Buying a Home Remotely: A Step-By-Step Guide

Everything can now be done online

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 entire process can be done remotely—by buyers as well as sellers.

Key Takeaways

  • The entire process of buying a home can now be done remotely by both sellers and buyers.
  • Finding the right real estate agent is key, so be sure to ask about their experience with remote sales as well as their daytime availability, and remember to request references.
  • Sometimes there is a due diligence period, which a buyer can use as a tool to get a house under contract while giving an easy out to terminate the contract with limited financial risk.
  • If there is a due diligence period, consider using it not only to do inspections but to visit the house (if you can) and make sure it's the one you really want.
  • Even closings can be done remotely—you sign documents using an electronic signature system and your agent attends in person.

Why Buy a Home Remotely

Right now, the novel coronavirus is upending the way home sales are conducted, from canceled open houses to video tours taking the place of in-person home showings. As people avoid close contact to keep from spreading the virus, buying remotely makes more sense.

In more normal times, “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 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.

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

Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).

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 the agent.”

An interview is helpful (whether by phone or video), and it’s always a good idea to get references to see what other buyers have to say.

Ask About 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 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 difficult for remote buyers. Your agent will serve as your proxy, so they need 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 they don’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 they have 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

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

The buyer pays a non-refundable due diligence fee, typically 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.

If there is an official due diligence period, it typically lasts between 14 and 30 days.

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, they 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.

Close Remotely

The E-Sign Act of 2000 makes your electronic signature just as valid as if you signed the documents in person. In addition, 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 addenda. 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—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—one who has experience with remote transactions—is one of the most important steps you can take when buying a house remotely.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. FDIC. "The Electronic Signatures in Global and National Commerce Act (E-Sign Act)."