You should never invest in a piece of property without first doing your due diligence. But over the years, the concept of due diligence and what sort or research is necessary to make an educated financial decision has evolved. Contrary to popular belief, it’s no longer mandatory to actually see a property in person. It’s definitely ideal to be able to walk a property, but don’t let an inability to physically see a property hold you back from making a profitable investment.
Why Buy a Property Sight Unseen?
The idea that anyone would make such a large investment without first being able to see a property in person might seem strange, but is it really? Consumers buy virtually everything online these days and it typically works out. Plus, have you ever thought to yourself, “I need to visit the headquarters of Amazon before investing in their stock?” Probably not – so who says a house can’t be purchased when the right research is conducted?
Again, it’s smart to see a house if you can…but you don’t always have that luxury. Here are three specific reasons why you may choose to put in an offer, sight unseen.
- No time to look. Sometimes you just don’t have the time to look at a property. If you’re busy working a full-time job, trying to fit a showing into your very limited downtime is nearly impossible. It’s also impractical to see a house if you’re out of town when a property goes on the market and you know it’ll be under contract by the time you return. In both of these scenarios, buying unseen might be the only choice.
- Competitive market. In most regions around the country, real estate is red hot. As a result, it’s not uncommon for a house to go on the market in the morning and be under contract by the evening. If you know a house is going to sell quickly, getting your offer in as soon as possible is supremely important.
- Counter offers. Have you ever had a seller accept your first offer? Assuming that you don’t offer full-price, probably not. Sellers almost always come back with counter offers that are in between your offer and the list price. This gives you a chance to see what the real price is. At this point, you may choose to see the property in person or continue negotiating.
You probably aren’t going to buy your first rental property without checking it out in person, but once you get familiar with the process and comfortable with how these deals work, this is certainly a strategy you can use in competitive markets where you’re unable to look yourself.
6 Things You Have to Do
If you do choose to buy a house unseen, you have to proceed with caution. This isn’t a choice to make lightly and there’s a lot of research that goes into the process. Specifically, you’ll need to do the following:
- Send a Representative, if Possible
The first thing you should do, if time permits, is send a representative in your place. This could be a trusted business advisor, a spouse, an investing partner, or even your real estate agent. The benefit here is that you’re able to get a firsthand report on things that aren’t immediately obvious online. This includes strange smells and signs of hidden damage.
- Take Listing Images With a Grain of Salt
Listing photos are great, but they aren’t always the most realistic. Today’s real estate photographers get paid good money to make properties look as compelling and warm as possible. They know which angles to use to make small rooms look bigger and how to cast light so that it hides or highlights specific elements. Look at the pictures, but don’t let them be your only reference point.
- Use Google
Google is your best friend when it comes to researching a property, especially sight unseen. For starters, you should always pull up the aerial view of the property to check out the entire lot, acreage, and space between neighbors. The next thing you should do is pull up the Google Street View and take a virtual ride around the block. What do the neighboring properties look like? Is the street clean? Are the roads busy? This gives you a better picture of the area than just staring at a map.
- Check and Recheck Comps
Even if you see a property in person, it’s imperative that you check comps to make sure the pricing is right. But it’s especially important to study nearby comps if you aren’t seeing the house. This lets you know if houses in the neighborhood are actually good deals.
- Add in a Cushion
You need to figure in a cushion if you’re going to make an offer without seeing the house first. For example, let’s say the list price on the house is $200,000 and you believe it’s worth $195,000. Chances are, there’s something that you haven’t picked up on in your remote research. As such, offering $190,000 or $192,500 gives you some wiggle room to deal with an expense that may pop up.
- Ask for a Walk-Through Contingency
There are plenty of other contingencies to include in a written contract offer, but a walk-through contingency is one of the most important when you’ve yet to visit the property in person. This gives you the ability to physically see the property before heading to the closing table. Should you see something that doesn’t add up, you have the chance to back out before making a bad investment.
Contact Green Residential Today
Real estate investing – especially of the rental property variety – is a group effort. It’s nearly impossible to handle all of the responsibilities on your own. At Green Residential, this is where we come into play. Whether you’re looking for assistance buying, selling, or managing a property, we have the expertise and knowledge needed to make the process as stress-free as possible. Contact us today and we’d be happy to provide you with more information!