How to Buy a Property While Out-of-State
I’m going to illustrate this blog with increasingly awkward stock photos. Enjoy.
House hunting can be stressful. Whether you’re a first time homebuyer or a house buying veteran, it’s a multi-faceted process involving procuring financing/down payment, interviewing lenders and Realtors, conducting the home search, navigating the offer and negotiation process, often dealing with competition, going through inspections/due diligence, etc.
I’ve written several blogs that help guide savvy buyers through the process, such as 5 Real Estate Contingencies You Should Know About, Prepare to Buy a Home in 4 Steps, and Inspection Negotiation.
An informed home buyer is a much less stressed and much more happy home buyer!
More data = more success!
But, what about purchasing a home when you live in a different state, or even a different country? This can seem so daunting that some people decide to try interim housing and/or long-term living with relatives rather than tackle a home search from afar. Of course, this presents a whole different level of stress! Multiple moves, storage units, searching for rental properties, handling family drama…
The reality is that an out-of-state home search is NOT an insurmountable challenge. And, with the right preparation, can even be… dare I say it… FUN!
(Okay, that was cheesy, but it’s also true.)
I’ll admit, out-of-state buyers and sellers are probably my favorite clients to work with. It’s not a common specialty for Realtors as there can be more leg-work, but I find a lot of joy in this process. I think my favorite aspect is the communication involved.
When I’m working with out-of-state (or out-of-country) buyers, a combination of robust synchronous and asynchronous communication is necessary. Being able to quickly adapt between phone calls, text, email, or other media is a key component to success. As you can probably tell from the length of my blogs, I’m a fan of words and can be, if anything, an over-communicator.
It turns out that with out-of-state clients, over-communicating is communicating just right!
Keep in mind that I’m a licensed Realtor in the Portland, Oregon metro area, so all information provided here is from that perspective.
Now let’s talk about some do’s and don’ts.
Out-of-State Buyer DO: Make a list of must haves and deal-breakers.
You’ve decided you likely want to move to a particular area and you want to buy a property. What’s the first step?
If you’re moving into the Portland, OR metro area, you may either be coming from a more expensive area (like San Francisco) or a less expensive area (such as some towns in the Mid-west and Southern US).
It’s very common for people from the Seattle or San Francisco areas to think that the Portland metro is a “low cost” area to live. It IS somewhat less expensive… though probably not nearly as much as you think.
For many people, it might be a lifestyle change to live in the Portland metro, including suburbs such as Beaverton, Lake Oswego, and Hillsboro. Take some time to think about what’s important to you:
How many beds/baths do you absolutely need? If you need 2 baths, would 1 full bath and a half bath work?
How much square footage is workable? Do you NEED two living areas? Is a basement absolutely necessary?
Do you need a garage? How many spaces? Must it be attached?
How much maintenance/updates are you willing to do? How old of a home is “too” old? Are you considering new construction?
How important is location? What aspects of location are important? I.e. walkability to parks and/or businesses, walking/driving distance from particular schools and/or work place, etc.
How do you like to live? Some examples of questions:
Do you need plenty of yard space and privacy/distance from neighbors?
Do you prefer living in a grid where most homes are on 5000 square foot lots and have at least a modicum of walkability? Do you like a suburban lifestyle with larger yards and defined neighborhoods? Or are you looking for something unique or rural? (We’ve got alllll kinds of options within the urban growth boundary and beyond.)
Do you feel the need for a view? (Hint: we don’t have very many “view” homes in the Portland metro due to our topography of rolling hills with tons of mature trees. If you want a home with a view, it will come with a hefty price tag.)
If you’re considering condo life, do you need/want concierge services, parking, upper/lower level, in-room laundry, etc.?
What are your deal breakers (busy streets, next to apartments, school districts, etc.)?
Out-of-State Buyer DON’T: Spend a ton of time on home search sites.
At least not quite yet!
I know it’s hard not to. Window shopping for homes is fun and it seems like good research. But, unless you’re ready to actively start placing offers on homes, don’t fall too far down the Zillow/Redfin rabbit hole.
