Buying a house out of state & closing remotely: is it possible?
I remember being a brand new, uprising real estate agent, sitting in the class that everyone had to take to get their Virginia real estate license.
The discussion turned to how settlements have changed over the decades, and whether a buyer can buy a house from out of state.
The “old way” was for everyone to show up at the “settlement table” ideally with smiles on their face and discussions about the home.
Seller signed away title, buyer signed loan documents, keys were exchanged, and the house was sold.
Being the curious new agent, I asked if buyer and seller could sell a home without being in the area. The answer was clear from the instructor: yes for the seller, no for the buyer.
It was years before I found out that this was not necessarily correct. Buyers can settle remotely, under certain circumstances (Hint: lender & title approval is the key).
Virtual Real Estate Settlement : A New Option for Remote Home Buying
This updated section addresses potential new options for remote settlements.
Spurred by the pandemic of 2020, there was lots of pressure on lenders to offer buyers options to close on a home without having to go in person.
Some, but not all, lenders began to accept virtual closings for both buyers and sellers.
Think of this as a video call meets electronic signatures. You sit down with anyone who is buying the home in front of a computer with video.
The title attorney or notary, at the other side of the call, will perform the same tasks a notary will. Check your photo ID, go over paperwork, and have you e-sign.
Again, this is something that some lenders will accept and some will not. Similarly, not all title companies have the technology for it. So check early on in the homebuying process if you will be able to do it.
Seller Remote Settlements
These days, only about 1 in 10 of our settlements include both parties signing at the same time in the same location.
Usually the seller will sign ahead of time, or if they are out of the area, will sign remotely by overnighting the documents and getting them notarized (or utilizing the e-notary option above).
We have sold properties for investors where they mail us the keys, we prepare the listing, market the home, and have them sign documents with the “mail-away” method remotely.
The seller did not even step foot step foot in the state and sold their house.
Why, then, is it hard for buyers to settle remotely? Sellers have less paperwork, and there are no loan documents involved on the seller side.
Missing signatures for a buyer can mean at best, a delayed settlement; and at worst, be a default for not settling on time.
In Northern VA at the time of this writing, lenders and attorneys require many documents to be signed by hand, so the “mail-away” method is used.
(Documents are sent out overnight, signatures are done in front of a notary and notarized, and are then overnighted back to the settlement attorney).
The volume of paperwork, the need for accuracy, and the timing of paperwork arriving make it easier for a buyer to just come to the settlement office as opposed to to buying a house out of state.
But it possible to buy a home with an out of state notary, and we recently had a buyer close on a townhome without being in state.
Who Buys a House Out of State?
There are a number of buyers who look to put a contract in, sight unseen.
Our area has a good amount of military bases, intelligence jobs, technology jobs, government workers, etc. For many, they choose to rent a place to get acquainted with the area.
However, others choose to buy immediately. Neither is wrong — there are advantages to both.
Some of these buyers decide that their busy lifestyle or work travel does not provide the time to look around at homes in another state and pick the right one.
Another group of buyers who are often interested in buying remotely are investors. You will hear a lot that you should invest where you live.
But really, I think it is wise to invest where you have knowledge of the market. This group either formerly lived in our area or have a knowledge of the market in another way.
Oftentimes, family members of people living in-state will help with the process of the property purchase.
If this is the case, you will have to go through the remote closing process; but often, the in-state family member will be the one seeing homes, going to any inspections & walkthroughs, etc.
The buyer we recently helped bought a property as an investor.
They were from our area, but had moved away so they had extensive knowledge of the market. Each situation is different, so below are some tips to help you get the right property and close remotely.
Tips to Buying a House Remotely
1. Knowledge of the market
Buying a house completely out of state is not for everyone. And if you know absolutely nothing about the market you are buying into, then it could be a risky move until you do some more research.
The best option is to make a trip to visit the area and some properties. If you are new to the area, or new to the homebuying process.
This helps, even if you do not find the one you are buying (this article is, after all, about buying out-of-state); you will be more prepared when you do find the property you would like.
The good news is, the internet can give you the ability to learn an area remotely. The first step is to find an area that you would like to live. Search engines are your friend here.
Continue to search for all the questions you have about an area until you are comfortable. Greatschools.org is one good source for school information and there are others.
If you have friends, family or even friends of friends in the area, they can be a big ally to find out more information about our area.
