 Personal Finance PowerPoint Presentation, buying a home remotely. Get ready to get financially fit by practicing personal finance. Remember when we're thinking about our financing decisions, we can break them out into the short-term decisions, the long-term decisions, short-term decisions being those ones where we're going to train our gut to trust our gut using things like tinkering, trial and error so we can hone down our habits so we can make more decisions by good habit. When we're looking at the long-term decisions such as the purchasing of a home, one of the longest term decisions for most individuals, we want to put down a more formal process because we're not usually as good as human beings to make decisions that are longer timeframes out into the future and because we can't tinker, we can't use the same kind of trial and error method. We have to use the adage of measure twice, cut once in order to make our decision-making process. So here's the process that you might think about going through when we're going through the home purchase. We've got number one, determine the home ownership need. Why do I need the home? What's the purpose of the home? Is it more of a financing need or is it more of a personal need? Am I using the home for a home for a long period of time or is there more of a financial condition that's driving my decision-making process? So number two, find and evaluate a property to purchase. So clearly we're going to be looking at the properties and where we're going to be purchasing them. We're going to compare the prices of the property to our budget. We're going to obtain financing at that point and then close the purchase transaction. That's the general process. So we're going to be looking at buying a home remotely. A step-by-step guide, most of this information can be found at Investopedia, which you can find online and you can look at more references, resources, continuing your research from there. This is by Gene Fulger, updated July 31st, 2021. So we've got the online or remote purchasing resources. This is something that's of course fairly new and is becoming more and more applicable as time goes on, as the resources and applications are improved. The online tools are, even if you're not purchasing completely remotely, are going to be tools that are really nice and useful when going through the home purchasing process. Buying a home remotely is becoming increasingly common these days. It has been standard practice for some time in the real estate world for sellers to skip the home closing by presigning paperwork and having sale proceeds wired directly to a bank account. But now the entire process can be done remotely by buyers as well as sellers. Why buy a home remotely, you might ask. During this point in time we're dealing with the coronavirus and the aftermath of the coronavirus. Clearly that is pushing more and more businesses, including in the real estate area, to push as much as possible into an online platform. For most businesses, including real estate, many things were going that way anyways. We had more applications, more tools on the online area, which were great, but clearly that process has been heightened, the speed at which it has been going increased due to the coronavirus. So right now the novel coronavirus is upending the way home sales are conducted from canceled open houses to video tours taking the place of in-person home showings. So that's one of the things that in-person or the video tours is one area where you can kind of see that increase, that step-up, meaning we're having these tools where you can kind of compare different properties, have pictures of different properties, have side-by-side comparisons with a lot of these kind of tools that are online. Look at the amenities that are around the area or resources that are around this particular location. But you often then still have people that we're going to go check out the home and take the actual physical tour. More and more you got that tour aspect that can possibly even be done in a remote kind of situation. As people avoid close contact to keep from spreading the virus, buyers remotely make more sense. So in more normal times, people who buy remotely often do so to purchase a second home or vacation home. So it used to be in the past, you might think, if you're going to purchase remotely, maybe it's for a second home type of purchases. Typically they are from out of state and have jobs and other obligations that prevent them from spreading a lot of time on the home-buying process. So clearly they're trying to save time with the remote purchase. That said, by Todd Catterback, a residential broker associate with Beverly Hanks and associate Realtors. Financing can be a factor. If a parent is buying a home for an adult child, they may decide to buy remotely, especially if they live out of state. So obviously if you're purchasing something for a child and the child is moving out of state, it's going to be more difficult for you to go take the tour out of state. That might be a remote purchase, says Catterback. Quote, in these cases, the parent often buys the house site unseen, handles all the paperwork and closings remotely, making an all cash purchase end quote. Real estate investors may also choose to buy homes remotely. Most real estate investors follow the 1% rule, which states that the monthly rent earned on a property should exceed that property's monthly mortgage payments. So the investor at least breaks even on the property. So if you're in an investment type of situation, you might be trying to be driven