, Katzen advises, “Do as much digging as possible about the inherent makeup of the building. Really do your due diligence. Look at the (comparable sales) to make sure what you're paying is the right number in context of the current climate and what's been achieved beforehand.”

Beyond Virtual Tours

In the early days of the pandemic, even if in-person home tours were impossible due to local regulations, agents were still able to enter vacant houses. That is what Sheppard did in order to take videos and images that supplemented the listing photography. The additional visuals helped her clients make up their mind about the property in Sebastopol.

“They decided that they were to buy the property sight unseen,” Sheppard says. “They've just seen it virtually through the photography, the videos, the floor plans and the drone stills.”

While 3D renderings and pre-recorded walkthroughs may offer a worthwhile introduction to a home, buyers should also request a live video tour that allows them to inquire about certain features as well as to request a brief stroll through the neighborhood. For instance, they may ask to see inside the cabinets that are closed on clips produced for the listing’s advertisement.

Moreover, during video tours, the agent’s experience of the property becomes paramount. Unlike their clients, agents can see the views, hear any noises and observe the community.

“You almost become the buyer for (the homebuyer) because they're not here,” Kastanis says of the role agents must play. “You have to really be able to express the property in a very emotional, strong way because they're not here to physically feel the property.”

It is also advisable that buyers reference the floor plans while virtually touring a home in order to better grasp the layout and the furnishing options it offers.

In some cases, it's also possible for homebuyers to connect with current homeowners, either in a neighborhood or a building, and seek their insights. This is what happened about two years ago in a $6 million condo transaction closed by Nada Rizk and Joanne Greene, New York City-based agents with brokerage Brown Harris Stevens, in a building where they had conducted deals before. At the time, a former client of theirs agreed to talk to the buyer, who lived in London.

“They stayed on the phone for half an hour,” Rizk says. “That made the buyer comfortable with buying sight unseen.”

Home Inspections and Appraisals

In conventional sight-unseen deals, agents would facilitate home inspections and appraisals on behalf of buyers. In such transactions, home inspections are crucial and often serve as a contingent factor for the execution of the sale.

In some cities, the coronavirus pandemic pushed inspections and appraisals to virtual alternatives that rely on images and available market data. In others, inspections and appraisals have been carried out under specific health protocols. The latter include limits on how many people can be in a home simultaneously and what personal protective gear they must wear.

In Arlington, Virginia, Boyer O’Dea met the home inspector outside but did not accompany him indoors, which would be typical in any other time. The appraiser also entered the house.

In New York City, though, both the inspector and the appraiser of the penthouse Katzen represented worked remotely through images. Only an engineer showed up in person to examine the upper deck.

In early June, the Federal Housing Finance Agency, which oversees the government-backed enterprises Freddie Mac and Fannie Mae, extended its policy to allow lenders to conduct virtual appraisals through at least the end of July.

Closing Deals

Traditionally, buyers purchasing sight unseen would visit the property for a final walkthrough and to close the deal in person. Yet, the pandemic has complicated this approach not only with the remote-work arrangements some title companies have adopted but also with numerous travel restrictions, both local and global.

Fortunately, though, in the U.S. the coronavirus outbreak has accelerated the adoption of remote online notarization, the so-called RON service, which postulated the legally binding nature of electronic signatures. Accepted in roughly 25 states, RON has allowed real estate settlements to go through during the pandemic (signing offers is usually subject to fewer regulations). This doesn’t mean that remote settlements are easy, though.

Boyer O’Dea’s clients had to video conference with a lawyer from Virginia, who went through the closing documents, a paper copy of which they signed in the presence of a local notary in Texas.

“They were all together, but they weren't physically together,” Boyer O’Dea says.

Then, those files were sent to Virginia overnight for the sellers to ink.

Because of the enormous commitment of buying a home and the new ruffles that the pandemic is adding to sight-unseen transactions, Kastanis has one overarching piece of advice: “Work with someone who you trust and who you are sure understands the home that you're looking at.”

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