The reason? I’ve worked with MANY buyers who have solidified their plans to move to Portland that have created completely unrealistic housing budgets based off of homes they’ve seen for sale online.
The mistake being made here is two-fold:
Assuming that list price is somewhat close to sale price. Depending on when you’re reading this… right now it’s 2021 and most homes are selling WELL above list price with multiple offers. 75-125K+ over on homes listed from 400K+ is not uncommon.
Be aware of confirmation bias. Here’s what I mean:
I’ve noticed that before people are ready to buy, they go on the search sites usually a few months before and start looking in their preferred budget to see what’s out there (which is great!). However, they tend to over-focus on a small handful of homes that appear to meet many of their requirements and are listed within their budget, taking this as proof that they’ll be able to afford everything they want without much compromise.
This is confirmation bias. People find what they want to find and disregard the many, many examples of homes that meet their criteria that are selling WELL above their budget.
List prices are NOT sold prices, and even if you go through the extra step of tracking listings all the way through the closed sale… those cherry-picked homes may have had a big limiting factor you didn’t notice that kept the price lower than other comparables.
After setting up a search and sending some listings, I’ve had buyers surprised/confused that there’s nothing in their budget that meets their criteria. They then send me example properties they saw a few months prior that would have fit the bill… and I end up finding out that these homes had major foundation issues and it was a cash-only sale, or it was a smoker house, or the home was in a flood zone, etc. (Also, a few months can be a difference of 5%+ in home prices going up.)
So, before you dive down that home search site rabbit hole…
Out-of-State Buyer DO: Start reaching out to Realtors!
Whether you are one year away or one week away from being ready to start a home search, start interviewing Realtors right away.
Yes, I’m a Realtor so I’ve got plenty of bias, but hear me out. A buyer’s agent that is experienced in working with out-of-state buyers is absolutely worth their weight in gold. Finding the right one is imperative.
The first thing that a Realtor can do is discuss your list of must haves and dealbreakers (see above). This is important because some items on your list might not be attainable in the Portland metro (for instance, if you’re really into yards with pools… we don’t have many of those here… a small handful, but not many).
Then your Realtor will help identify the areas that best meet your needs and have a REAL discussion about your criteria. It may be that you’ve got very reasonable, attainable expectations. If so, I’ll tell you so! Or, there may be some pieces to the puzzle that don’t fit. In that case, we can start to talk about what criteria are most important and start adjusting as we go so that you’ve got the best chance at finding the right home.
It’s important to start narrowing down search areas and criteria early in the process. When you start paying attention to properties on the home search sites (as you do), it makes sense to know where to pay attention and what to pay attention to. This will save a lot of time and frustration.
Bonus: Send a small handful of properties to your agent before you’re ready to start a search and place offers, just to get some input about them. Gaining insight into the market before you start your search will help make the search more fun and much more successful.
As I always say, More data = more success!
But, there’s an even more important reason to find a great agent as soon as possible.
For a buyer that is in town, sometimes you can have a mediocre agent and maybe still come out on top by doing a lot of research and leg work yourself.
But, an out-of-state buyer doesn’t have the luxury to settle for mediocre. You need a full-time Realtor that is a hard worker, absolutely excellent communicator, experienced in all facets of the home purchase process, and has a list of experts for inspections and bids. Most importantly, you need someone highly familiar with all areas of town that you might be interested in, so they can help guide you during the home search process.
Then, on top of all that, you need a Realtor who is tech-savvy and detail oriented. They will be your eyes, ears, feet, and even NOSE, on the ground during the search process. Finding someone with experience that you can trust is paramount.
How your agent serves as your boots on the ground is covered next…
Out-of-State Buyer DON’T: You don’t need to rule out listings without floor plans and videos.
Out-of-state buyers often think that the only listings that they can consider are those with walk-through videos and/or floor plans. This is extremely limiting given that the majority of listings do not have these items (I usually include these, and more, on my listings but that’s another blog).
You don’t need to knock out listings without these items, though. For one, even if they’ve got some nice pictures and videos, these are made to highlight the best in a home and de-emphasize the drawbacks. Media produced by listing agents can be heavily edited so you can’t rely on it.