more on how much investment or rent you might get from the place. And this is a factor that you might be able to get just by the location of the place. So you might be more content with purchasing, for example, on a remote type of purchase situation. It's easier to find properties that follow the 1% rule in certain markets, which may be located in significant distance from the investor's home base. As a result, buying a house remotely can be an attractive time saving option. So that allows you to basically invest possibly in different states or different areas, which could be great. I mean, for investing in real estate, usually, if you're going to actually physically invest in the actual real estate itself, it used to be more difficult. You're probably going to have real estate around your local area, but it would be nice if you can expand your investment outside of that local area so that you have a more diverse investment in real estate, which is becoming easier to do with some of these kind of online tools as well. Whatever your reason for buying remotely, there are certain steps you can take to ensure the process goes as smoothly as possible. Find the right real estate agent. So clearly, you're going to need an agent. You're going to want an agent that is experienced with this kind of transactions that you're going to be dealing with and the way that they're going to be put in place. You will depend on your real estate agent to handle nearly the entire home buying process. So it's critical that you take the time and make the effort to find a good fit. Homebuying involves a lot of moving parts. It says, cat or back, quote, it's important to find a good personality match between the client and the agent. So clearly, if you're going to be working with someone for a good deal of time, you want to make sure that you have a good working relationship with that individual or at least think that you can have a good working relationship with them. An interview is helpful, whether by phone or video, and it's always a good idea to get references to see what other buyers have to say. So clearly, you want to do some research when you're looking into an agent, talk to them by phone or by online conference, get some background check on them if possible. Ask about experience when you speak with a potential agent. Cat or a back recommends asking from the start, quote, how often have you done this process remotely? So if you're clearly focusing in on remote transactions that might not be the expertise of many agents, you want to be upfront in terms of what you want from them so that everybody knows what is expected going forward. Experience matters and agents who work frequently with remote buyers are more likely to understand how it works, negotiate favorably, and find suitable properties for the buyer. The agent should also be able to advise on a local lender, quote, a non-local lender is likely to use a non-local appraiser, which can be the death nail in unique markets like Asheville. The agent should also be able to advise on a local lender, quote, a non-local lender is likely to use a non-local appraiser, which can be the death nail in unique markets like Asheville, quote, says Cat or a back. So you could have circumstances that are different from one location to the other, which could be costly. So you want to make sure that whoever you are dealing with is able to circumvent or navigate through those items as well as the agent. Ask about availability. Many real estate agents work odd or port time hours, which can be particularly difficult for remote buyers. Your agent will serve as your proxy, so they need to be available during regular business hours to handle a variety of tasks in the home buying process, including home inspection. If you're dealing with an agent, are they like a part-time agent? Is this a side job for them? How much availability do they have in the process, quote? I attend all home inspections, but with an out-of-town client, it's critical, quote, says Cat or a back, quote. In a world where home inspections take place between nine and five, it's going to be very difficult for an agent to attend your home inspection if they have another job, end quote. So you got to be making sure that when you're talking that you're picking someone up that's going to be able to suit your needs. If they're doing it as a side job, it might be more difficult, of course, for them to do so. Share your wish list. Once you have an agent, share your wish list so the agent can help you find the perfect property. The more refined your list, the quicker the home search may go to a point. So clearly if you're looking for, if you know what you want and you're listing out what you want, you're picking up an agent that has the time and the ability to search for what you want and then you're specific with them about what they are looking for that will make things easier. If you have too many requests, it will likely slow down the process. So obviously we can, you know, go overboard with your requests and whatnot and that could slow things down. Stick to the things that really matter, size, location, house style, walk-in closet and leave out the minor details that would be easy to fix or update in any home. I would like the den to be painted green or something like that. It's probably a little too detailed. You can paint it green. Maybe afterwards let's stick down to the big things that really matter in the home purchasing process. And if there are any deal breakers, features you absolutely could not live without, then you want to make sure you're