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Should You Buy Real Estate Virtually?: New Normal

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Forge Your Wealth is meant for education and entertainment and should not be used for financial advice.

The Coronavirus has changed so much in a matter of weeks. Arguably the largest way that the world has changed with Covid is buying real estate virtually. If some one told you that you should buy real estate virtually last year you would probably call that person crazy. However, Zillow reported that 36% of Americans would buy real estate entirely virtually due to the Coronavirus.

You should not buy real estate strictly virtually. After all, buying any form of real estate will probably be the most expensive purchase in your life. And the most common feeling after buying a home or any type of real estate is buyer’s remorse. 63% of millennials regret buying their home to some degree and other generations are not so different. Practically every single reason for these regrets stem from a lack of foresight and consideration. Buying real estate virtually will keep you from seeing all of the angles.

Real Estate Buying May Become More Virtual

Despite the fact that you should not buy real estate purely virtually, many people fear the Coronavirus more than the chances of buying a house that does not meet their standards. Zillow reports that 33% of sellers believe this trend will continue even after the fears of the Coronavirus subside. Some home sellers even fear having several strangers enter their abode due to the Coronavirus.

If you think about it though, having too many strangers in your home has been stressful even without a potentially lethal respiratory virus taking the world by storm. Even after the fears of the virus dwindle sellers may still prefer selling their real estate virtually.

Despite the higher possibilities of buyer’s remorse, many sellers report that their buyers appear happy with their purchases. Is it too early to tell if these people are truly happy with their purchases? Probably. It may also be that the buyers feel like they have taken a new step in life during a time of uncertainty and feel that they have little to complain about relatively.

I have heard many people with real estate investments claim that they have rather quickly sold real estate almost entirely if not entirely virtually. Granted many of the people I know personally who own real estate investments own them in or around Philadelphia, which appears to be the new real estate hot spot. I cannot say other real estate investors in different markets feel the same. If you own the right type of real estate in the right market, it is selling, quickly and likely virtually.

Problems With Traditional Buying

When you buy a house traditionally, you should check the place out and the neighborhood. Then you should check out other places to determine which would be the best option. After that, you should hire an inspector to check for any necessary repairs.

Do even a single one of those steps sound like something that can or should be done in an hour while sitting on your couch? You are not going to have the experience of house shopping you need by doing something similar to shopping online for a phone case.

You should not buy real estate entirely virtually, but that will not keep everyone else from buying real estate virtually. If the real estate you want is receiving many views, you could end up checking out a house that someone just purchased with little more than clicking the buy now or checkout button. If you go with the traditional route you are risking having the property swept out from under you.

Sellers Have Their Own Problems

This is a double edged sword for sellers too. With more people purchasing real estate entirely virtually sales may be set up but never finalized. If people are so willing to make a big decision buying real estate using virtual tours it is not unwise to consider the fact that the simplest things could give those same buyers cold feet.

If you are trying to purchase property using the less virtual route you could have a special edge over virtual buyers. The sellers may have some favorable bias towards buyers who tour in person than buyers who tour virtually. The surest way to show you are serious about buying real estate is to risk your life, virus or no virus, to see the property in person when you buy.

Sellers may even hold off on taking money from people buying real estate virtually if they have a buyer who is touring the place in person if buyers could easily get cold feet and back out of a deal with few consequences.

Do Not Be Pressured To Buy Real Estate Virtually

Maybe properties are quickly sold virtually. However, that appears to be real estate in a market with little competition. If the property is very desirable or even just desirable, there will be competition. Touring the place in person will give you an edge with the competition.

While many are buying real estate virtually, I believe there is a likely chance that more buyer’s remorse will come up. I just believe there are larger issues the public are willing to listen of horror stories about how someone bought a home virtually and the home ended up being a meth lab. With the number of scam complaints on the rise since Covid, I believe it is only a matter of time till we hear of many real estate scam complaints.

You Should Use Virtual Tools To Buy Real Estate

Do not take me wrong, virtual and online tools are excellent ways to determine if you should buy real estate. They just should not be used strictly when buying real estate.

Check Online Photos

Before the internet it was hard to believe you either bought real estate near you that is easy to see or you decided to tour the place far away with little idea of what it looked like. Now with the internet, you can actually determine if the real estate is worth the tour before making any commitment. You can now see the exterior and frequently the interior of the house online.

Be careful though, one of the best pieces of advice I have heard about viewing any property online is that if there are no, or even just two, pictures of the interior there is a good possibility the interior is a wreck, or the listing is a scam.

The exterior of any real estate is supposed to look appealing and it is not difficult to fix the exterior. Not many owners care too much about the interior though and it will be more difficult to fix. By fixing the exterior, the seller can attract more potential buyers and even justify a higher price without fixing the interior. This practice is ethically corrupt and a borderline scam.

What is a scam is listing a property online that either you have no intention of selling, or even do not own. Unfortunately, it is not hard to do this. Almost anyone can take pictures of a property’s exterior. They can use those photos to become a fake real estate seller and post a listing online unverified. If someone sends money to this fake seller for the unverified listing the fake seller could disappear with the money and that potential buyer has no stake in the property whatsoever.

Using these guidelines you can determine which properties are worth any more of your time just from the photos.

Virtual Tours Are Still Very Useful

If a virtual tour is still available it can provide more information than a few photos. You can use it before you make any commitment. However, it still should not be used as a replacement for an in-person tour.

When you tour in-person you can control what you see. If you are interested in something and the seller refuses to let you check something out that should be a red flag. A seller can control what you see virtually and even skip or things that should be red flags. A virtual tour is like wearing red-tinted sunglasses, you will not see the red flags easily.

Also just because someone is giving you a virtual tour does not mean the listing is not a scam. It is not difficult for a fake seller to show you around their own property and put up a listing of real estate at a fake address. Also, a plumber or electrician working on a property could become a fake seller by using a smart phone to give you a virtual tour of a property they are working on but do not own. It is not hard to create a real estate scam complete with virtual tours.

An in-person tour will show that the listed property is legitimate and that the potential seller is real.

Do Not Skip On The Inspector

This is a rule to buy real estate that applies no matter what situation you or the rest of the world are in. An inspector can show if the property is up to code or if there are any necessary repairs. Even an in-person tour will never thoroughly reveal these problems.

Even people who buy real estate entirely virtually know this. Some who bought strictly virtually even paid for a more thorough inspection because of the higher risks. Think of it this way: you may think buying property virtually is ridiculous, but those “ridiculous” people know it is even less wise to skip on the inspector.

Final Thoughts

Times have changed but the demand for real estate has not. More people are buying real estate virtually and even those who are not are demanding virtual tools to help them on the most impacting purchase of their lives.

While you should never fully rely on these virtual tools, you should use them to your advantage. Buyers are quickly plucking real estate in high demand markets. While you should never skip on the time-consuming steps of buying real estate including in-person tours or inspections, using virtual tools can help you determine where to aim your time and efforts so you do not waste either on a property you will not want to buy.

Author: Papa Foxtrot

Most of my life I was careful with money and learned where I should invest it. I was very lucky to have parents who taught me financial literacy when I was young. Unfortunately, I am very lucky because many people lack the financial literacy I know. The purpose of Forge Your Wealth is to teach people who are just starting out in life how to obtain their wealth or anyone who just realized they may need to learn more to handle their finances. I currently have a PhD in biochemistry, just started a job in industry (will not disclose where exactly for personal and professional reasons) and am currently married to the love of my life. I am one of the lucky few people in America who graduated with no student debts, my wife was not. Over the series of a little over 3 years we paid for our wedding with no debt and paid off her federal student loans.

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