It is increasingly common for buyers to buy a home without setting foot inside
It may seem risky to invest in a home you’ve never physically visited, but it can be done safely and smartly with the right research and experts by your side
It is advisable to hire an experienced agent with a background in handling this type of transaction, as well as other experts, such as inspectors, lawyers and accountants.
You should also take advantage of increasingly sophisticated technology that allows buyers to view the property and its surroundings as clearly as possible.
By doing their homework ahead of time, and reflecting on their own expectations and goals, buyers can be confident in their decision to make an investment from afar. It’s all about really looking at the information about the property and understanding its value, which will be different for every buyer
The buyer who buys without seeing
Most people who buy real estate without seeing it own more than one home and are looking for a vacation property or a promising investment.
These buyers may have already visited the area where they plan to make a purchase, as well as thoroughly researched the potential for a good return on their investment through rental income. The profile for this buyer is that they will use the house as an additional residence and rent it out part time
In London, many of the buyers who buy remotely come from Asian countries such as China, Japan, and Malaysia, and rely heavily on technology to get a sense of what a property will look like.
Whether it’s for occupancy or simply for investment, they have a completely different perspective. They have very clear computer-generated images and already know these directions relatively well.
Other investors focus entirely on the potential for leasing the properties: They want to know what can be achieved from a rental perspective.
The importance of hiring the right agent
According to experts, all the virtual tours and crystal images in the world are no substitute for a trusted person on the ground to guide buyers through the process of making this type of investment.
The first step is to hire an agent who has a great track record. Find someone who understands the investment market well enough to know if you are getting good value for the purchase itself. You also need an agent who understands recent rental prices if you plan to rent.
Look for a broker who not only has excellent reviews, but also a long track record, as you will want to work with someone who is well versed in the changes in the market you are investing in.
They should be familiar with recent comparable sales, as well as the rental value of properties such as the one you are considering. A good broker should also know the vacancy rate and what’s on the market in that neighborhood, and be able to provide you with this information in a way that makes you feel comfortable.
In addition to providing critical information on market conditions for investors in the area, an experienced real estate agent can offer important guidance on when it is time to make a purchase.
The agent will hire inspectors and other professionals to observe the property. In addition, for both domestic and international buyers, there are many tax and legal implications as to what type of entity will purchase the property.
For these questions, an experienced agent will be able to recommend accountants and lawyers to advise buyers.
An experienced agent will not only get you the best deal, but will also be your advocate and ensure that the entire transaction goes smoothly.
Next steps for doing due diligence
Today’s buyers are empowered by technology to get a solid visual sense of a property without even setting foot inside. And by taking advantage of visual tools such as FaceTime, Google Earth and virtual tours, buyers can see the interiors of a house and its surroundings from afar.
But if it’s a secluded property somewhere and not part of a planned community, then you’d be very reluctant to buy it without seeing it.
The danger, he said, is that the visual elements alone do not reveal the negative aspects of a property’s surroundings, leaving aside possible problems, an idea of who its neighbors are and what it can expect in terms of infrastructure and local services.
To avoid unpleasant surprises, in addition to access to quality images, investors should ask an agent or other trusted person in the field to share their impressions of what it really feels like to occupy the space.
You can look at floor plans or videos, but you don’t really understand that the windows are as high as the ceiling, so the house feels nice and big. You need assistance with sight and feel, as well as a pre-closing inspection. If you are not in town, ask an inspector or architect to examine everything along with the agent.
This will not be possible for those buyers who are considering investing in a new development that has not yet been built. But for such schemes, it is easier than ever to find out what the end result will look like.
Buyers of properties still under development should also learn as much as possible about the environment of the site.
Start researching, through videos, maps and photos, the location of the planned development.
Questions buyers should ask include “How far is the property from the main road? What infrastructure exists there? A developer may have great photos, but exclude facts such as that a couple hundred feet to the right there is a gas station or other major condominium project in progress.
Especially for those who are considering vacation homes in remote locations, he added, it is crucial to see what services are available in the area.
You might buy an oceanfront lot only to find that the cost of bringing electricity there will be about the same as the cost of the lot you bought.
For those buying resale properties, it may be helpful to contact the city’s appraiser’s office to get an idea of the property’s history, to find out about changes in market value and what the most recent valuation was.
In addition to doing due diligence when it comes to the interiors and exteriors of a property, investors should also investigate the legal and tax implications of making a purchase remotely, especially if they are foreign buyers.
Preparing for these types of restrictions often comes down to hiring the right people locally.
It is very important to have a very reliable accountant and lawyer who specializes in international clients and understands the ramifications of different types of property.
Property types to consider
How investors approach buying without seeing a property will vary depending on whether the home they are considering is a resale or a new development.
In London, it has become rare for buyers to buy anything other than new construction without seeing it first.
In the recent past, he added, it was more common for investors to buy pre-owned homes without seeing them because supply was more limited. Today, there is more uncertainty in the marketplace as a result of political changes, including a decrease in capital gains tax benefits and the Brexit decision.
Now supply has caught up with demand, and with any luxury address, there are more than a handful of properties available. The need to commit to buying without seeing has been reduced exponentially.
Along with a decrease in the urgency to purchase a resale property, many investors find that there is a greater sense of security in purchasing a new development.
When there is a planned community, there is usually a serious developer behind that project, which allows buyers to investigate who the developer is, and whether he has a good track record and the liquidity to complete the project.
However, in other parts of the world, buyers are more confident about buying resales without seeing. In Miami, for example, there are more resales available than new construction.