Buying A House In Another State: A Guide
There are plenty of good reasons why you might want to buy a house in a different state from your current location — and thankfully, modern technology makes it possible to shop for a home and work hand-in-hand with trusted professionals who can make the process easier for you. Whether you’re going to be living in the house full-time and want to have the purchase handled before you move, you’d like to find a vacation home in one of your favorite places to visit, or you are hoping to invest your money in real estate somewhere you don’t actually live, you’re not alone!
Plenty of people are buying homes from across the country these days, and you can make it work for you if you understand what’s involved and make sure you’re working with people you trust to help you make big decisions. To be successful in your remote purchase, make sure you’re covering these basics.
Know why you want to buy remotely
It’s absolutely fine to have more than one reason for buying a home in a different state — for example, perhaps you want a vacation home that you can also rent out short-term when you’re not staying there to help cover the mortgage, so you’re looking for both a second home and an investment property. But you need to think long and hard about your primary reason for buying a house in a state where you don’t currently live full-time well before you start shopping because your primary reason should help you determine what will (and won’t) work for you.
If you’re planning on moving to the home full-time soon or eventually, then your needs are going to be very different than if you only plan on visiting the house once a year for vacation. You might want more square footage in a house that’s going to be your full-time residence than in a house you’re only staying in for a week or two every year, and you’ll want to make sure there’s plenty of room and storage space for all the belongings you want to keep. It might not matter so much if a vacation home or a short-term rental doesn’t have great internet access — the whole idea is to get away from the world, after all — but a lack of connectivity could be a big problem for a full-time residence or even long-term rental.
Consider how much time you plan on spending at your new home if any, and work on your list of must-haves and nice-to-haves from there. This will be useful when you start actually looking at properties to buy: You’ll be able to easily eliminate homes that don’t meet all the criteria on your must-have list, and you can prioritize which homes you like best based on how well they meet your nice-to-have criteria.
Research, research, research
You might have a general idea of where you want to buy a house — maybe you’ve always wanted to own a home in the mountains, on the beach, or in your favorite city to visit. But you’ll need to get much more specific than that before you start seriously looking for a house and start the purchasing process. What metro area or rural area will you be considering for your out-of-state home? How well do you know that area and its neighborhoods or small towns? If you want to buy remotely in a place where you used to live, or somewhere you’ve visited regularly for years, you’ll be in a decent position to make some decisions, but if you’re not very familiar (or at all familiar) with the areas where you want to shop, then you’re going to have to start doing some heavy research into the specific locations that will work best for you.
Investors who want to buy a long-term rental and rent it out are going to want to consider not only crime rates and home appreciation in the possible neighborhoods and metros for buying a house, but also school ratings and commute times so they can attract the widest possible pool of well-qualified renters to their property. Vacation-home and short-term-rental buyers are also going to want to think seriously about crime rates; homes that sit vacant for some or most of the year are prime targets for burglary and vandalism, which is not something you want to deal with remotely. And of course, if you’re going to be living in the house and working in the area, you’ll want to know how close you are to work and how convenient (or inconvenient) it will be to shop for groceries, among other factors.
Spend some time reading local publications (if they exist) and digging into the information available online about the general areas where you might want to buy. Keep in mind, though, that the internet isn’t going to be able to tell you everything: You’re going to want to talk to some actual humans about what you’re learning at some point …
Get some resident opinions
Do you know anybody who lives in the area where you want to buy? This can be a huge asset when you’re trying to purchase a home in a different state. And the good news is that you don’t necessarily have to know someone in the area already; you can craft relationships from out-of-state with knowledgeable people and ask them every lingering question you have about your future home purchase.
Get onto Facebook and see if the region or neighborhood has a group created, then join it. You might want to lurk for a little bit to make sure it’s the kind of environment where people will welcome (and answer) your questions, but this can be a good place to start. If there isn’t a Facebook group, try to find property managers, general contractors — even landscapers and house-cleaners can be great resources for giving you details on which streets tend to be more dangerous than others, what you’ll want to keep an eye out for in terms of potential structural problems or damage in the houses you’re considering, and the best places to walk dogs or playgrounds for kids.
Decide on a neighborhood
When you feel confident that your research has answered every question you have about the pros and cons of each possible market, town, or neighborhood, it’s time to start narrowing down your choices to two or three (at most). Targeting your search is a smart thing to do, at least at the beginning; you can feel confident that the homes you’re looking at online meet some of your basic standards — your must-have list — and if you don’t find the right place in your narrowed set of two or three targeted areas, then you can always expand your horizons later on.
Choosing a specific neighborhood or region also has the advantage of allowing you to do some really deep digging on the average homes — their size, their price, their lot size, their amenities, and so on. You’ll need to know about how much you want to aim to spend before you start talking to a mortgage lender, and it’s much easier to do this kind of research on a small set of locations instead of an entire metropolitan area at one time; if most of the houses that seem appropriate to you are out of your reach financially, then that’s a signal that you might need to reconfigure your location options.
Pre-approval still matters
When you’re buying a house remotely, you probably want the process to move along as quickly as possible, and you want to seem competitive with any local buyers. This means you really should get pre-approved by a mortgage lender before you start shopping in earnest. Securing a pre-approval can be time-consuming because you have to submit so much documentation about your finances, your income, and any expenses, but sellers know that buyers with pre-approvals are both serious about buying and actually have the means to purchase a house for the price they’re offering.