Instead, using the dialed in search that you’ve established with your Realtor, look for homes that appear to meet your needs and send them to your agent. (Your agent will likely be sending you a few, too.)
When we find a listing of interest, here’s what I do:
I should be able to provide some insight into the home beyond the listing info. Sometimes I’m able to dig up an old floor plan. More often, I see SO many houses that I already have a feel for the location, condition, and floor plan without even seeing it in person.
For instance, I can often tell if a basement doesn’t have enough height to be legal living space. Or, I’ll spot that there have been a lot of updates done without any permitting (which may or may not be important to you). In some cases I notice that the home is on a cesspool system or oil tank heating… these are expensive items to update, and if the listing agent is adamant that the seller will do no repairs or credits for those items, then you might want to move on. Or not! Because, that home might be a deal ;)
I’ll do a little research about the history of the home including historical records and past listing data, look into the permitting history, and potentially ask the seller some specific questions.
After I give you some extra insight, it may or may not knock the property out of contention.If, after my digging, it becomes a property of interest, then it’s time for me to go see it for you.
I provide VERY detailed walk-through videos to my out-of-state buyers. I take time to go through the house, the yard, and include a brief neighborhood walk around.
I provide commentary throughout the video. Not to point out “Here’s the kitchen!” and “Here’s the family room!” (okay, I might say those words sometimes… LOL); the commentary is my honest, sometimes blunt, impressions of the home.
I talk about a LOT in these videos as I’m walking through the home. Here are some examples:
Ceiling heights
Orientation of the home and how to expect sun to move through the home
How worn the flooring is
If there are any odors of note (I have a super-sniffer and usually pickup pet and smoke smells that other people don’t).
Just like when I walk through a home with in-town buyers, I’m keeping a close eye out for potential problems. If there are accessible crawl spaces or attic areas, I’m going into those.
I spend a lot of time in basements, as these areas, especially if unfinished, can provide a lot of information about the “bones” of the home.
I’m keeping an eye out for the electrical panel (is it old, is it a panel known to have fire concerns such as Federal Pacific, are there any minor labels for permit work, is the panel completely full, etc.).
I look for the major components such as furnace, water heater, AC unit to see if I can tell the age.
If plumbing is exposed I’m looking to see if it’s modern (copper, PVC, Pex) or is it old galvanized pipes?
I’m looking for any signs of moisture issues inside and outside the home. (Common area of concern in Oregon.)
Outside I’m looking at decking (does it stand up to a shake test, does it have signs of rot, etc.)
Parts of the roof I can see (what type of roof is it, is it covered in moss, does it look very old, etc.)
Whether or not it looks like there is any soil sloping towards the house.
Condition of the siding, trim, chimney, etc.
I look at and comment on all of this and much more while I’m recording a walk-through video. While I’m not an inspector, I’ve attended a few hundred of them, and I grew up in a builder/home inspection family so I’ve got a wide knowledge base directly in my brainpan to draw from. (I’ve owned a few homes, too. :)
I also always carry a laser measuring tool with me and can provide information about the size of any rooms that are important to my buyers.
Occasionally, I’ll do a live tour with my buyer instead of a recorded video. Depending on the quality of the cellular signal, though, it might not be nearly as useful as my recorded videos. By the time I’m doing walk-through videos, I’ll already be familiar with my buyers and what’s important to them so I’ll focus on any of those items in the video.
Usually I’ll start with my recorded walk through video, send that to my buyers to view, and then if another visit is needed to answer any questions, we can do a live walk through.
If it’s a home that you’re interested in potentially placing an offer, I will provide a detailed value analysis to see how well the list price is supported. I’ll also start really digging into what’s going on with the listing. I’ll find out whether or not there’s competition, if there’s an offer deadline, what terms the seller’s are looking for, and begin establishing good communication with the listing agent so that I can draw forth as much information as possible. Whether it’s a competitive situation or not, this will help guide our offer strategy so that you have the greatest chance of success at the best price and terms possible.
That last piece is a crucial step most Realtors miss and is what has helped me successfully close on properties for buyers in the most competitive market in history.
Out-of-State Buyer DO: If at all possible, travel out to see the property during the inspection.