laying those out, let them know. Let your agent know early on so they don't waste time looking at the wrong property. So if they're looking at properties and you're saying, well, I can't do that because it doesn't have a patio. That's like a deal breaker. Well, you didn't tell me it was a deal. You want to lay that out up front. Quote, if you're an agent, you have to take the bold step to call your client and tell them you've found the perfect property for them, says a cat or a back. As a buyer, you need to trust that your agent knows exactly what you're looking for at home. Quote, a home could look perfect on the internet, but a good agent will be able to say, no, that's not the home it's home for you because it sits next to an active railroad track or something like that. So clearly if you're looking on a home remotely, you don't have the capacity to actually, you know, do the walkthrough. You're not going to be picking up things that the person on the ground can be picking up such as, well, yeah, something over here. And again, you might be able to pick up some of that kind of stuff online. You might be able to see that it's next to a railroad track just by looking, you know, by researching it online, but you know, you get a much better look and feel, of course, if you're on the ground looking at a piece of property than if you are looking at it remotely. So use the due diligence period. Once a home is under contract, there's time to review title documents and deed restrictions, as well to conduct inspections, financing and bank appraisals before closing. In some states, including North Carolina, there's an official due diligence period during which buyers conduct their due diligence and decide if they want to go through with the home purchase. This may not apply if the home is in, is a new construction. The buyer pays a non-refundable due diligence fee, typically between $500 and $2,000, which typically compensates the seller for taking the home off the market and gives the buyer time to make a decision. The buyer also makes an earnest money deposit equal to about 2% to 3% of the purchase price or more in fast-moving markets. Both the due diligence fee and earnest money deposits are negotiable between the buyer and seller. The buyer can terminate the contract for quote, any or no reason in quote, or some other language during the due diligence period and forfeit only the due diligence fee. If the buyer backs out after the due diligence period they will forfeit both the due diligence fee and the earnest money as only the due diligence fee is forfeited if the buyer terminates the contract during the due diligence period. This can open up an interesting opportunity for remote buyers. It can be used as a tool to get a house under contract while giving an easy out to terminate the contract with limited financial risk. In the case of buying remotely it gives the buyer a window of time to view the property in person before making any financial decision, making any final decision. Close remotely, so the closing process remotely, the e-sign act of 2000 makes your electronic signature just as valid as if you sign the documents in person. So this is another thing that really opened up a lot of the online kind of business process, these kind of e-signatures that are in place so now we can kind of seal the deal in a remote fashion a little bit more easily, a lot more easily than before. In addition advances in technology have made remote closing routine for sellers and very feasible for buyers. Your agent will send you all the pages of the contract and addenda. You'll sign them using an electronic signature system which usually sends the signed forms back to the appropriate party. So if you've ever used these electronic signature systems then they're pretty nice at least from a logistics standpoint because they can go through multiple people to get the signature and then send it back to whoever needs to sign it. If it needs to go to multiple people to sign it then it can follow that pattern with an electronic signature program. So quote, attorneys still require physical signature so your agent will work with the closing attorney and FedEx all the necessary documents to you ahead of the closing says cater a back so you might still have some physical signatures necessary for the agent, for the agent. So the quote, the agent then goes to the closing table with the closing documents without the buyer and the funds are wired to complete the transaction. The bottom line, buying a home remotely can be a good option for second home buyers, parents who want to buy homes for their children and out of state real-estate investors. In many ways the process is the same as buying a home in person however you will depend even more on your real-estate agent to find the right home be present for the inspections guide you through the paperwork and attend the closing. So clearly again there's some very nice pros and cons there because you got these circumstances that you can make the purchase under especially this kind of out of state purchasing or investing if you're purchasing something out of state or something like that might be able to increase the diversity but of course the fact you can't do everything remotely so you do have to rely on the agent you would think to make some of those decisions on the ground or at least give you that second look as someone that is looking up physically looking at as such finding the right agent one who has experience with remote transactions is one of the most important steps you can take when buying a house remotely.