Purchasing Properties Sight Unseen

I personally wouldn't buy something sight unseen, relying only on photos. I have previewed and bought properties without my husband seeing them, but they were foreclosures and we expected to replace heating system, gut interior, etc. I wouldn't recommend this to a client though. What I feel comfortable with may not be the same for another investor.

We've sold many homes over the years to persons out of state, and out of the country that view the home only via the Internet and email photos.  Some of it is trust that we are representing their behalf, not our own.  Even though many were investors, we had advised them from the beginning we do not do property management, or seek tenants.  They were even all right with that.  It is part of living in the new millennium the Internet is here to stay.

Well, I put in an offer on my townhouse without looking at the inside (the tenant ...geez, tenants....did not want to cooperate too much) until I did the home inspection.  I sure am glad the tenant didn't give us  a hard time like my current transaction!

Home inspections and the technology of the digital camera make the transaction much more reliable and the buyers usually are very happy with the end result.

I've bought countless properties out of state and earned great money on some and got nailed on others.  Depends on the comfort level of the investors and how big or small they are and their level of experience and risk.

I have bought site unseen or walk on. I prefer to take and advice to but sometimes you need to react to make a deal.

Pat,

There is certainly a glut of properties that are appealing to out of state investors.  The problem being that they buy them, start a rehab and many times that doesn't get finished.  Then the property just sits and becomes an eyesore.

Unfortunately our area is somewhat of a 'write off' for investors in other areas.  They do things here that would make them 100% persona non grata in their own neighborhoods.

Personally if I am going to invest my money in a property I want to see it - firsthand.  I want to walk into it, smell it, check on the mechanicals and KNOW where my money is going.  But that's just me. 

I have done this several times with investor clients of mine. I take as many pictures as I can not only of the property but of the view up and down the street and send them comps of similar properties on the same block if available. Ultimately the decision is the clients and I do my due diligence to make sure they are happy Worth their investment. Make sure those clients are well taken care of and they will continue to do business and refer business to you.

I have sold sight unseen property also. When selling to an out of the area buyer, we alway include a hold harmless addendum to eliminate liability for us and for the purchaser to sign. This is done prior to  writing and submitting any offer.  It usually makes them come up and take a look.

Pat, I had some clients from south Florida that bought a home here sight unseen.  I had taken plenty of pictures and emailed them..  They love their home.  I was leary and made them sign a statement that they were doing this unseen.  My clients are now dear friends

Do you help them find tennants as well?

Greg Z

If the price is right (60-70% of FMV) and you are confident that your contractors can do the job, then go for it, I say. Otherwise, the wisest thing to do is at the very least, even if you are not present, is go thru the yellow pages and invest in an inspector you pick at random. I have one that I like to work withand he's worth every penny.

I've never had a sight unseen sale, but there are several agents in my office that regularly deal with out of state investors by fax. They look at the listing online, fax the offer and it's a done deal without ever laying an eye on the property. Sales are mostly renovated townhomes, prices in our area are very reasonable so they can make the numbers work. I like the 'hold harmless' addendum Mary mentioned, I would definitely include one if I ever have this type of sale.

In my opinion, investors often buy on impulse.  I am a real estate auctioneer.  We have went away from doing open houses and now just hold the property open 1 hour prior to auction. They can walk through and do all the "looking" they want to do.

What does this have to do with the above?  The point I am trying to make is that some investors will do just a casual walk-through and STILL buy the property.  Of course mine are sold "as is, where is".  The same applies, I'm guessing to your out-of-town buyers. 

Most of my investors if the numbers work and the inspection comes back and the appraisal is fine, would gladly buy a positive cash flow property site unseen. It happens all the time in real estate investing, it is just a numbers game.

Aw, it's duck soup if you're careful.  Most of my clients are Air Force families gathering from all corners of the globe and I do about a dozen "long distance sales" a year.  You take a LOT of photos, look at the home very carefully (being careful not to use the "inspection" word), get a first class home inspection done and use whatever influence you have to get a "real" appraisal.

Equally important, you stay in close communication with your buyer and, if at all possible, have a family member (or in may case, a military sponsor) take a look at the home to provide their opinion to the buyer.

It can be a lot of work but it's also very satisfying to know that when the families come rolling in at 3:00 after catching the red eye from Zimbabwe, they can at least camp out in the new digs. 

 

I have a guy who lives only an hour away and he has done it 2x.  He just says i never want to see this thing, just buy it for me fix it for me and flip it for me.  Okay he makes great money i make good money.  As long as he does not get burned we'll most likely do this for the next few years.  He doesn't even want pictures.  Our realationship goes back 15 years though, he does commerical loan workout 5million-20 million dollar claims, and i used to be his boss running a private equity group buying non performing mortgages.  I think experience and trust go a long way with sight unseen sales.  We both know exactly what a repair shoud cost, so there is rarely any overage.  We also know what the lenders and other investors will not buy, because of their lack of experience in how to mitigate the issue.  So we buy homes with mold, septic, foundation, and fires.