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 in Virginia, and if a buyer can buy a house from out of state.
The “old way” was for everyone to show up at the “settlement table” at the same time at a specified time, ideally with minimal yelling at each other (just kidding? maybe).
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: 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 approval is the key).
Seller remote settlements
These days, only about 1 in 5 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.
I have sold properties for investors where they mail me the keys, and then I prepare the listing, market the home, and have them sign documents with the “mail-away” method remotely. The seller did not even step foot in the Northern VA 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 is not impossible, and I recently had a buyer close on a townhome in Northern VA near the silver line metro. They were on the west coast the entire time.
Who buys a house out of state?
There are a number of buyers who look to put a contract in, sight unseen. Northern VA 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.
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 Northern VA or have a knowledge of the market in another way.
Oftentimes, family members of people living in Northern VA will buy a house remotely for their other family members to live in. 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 I recently helped bought a property as an investor. They were from Northern VA, 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 Northern VA, then it probably should not be for you either until you do some more research. The best option is to make a trip to visit the area and some properties.
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 Northern VA 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 a bit 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. Northern VA, and real estate as a whole, is hyper-local. The real estate market in Fairfax County can change just by getting in your car and driving to the next town.
Northern VA has a diverse selection of real estate, and it takes years to really understand the market. Even then some areas can favor sellers, while others favor buyers.
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.
I took videos of properties for my clients and then went through the pluses and minuses of each one. I also explained the condition relative to the photos. Walkthrough videos are essential when buying a house out of state. And one that show all aspects of the house, not just the positives.
3. Get your lender and title company on board early
When you are looking for a lender, tell them immediately that you are doing a remote closing. Same with the title company. This is relevant even if you are going to be out of the area for closing. 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. 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
The lender had some conditions for the mail away closing. The most difficult was to find a notary with a certain amount of e & o insurance. The lender requested a copy so the notary had to have that as well.
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.
This was more difficult than it sounds. Some notary companies charge per page, which often will be very expensive due to the amount of loan documents. I would recommend finding a notary who gives a flat rate on the whole closing package.
One thing to take note and a potential workaround: if you use a title company that has an office near the state you are in as well as in Northern VA. 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 who buy homes in Northern VA 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 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.
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 ahead 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. If you have any questions about Northern VA real estate, feel free to get in touch.