The big risks in buying a house sight unseen

Patchogue, N.Y.: A home for sale, under contract, on Center Street in Patchogue, New York on May 17, 2022.

Steve Pfost | Newsday | Getty Images

In many areas of the country, homes continue to sell even as rising mortgage rates, high prices and recessionary concerns filter through economy. During the recent real estate boom, the urgency many would-be buyers have felt to act means making an offer sight unseen.

Nearly half of homebuyers — 47% — made an offer in the past two years without physically touring the property, according to LendingTree.

“I see a big sense of urgency with folks,” especially those who have lost out on multiple offers, said Adam Lampe, co-founder and chief executive of Mint Wealth Management in Houston, Texas.

While the housing market is cooling, to date it’s still a seller’s market, and buying sight unseen can be a viable strategy. Here are four caveats.

1. Don’t make snap decisions

It’s a challenge when you’ve lost out on several homes and are starting to feel desperate. And it can be even more frustrating when others are willing to plunk down cash with few or no conditions.

Notably, all-cash sales accounted for 25% of transactions in May, according to the National Association of Realtors. That’s down from 26% in April, but up from 23% in May 2021.

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However, just because others are “throwing caution to the wind” doesn’t make it a good idea, said Connor Daniels, a realtor in Olathe, Kansas. He tells clients to plan to miss out on at least five to 10 houses and strongly advises them not to buy a property sight unseen, even to clinch a deal. “To say it nicely, pictures can make a rough home look really nice,” he said. 

If you do plan to buy sight unseen, you should at least mitigate the risk by having someone else do a walk-through on your behalf, said Andy Hart, chief executive of financial planning firm Delegate Advisors. Insisting on an inspection and making sure adequate contingencies are in place in case you need, or want, to back out are also advisable.

2. Know what you are getting into

3. Send a trusted professional, family member or friend as your proxy

4. Don’t pass up the inspection

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