One of military life’s challenges is having to constantly move to a new location and find a new home - to rent or buy. If you’re serving overseas, you may already have experience purchasing a home “sight unseen,” which means you’ve purchased the home without touring the property in person (although it’s likely you poured over pictures and a video tour).
This home-buying method is actually becoming more common for all kinds of PCS (and personal) moves due to tight housing markets, where homes sell in hours instead of days, and adjustments to the purchasing process have been made in light of COVID-19. In fact, according to Redfin, 63% of those who purchased a home in 2020 made an offer without setting foot in the property.
If you’ll be buying sight unseen, keep these three do’s and don’ts in mind.
Related: First-Time Buyer Purchases Home While Overseas
1. Enlist Help
When you’re buying sight unseen, your real estate agent is a vital connection for you. They can send you fresh property listings and provide insights about each neighborhood and property.
By previewing properties, your agent can notice things like smells, the condition of adjacent properties or let you know that there’s very limited street parking — details that might not be apparent in the listing’s videos or photos. They can also confirm who is the property's legal owner to help you avoid scams.
As you begin your home search, be sure to get pre-approved by a lender like AMS. A pre-approval letter carries a lot of weight with sellers, letting them know you’re serious about buying and your lender believes your credit is sufficient for a loan up to a certain amount.
Throughout COVID-19, many lenders have tightened their credit standards. Some now require a credit score of at least 640 and a low debt-to-income ratio for VA Home Loans. Also, be sure to ask if they’ll be able to do a quick closing — within 14 to 21 days. Stipulating a fast close can be attractive to some sellers and make your offer stand out.
2. Don’t Skip the Inspection
Once you make an offer, be sure to have the home inspected by a professional inspector (this contingency can be written into your contract).
The home inspection will help eliminate the possibility of buying a home with structural problems, mold that's been painted over, and other issues an unscrupulous seller may not disclose. Some home inspectors will use video conference technology such as FaceTime or Zoom to fill you in on the highlights that will be in their report.
Other facets of the transaction, such as the close, may be different, too. Some states require the buyer (or his duly-authorized agent) to sign documents in person. And some lenders require that a buyer sign documents in the presence of a notary. If you choose a lender that offers eClosings, and live in a state that allows remote mortgage closings, then you do not need to be physically present on closing day.
Of course, if you’re buying with cash, there is no obligation for a buyer, a seller or a closing agent to be in the same room or even the same building to conclude a closing. Everything can be done by mail, email, and wire transfer.
Related: How COVID-19 Changed the Mortgage Process
3. Envision What Could Go Wrong
If you are buying a home sight unseen, you’ll need to take all reasonable steps to protect yourself against moving into a property that doesn't match what you saw online, or worse, parting with your money for a home that never existed in the first place. Consider enlisting the help of a family member or friend to drive-by the home and take fresh videos and pictures so that you know what you are getting. It’s possible these images may more accurately reflect the property’s current condition than the images online.
Other issues can delay or derail your purchase, too. For example, if there’s been a negative change to your income or credit score between applying for the loan and closing on the property, you may no longer qualify for the mortgage for which you were pre-approved. Should that happen, you’ll need to re-apply and see if you still qualify for financing. If not, the deal can fall through. Other potential issues at closing include problems discovered with the property’s title, a bank transfer of funds that falls through, or document errors.
And be aware that there are scammers out there hoping to intercept your earnest money and downpayment. Double-check wiring instructions with the title company or attorney involved in the transaction if you have any doubt. Red flags include last-minute account number changes, requests for you to send immediately because the seller is leaving town for similar reasons, and misspellings.
Always stay in close touch with your mortgage lender and title company/real estate attorney to avoid these and other problems with the close.
We’re Here to Help
While purchasing a home sight unseen could help you avoid a bidding war so you can buy your new home faster, you need to take precautions and work with a trusted real estate agent and lender. These professionals can help watch for anomalies and ensure you’re buying exactly what you expect.
We Can Help
If you need assistance with a mortgage to build, buy, or refinance a home, contact AAFMAA Mortgage Services LLC (AMS) using our online form or give us a call at 844-218-6926.