Buying a House Remotely: A Step-by-Step Guide

Buying a home remotely is becoming increasingly common these days. It has been standard practice for some time in the real estate world for sellers to skip the home closing by pre-signing paperwork and having sale proceeds wired directly to a bank account, but now the whole process can be done from afar.

Buying a Home Remotely: Who Does It and Why?

“People who buy remotely often do so to purchase a second home or vacation home,” says Todd Kaderabek, a residential broker associate with Beverly-Hanks & Associates Realtors in downtown Asheville, N.C. “Typically, they are from out of state and have jobs and other obligations that prevent them from spending a lot of time on the home-buying process.”

Financing can be a factor. “If a parent is buying a home for an adult child, they may decide to buy remotely, especially if they live out of state,” says Kaderabek. “In these cases the parent often buys the house sight unseen, handles all the paperwork and closing remotely, making an all-cash purchase.”

Real estate investors may also choose to buy homes remotely. Most real estate investors follow the 1% rule, which states that the monthly rent earned on a property should exceed that property’s monthly mortgage payment, so the investor at least breaks even on the property. It’s easier to find properties that follow the 1% rule in certain markets, which may be located a significant distance from the investor’s home base. As a result, buying a house remotely can be an attractive, time-saving option. (For more, see HomeUnion Review: A New Way to Be a Landlord.)

Whatever your reason for buying remotely, there are certain steps you can take to ensure the process goes as smoothly as possible.

Find the Right Real Estate Agent

You will depend on your real estate agent to handle nearly the entire home-buying process, so it’s critical that you take the time and make the effort to find a good fit. “Home buying involves a lot of moving parts,” says Kaderabek. “It’s important to find a good personality match between the client and agent.” An interview is helpful (see below for some questions to ask), and it’s always a good idea to ask for references to see what other buyers have to say. (For more, see How to Choose the Right Real Estate Broker.)

Ask About Remote-Transaction Experience

When you speak with a potential agent, Kaderabek recommends asking from the start: “How often have you done this process remotely?” Experience matters, and agents who work frequently with remote buyers are more likely to understand how it works, negotiate favorably and, perhaps most important, find suitable properties for the buyer. The agent should also be able to advise on a local lender. “A non-local lender is likely to use a non-local appraiser, which can be the death knell in unique markets like Asheville,” says Kaderabek.

Ask About Availability

Many real estate agents work odd or part-time hours, which can be particularly bad for remote buyers. Your agent will serve as your proxy, so he or she needs to be available during regular business hours to handle a variety of tasks in the home-buying process, including home inspections. “I attend all home inspections, but with an out-of-town client it’s critical,” says Kaderabek. “In a world where home inspections take place between nine and five, it’s going to be very difficult for an agent to attend your home inspection if they have another job.”

Share Your Wish List

Once you have an agent, share your wish list so the agent can help you find the perfect property. The more refined your list, the quicker the home search may go – to a point. If you have too many requests, it will likely slow down the process. Stick to the things that really matter – size, location, house style, walk-in closets – and leave out the minor details that would be easy to fix or update in any home. And if there are any deal breakers – features you absolutely could not live with (or without) – let your agent know early on, so he or she doesn’t waste time looking at the wrong properties.

“If you’re an agent, you have to take that bold step to call your client and tell them you’ve found the perfect property for them,” says Kaderabek. As a buyer, you need to trust that your agent knows exactly what you’re looking for, and that he or she has also taken the time to look closely at the home. “A home could look perfect on the internet, but a good agent will be able to say, ‘No, that’s not the home for you because it sits next to an active railroad track.’”

Use the Due Diligence Period, If Your State Has One

Once a home is under contract, there’s time to review title documents and deed restrictions, as well as conduct inspections, financing and bank appraisals, before going to the closing table. In some states, including North Carolina, there’s an official due diligence period, typically lasting between 14 and 30 days, during which buyers conduct their due diligence and decide if they want to go through with the home purchase. (Note: This may not apply if the home is a new construction.)

The buyer pays a nonrefundable due diligence fee, typically ranging between $500 and $2,000, which basically compensates the seller for taking the home off the market and gives the buyer time to make a decision. The buyer also makes an earnest money deposit, equal to about 2% to 3% of the purchase price – or more in fast-moving markets. Both the due diligence fee and earnest money deposit are negotiable between the buyer and seller.

The buyer can terminate the contract for “any or no reason” (or some other language) during the due diligence period and forfeit only the due diligence fee. If the buyer backs out after the due diligence period, he or she will forfeit both the due diligence fee and earnest money.

As only the due diligence fee is forfeited if the buyer terminates the contract during the due diligence period, this can open up an interesting opportunity for remote buyers. It can be used as a tool to get a house under contract while giving an easy out to terminate the contract with limited financial risk. In the case of buying remotely, it gives the buyer a window of time to view the property in person before making any final decisions.

Remote Closing

Advances in technology have made remote closings routine for sellers and very feasible for buyers. Your agent will send you all the pages of the contract and addendums. You’ll sign them using an electronic-signature system, which usually sends the signed forms back to the appropriate party. “Attorneys still require physical signatures, so your agent will work with the closing attorney and FedEx all the necessary documents to you ahead of the closing,” says Kaderabek. “The agent then goes to the closing table with the closing documents – and without the buyer – and the funds are wired to complete the transaction.”

The Bottom Line

Buying a home remotely can be a good option for second-home buyers, parents who want to buy homes for their children and out-of-state real estate investors. In many ways the process is the same as buying a house in person; however, you will depend even more on your real estate agent to find the right home, be present for the inspections, guide you through the paperwork and attend the closing. As such, finding the right agent – and one who has experience with remote transactions – is one of the most important steps you can take when buying a house remotely.