Would You Consider Purchasing a Home Sight Unseen?
A recent article from The Orange County Register discussed the “housing frenzy” that is driving home prices upward. It made the well-established argument that buyer competition and low inventory are making it increasingly difficult to purchase a home.
High demand and low inventory are, according to the article and our own experience, forcing buyers into unique strategies for winning a home. Sight unseen, the article says, is one tactic used to have an offer accepted. The article only takes a passing mention at sight unseen, but it does imply that it’s a bad thing, something buyers are “forced” to do.
But is buying a home sight unseen really all that terrible? Is it something to be avoided unless you are desperate to purchase? Or can it be a viable strategy for purchasing a home in a blazing market?
What is Sight Unseen?
Sight unseen is simply when you purchase a house without visiting it yourself. Essentially, you are closing on a house without touring the property and visiting the home. You can take virtual tours, research the neighborhood, and even have a realtor tour the place on your behalf, but if you’ve never been there yourself, it’s “sight unseen.”
There are many reasons that people complete a sight-unseen purchase. Usually they are moving a long distance and it’s either expensive or impossible to visit the property. Because of the coronavirus, many people chose to purchase sight unseen to avoid contracting or spreading the disease.
But now, many people are choosing sight unseen because they just don’t have time to wait. With homes selling at a record pace, buyers can’t wait a couple of days to tour the home; if they do, the house will be gone.
Is it Really so Uncommon?
Sight unseen seems incredibly risky. But if you’ll completely miss the opportunity to purchase by waiting, it might be a good idea. In fact, more people are making offers without seeing the home than you might think.
According to a January, 2021 report from Redfin, 63% of active homebuyers in 2020 made at least one offer without seeing the property for themselves. It should be noted that this is the percentage of people who made at least one sight-unseen offer, not sight-unseen transactions or the percentage of total offers that were sight unseen. However, it shows that sight unseen is not a rare, drastic measure made only be desperate buyers. (Unless you assume that 63% of buyers were, at some point, desperate.)
So it’s more common that you may have thought, but that doesn’t mean it’s automatically the right choice for you. To decide if it’s right for you, you need to understand the advantages and disadvantages of purchasing sight unseen.
Advantages of Sight Unseen
The advantage of buying sight unseen is that you can purchase the property even if you can’t visit it. When you don’t have time to visit, or when you are moving and simply can’t make a thousand-mile trek to see the property, this approach can help you make the purchase. With videos and virtual tours, as well as the assistance of a trusted real estate agent, you can get a fair idea of the home without actually seeing the home. (At least with your own eyes.)
There is also the competition angle. As we have written about on numerous occasions, the real estate market, both nationally and locally, is red hot. Homes are selling fast and prices continue to trend upward. With more buyers competing for extremely low inventory, buyers need to take every possible step to make their bid more attractive. Buying sight unseen may provide the boost you need to have your offer accepted. By using virtual tours and good a real estate agent, you can reduce closing times by a couple of days or more, which means you have a chance at making the purchase before the home sells.
If you are still concerned about COVID-19 (and there is good reason to be) purchasing sight unseen can provide a safer path towards your purchase. You don’t have to put yourself or your loved ones at risk, which is a big reason why sight unseen soared in 2020.
Disadvantages of Sight Unseen
If you are considering a purchase before seeing the home, you need to be aware of the potential (and seemingly obvious) disadvantages. The biggest, and most obvious, problem with purchasing sight unseen is that the sight is unseen! Pictures and virtual tours can’t take the place of actually being in the home and seeing the entire property in real time, 360-degrees, with your own eyes. You just never know how you’ll feel in a home; virtual tours can’t evoke the emotional response that many feel when touring a property. (Although buying on emotions alone can be troublesome.)
You’ll miss out on walking up the stairs, meandering through the kitchen, even stopping for a moment in the living room. While you may be able to visit the neighborhood, going sight unseen often means you can’t drive through the area and see the nearby houses. You won’t be able to see if the neighborhood suits your preferences and your style.
You are also taking a risk with potential remodeling and renovations. Even the most attentive real estate agent could miss a few issues or flaws with the home, and these problems could lead to costly bills. While it has advantages, there’s no doubt that you are taking a large, albeit strategic, risk when you purchase a home sight unseen.
Some of these risks could be reduced or eliminated with a home inspection, which may be required if you are using a loan. But in a hot market, some buyers may want to finalize a purchase without an inspection, which is another way to make your offer more attractive. (But it is, again, risky to the buyer.)
Dedicated to Serving All Your Mortgage Needs
Whether you purchase sight unseen or you tour the property half a dozen times, we’ll be here to provide the mortgage service you deserve.
Contact our team today and let us guide you to a top-quality loan that helps you purchase a wonderful home!