1 In 3 Homebuyers Made An Offer On A Home Sight-Unseen
Shopping for a home has always been something of an arduous process. But lately it’s gotten even crazier. Consider Redfin’s recent survey that found that one out of three people who bought a home in the last year in 11 metropolitan areas made an offer on a house sight-unseen. That’s up from one in five a year ago.
This is partially because of market conditions. “Homes are going under contract faster than ever,” says Rachel Musiker, senior communications manager at Redfin. “The typical home that sold in May went under contract in 37 days, and that’s the lowest number we’ve recorded since we’ve been tracking this trend in 2010.”
The markets tracked in this survey are some of the fastest in the country, and they’re also places that attract a lot of relocators – people changing cities for a job or other reasons. “They can’t be flying in every single weekend to be touring homes,” Musiker says. “So sometimes if a home hits the market on Thursday and we know it’s going to go under contract by Sunday, and if you think this is the one, you might have to make a really informed decision before you see it in person.”
Luckily, that’s not hard in this age of modern technology. There’s a vast amount of information available online about houses and neighborhoods. And sites such as Redfin offer 3D interactive photography on listings. “It’s a 3D image that lets you walk through the home virtually,” Musiker says. “Redfin agents also conduct video showings live via FaceTime or Skype.”
Other homeowners have a friend or
family member in town who can check the house out for them. “There’s just so much information available online that I think people now feel confident that they know what they’re getting. It’s not just a crapshoot.” Musiker says.
And the survey data doesn’t mean people don’t see a house at all before they close on it. They’re often present for the inspection or at some other point before closing or before contingency periods are up. “So if they end up seeing the home in person, they still have an out.” Musiker says.
In a seller’s market, making an offer on a house you’ve never visited may be necessary to stake your claim if you can’t get there in person. But there are other ways to stand out from the pack if you’re hunting down your dream home in a hot area.
Waive some contingencies.
If you can find a way to do it, consider finding a way to relinquish some of the standard protections in the contract. For instance, get an inspection of the home before submitting the offer (or walk through with an inspector) so you can waive the inspection contingency.
Offer more earnest money.
An earnest money deposit tends to be 1% to 3% of the offer price, but offering more—5% to 10%--can make you stand out from the pack.
Have your mortgage underwriter go further.
Mortgage preapproval is a necessity in a fast-selling housing market, but look for a lender who will also fully underwrite the loan in advance. “Not every lender will do this,” Musiker says. “We’ve found that it’s usually a local lender who is offering this service.” Talk to your agent and find out if they’ve had any buyers who’ve done this recently and what lender was able to do this for them.
Sweeten the pot.
“We’ve had buyers offer to create a nonrefundable deposit that guarantees that you’re going to close,” Musiker says. “And if you don’t close the deal, the sellers keep the cash. That gives the sellers a little extra incentive and extra assurance that this offer is solid.”
Pay attention to offer deadlines.
Sometimes the first offer at the asking price wins the home, and you can’t beat that if you aren’t first. But some homeowners ask for all offers by a particular date and time and then evaluate everything at once. If you wait until the end of the offer period, your agent may be able to find out more about the competition and the other offers that have come in. “They might know what might be needed to make your offer stand above the rest,” Musiker says. “And your offer will still be considered even if it’s not the first one.”