A lender who operates in both your state and the state where you’re hoping to buy might be a good choice for you because the lender should, in theory, be familiar with both areas; that said, there are some parts of the country where property anomalies make it beneficial to consider a local lender instead. For example, if you’re looking at homes in a resort area in the mountains, a local lender will have already encountered any potential issues with construction materials, septic systems, and so on.
Securing the mortgage could be more challenging
Even if this is a home purchase that you’re intending to make your primary residence, be aware that getting a mortgage to buy a house in another state can require jumping through even more hoops than normal. For example, if you’re relocating and are moving from a city where your employer has its main office to a location with a satellite office — or if you’re planning to work remotely for your employer — then your mortgage lender is going to want proof that you’ll still have a steady income after you move, and will want verification of what that income amount is going to be. This means you might need to get a certified letter or notice from your employer to provide to your lender.
Purchasing a vacation home or second home is also more challenging than buying a primary residence; your down payment requirement could very well be higher, and it’s possible that you might not get as low a mortgage interest rate as you anticipated. Make sure your finances can accommodate these potential snags, and do your best to get everything cleared up mortgage-wise on the front end so that you don’t end up having to untangle a mess from several states away during the closing process, which is absolutely nobody’s idea of fun.
Hire a local agent
It might or might not be beneficial to hire a local lender, but it’s absolutely critical that you find a local real estate agent — preferably one who has specific knowledge about the neighborhood or area where you want to buy. Some remote buyers decide to work with the listing agent for the property they want to buy, and although this is possible, it’s usually not a good idea. A real estate agent represents you and your interests, putting your needs first, and an agent who’s representing both sides in a deal isn’t going to be able to advocate very well for you if push comes to shove.
Local agents will have worked deals in the area before, giving them an idea of what to expect in terms of potential snags or issues; having your own local agent on your side gives you the protection of a trusted, knowledgeable advisor. Some agents even specialize in helping remote buyers purchase homes in their state. Ask any local contacts you’ve cultivated to recommend a good real estate agent, or you can even ask the listing agent to recommend agents who they think do a stellar job representing clients.
Walk through a house at least once before making an offer
This might not be possible depending on your own availability, but if you can, do your best to walk through any home you’re seriously considering buying before you make an offer. Photos, video tours, and even Facetime walk-throughs are certainly valuable and can tell you a lot about a property, but there’s also a lot you could be missing if you don’t visit in person. What’s that weird smell in the bedroom, and can it be eliminated? Why do the floors slope like that in the hallway? You don’t want to discover that you can hear traffic from a nearby highway and that it keeps you awake at night after you move in.
If you can’t visit the house in person, make sure that someone you trust — a friend or a family member who knows you well — can do so in your stead. Real estate agents are fantastic resources, but if you just met yours, it’s usually best to find someone who’s familiar with your preferences and quirks and can apply what they know to the property you’re considering and give you an educated opinion about whether or not it would work for you.
Try to be there in person for the inspection
Maybe you couldn’t make the pre-purchase walk-through, but one time when you really should try your very hardest to be present at the house during the closing process is for the inspection. The inspector is going to look at all the major systems in the house, check the appliances, open and close windows and doors, look for signs of damage or structural problems — and it’s really in your best interests to be there in person so you can ask questions and request additional information or clarification around any fixes the inspector recommends or issues raised at the inspection. If it’s absolutely impossible for you to make the inspection in person, ask your agent to attend and video chats with you while the inspection is taking place so that you can make sure you’re fully apprised of any possible problems with the house before the sale closes.
…And consider additional inspections
Inspection requirements vary from state to state. Some states require pest inspections, for example, while others consider pest inspections optional. You might also want to get radon testing done if you’re buying in a state where that’s a factor, and there are a number of other inspections that might not be required to close, but that you might want to get anyway — especially if you haven’t seen the house in person yet, or if you know you aren’t going to be living there.
If something happens to your investment rental in between tenants while it’s sitting vacant, and that something is a result of a problem that could have been uncovered in an optional inspection, you’ll be kicking yourself for not seeing it sooner; a little extra money spent at this stage of the process could mean a lot saved down the road, so it’s well worth it to be as thorough as possible with the inspection process.
Consider a title agency with a national presence
You don’t actually have to be present for the closing, but working with a title company that at least has offices in your state and the state where you’re buying can really help expedite processes and make the closing smoother for everyone, including the seller. You can drop off a cashier’s check in person, for example, and not have to worry about wire fraud or tens of thousands of dollars potentially getting lost in the mail. Talk to your agent and to the seller about reliable title companies that will be convenient for all sides and see if you can find one that meets everyone’s needs.
Find a trustworthy property manager
If you’re going to be moving into the home yourself, then you obviously don’t need a property manager, but if the home is going to be an investment property or vacation rental, then you’ll need someone to look after it while you’re away. Your real estate agent probably has some recommendations for people who are reliable, trustworthy property managers, and this way you can make sure that the lawn is mowed, plumbing or electrical problems are promptly resolved, and the place is always ready for you when you show up for vacation or just to drop in and see how things are going.