I’ve sold property to buyers completely sight-unseen. I’ve also had an occasion or two where out-of-state buyers had enough time to travel here to look at a specific home before placing an offer. Which is wonderful, but in our current fast paced market, is rare. The typical listing goes on the market Thursday or Friday and has an offer deadline of Monday or Tuesday (sometimes Sunday!)
Though it’s not required, I certainly prefer for you to see the property in person before closing, specifically during the home inspection period. This is our opportunity to perform our due diligence. During the inspection period, you have the ability to terminate the transaction without any undue risk to your earnest money based on the results of any inspections.
If you can attend the inspection in person, that’s ideal. However, if you can’t, I’ll provide live video so that we can go over inspection results and ask questions directly to the inspector (very important as they can verbalize a lot more detail than they can put into their report). Or, if a live video isn’t feasible, I’ll ask you to send me any questions you’d like me to cover and I’ll record the inspection summary. I usually have plenty of my own questions to add-on (I’m good at asking questions).
If, during the inspection period, we identify any reason that the home doesn’t work for you, we can terminate the transaction without any undue risk to your earnest money. Check out my blog about real estate contingencies to learn more about how this works.
But, I have never had an out-of-state buyer terminate a transaction after seeing the home in person! My buyers often say when they first see the home in person that my walk-through videos make it feel like they’d already been there. I’ve have plenty of references and reviews from happy out-of-state buyers; feel free to ask for them!
Out-of-State Buyer DON’T: Don’t panic if there are some issues identified with the home during inspection.
Every home has some issues. There are ALWAYS at least a few differed maintenance items.
The inspector will go through all of their findings. Afterwards, we’ll discuss this and determine whether or not we need to procure some bids from different contractors.
It’s okay and even normal if you can’t spend enough time in town to meet contractors. I’ll provide suggestions for different contractors and can meet them at the home when needed to look at the issues.
Depending on the extent of repairs needed, we may utilize these bids to negotiate for repairs, credits, or price reduction from the seller. Check out my blog, Inspection Negotiation: Should you ask for repairs, credits, or a price reduction? (One of my most popular blogs!)
This is the point where most sale-fails (terminations) occur. But, don’t worry. The vast majority of sellers want to sell their home (I know that sounds redundant but some sellers… aren’t all that concerned with selling, but fortunately they are the exception). If the needed repair items are larger, then sellers know most buyers will ask for them. I’ll help guide you through these negotiations.
I’ll also help you understand what repairs might be very difficult and which repairs might sound scary but are actually pretty easy.
For example, mold in an attic or crawl space sounds scary but is very common in Oregon. Remediation isn’t prohibitively expensive, usually only takes a few hours, and good remediation companies will also recommend/perform any repairs necessary to help keep mold from being an issue in the future.
Hint: it usually involves adding ventilation… homes of all ages often have inadequate venting, or sellers have the venting covered up, leading to increased humidity.
Also, if you’re wanting to get some bids for upgrades, such as re-painting the interior or replacing some flooring, I’m happy to meet some contractors at the home for you. Remember, I’m your boots on the ground and am here to help you throughout this process.
Out-of-State Buyer DO: Be excited about closing on your new, wonderful home!
Once we’re through the inspection contingency, there are a few more steps, but we’re through the toughest pieces of the puzzle.
At this point, usually your lender will still be gathering information for the underwriter. An appraisal will be scheduled (that’s a whole other blog, but the vast majority of homes appraise at or above sale price, especially with some extra leg work on my part). We may also need to schedule a re-inspection if the seller is completing repairs.
I’ll be on top of all the timelines and in communication with everyone, including the seller/listing agent, lender, and title/escrow regarding final details.
In Oregon, the buyers usually sign closing documents a few days before closing. When you are out-of-state, this will almost always be with a mobile notary wherever you are. So, there’s no need to fly/drive out to the Portland area again just to sign documents.
Once closing occurs and you own the house, congratulations!
If it’s going to be a few weeks after closing before you’ll be in town again, but want to have some work done to the home, I’m happy to leave a secure lockbox at the home for you and provide access codes when needed for your contractors. I’m here throughout the process and beyond!
