The idea of buying a property without ever looking at it first seems a bit crazy, especially if you are like me – a bit of a scaredy cat.
Let me tell you though, it should be a tool in your property buying tool belt. The key is doing it the right way so that you aren’t actually buying it sight unseen, but more so using it to help your offer win out in a competitive market.
Buying a Property Sight Unseen
Let’s step back for a second though – buying a property sign unseen. You must be crazy, right?
If you would have asked me that three years ago that is the exact response you would have received.
Not only did I not buy sight unseen, I didn’t even buy properties outside of the town I lived in!!!
Yes. I know. This cat had to get a handle on his control issues. Being able to driveby your property whenever you want does not make it any better of an investment than one 1,000 miles away.
Turning Sight Unseen Into Any Other Offer and Purchase
Whether we see a property or not in the end the contract and contingencies are the most important thing.
It is the contingencies that cover our butts whether we have seen a property or not.
In this instance the inspection contingency is key. The inspection period will give you an opportunity to look at the property, whether it is you, your partner or your inspector.
Either way, you are still getting the opportunity for due diligence as opposed to buying a property blind.
You should always have an inspector or at least your contractor look at a property you are buying in my opinion.
Advantages of making sight unseen offers
- Helps you make offers quick in a hot market
- Can protect yourself with the inspection contingency
- Helps you offer before the cash buyers
Disadvantages of making offers sight unseen
- Cannot see the surrounding area/know the neighborhood
- Inspector misses not so obvious problems with the property
- You give way to too many seller demands since issues don’t feel as real when not seeing them.
Risk vs. Reward
Like any other investment it comes down to risk vs. reward. You have to be prudent with how much risk you are willing to take to acquire a property, but understand you will have to take on some risk to do exactly that.
I recently had this experience buying my first out of state property sight unseen. A bank foreclosure that was in a highest and best offer scenario. My partner, a handyman went to see it along with several other properties that day.
Mind you, we had just recently partnered up although I’ve know him for years. I had nothing but a few pictures and his feedback to go on.
Here’s the rub, offers with contingencies likely had no shot. We could have certainly put one in, but every ounce of my experience knew that offer would have no shot. These were cash only deals, complete rehabs. Not currently livable.
Question was how much rehab? It would have been great if my partner could have went back to look again, but with it being winterized what more could we find out? Either the heat and pipes were okay or they weren’t.
So we basically went under the assumption it all needed to get redone and broke down the numbers and said okay, what price do we need to get this at if everything needs to get replaced; plumbing electrical, etc.
We already knew it was a complete cosmetic rehab and needed a new roof. The wild card was those other big ticket items. By accounting for them all, then anything that could be salvaged would be a win and money saved.
After coming up with that number we put in an all cash offer with no contingencies. I’d be lying if I didn’t say I was a bit nervous, but in the end we got the property, closed on it and the renovation was as expected. We needed to redo all the plumbing and electric.
Good thing we factored all those things into the budget!