If they are willing, they could also check out properties so that you have an extra set of eyes.
As you are getting set on the area and type of property, you can also use an MLS search to see what is currently on the market.
‘Favorite’ some listings and keep an eye on them. See how fast they go under contract, what kind of updates are done, etc.
Real estate photos can be notoriously tricky, as they often use wide lenses and use the brightest high definition settings.
I am no photography expert, but typically what homes look like in photos are different than what you will see walking through the home.
That is why it is important to have people who you trust to check out the property with a keen eye. Which leads us to the next tip….
2. Work with an agent you (really) trust
This is critical if you want to get a good house buying out of state. Real estate as a whole, is hyper-local.
There are diverse types of homes in each state, and it takes years to really understand the market. Even then, some areas can favor sellers, while others favor buyers at different times.
There are also national factors that affect real estate as whole such as the interest rates and other financial subjects.
You absolutely want a professional who works hard to keep themselves educated and is up on the latest market research.
Moreover, you should trust the agent whom you pick to guide you through potential pitfalls during a transaction. They should listen to your goals and take them to heart.
And most importantly, give you clear and direct feedback throughout the process. This can be especially helpful when going through a home.
The landscape changed in 2020 after the Coronavirus pandemic. Virtual showings and tours have become more and more acceptable.
Walkthrough videos are essential when buying a house out of state. And one that show all aspects of the house, not just the positives.
The popularity of virtual showings has increased as technology increases.
Many homes also use immersion 3d scans so you can get a good feeling of the home.
3. Get your lender and title company on board early
When you are looking for a lender, tell them immediately that you are planning on doing a remote closing. Same with the title company.
Some buyers start the process of buying by finding the home, but are then out of state for settlement.
This still counts as a remote or “mail away” closing so you will need lender approval if you have a loan.
The lender may also approve e-notary signing as tech improves. But you will want to ask your agent what title company might offer it.
If you do not have a loan and are paying cash, you will still want the title company to be informed so they know that they are going to be doing a mail away settlement.
4. Line up a notary ahead of time and verify their insurance
Lenders may have conditions for settling remotely. For example, the notary might have to have a certain amount of e & o insurance.
This could vary for each lender and/or title company. So make sure that you know what the lender’s requirements are and find a notary that fits them.
One thing to take note and a potential workaround: you could use a large title company that has an office near where you live now and also where the property is located.
This would make it easy to go and sign at their office without having to pay for a 3rd party notary.
5. If you can, use your inspection period
Some people buy homes and never even step foot in them until after the property is settled. This is a personal preference and again depends on what your life looks like.
For some people, buying the house from completely out of state is the only option. Even if you buy sight unseen, it is a good idea to get an inspection done and review the report thoroughly.
But if you can attend your home inspection or get permission from the seller to see the home before your inspection period is up, this is a great idea.
The inspection period gives you a chance to get acquainted with the property and make sure that there are no surprises when you move in or have your tenants move in.
Virginia real estate laws (our home state) say that it is a “caveat emptor” or “let the buyer beware” state as of this writing.
Therefore, the duty to learn about defects lies on the buyer — so long as the seller does not attempt to cover up existing defects or lie when asked about them.
However, other states have different disclosure laws. Again, great reason to get an agent you trust who knows the rules.
6. Get the paperwork signed and mailed ASAP
Missing a deadline or getting the paperwork back too late can delay closing, best case scenario.
In the worst scenario it could mean you default on settling on time. In real estate language, “default” is a bad thing to hear.
If you are expecting the overnight package to arrive on a Tuesday, make every possible effort to get them back in the mail to be overnighted back the same day.
If your documents are all completed very early in the process (in real estate language, we call that a miracle). Just ask the title company when you should get them back in the mail and try to stick to that.
I hope this quick little guide will give you some good tips on buying a home from afar. It definitely takes some extra work, but can be done successfully with the right planning.
Remote closings have been done for sellers with property for quite awhile, utilizing mail away closings.
It is also possible for buyers to buy a home remotely, but will require some extra planning.
Buying a home without seeing it first always poses a risk, and should be a last resort or for very experienced homebuyers with trusted resources.
Remote closings are becoming easier as technology increases and the business world grows accustomed to conducting business virtually.
You will need a lender and a title company to be on board with a remote settlement.
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