September 21, 2021

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On Buying Real Estate Sight Unseen With An FHA Mortgage

Refinance loans: is it time to commit?

Would you buy a house without having personally walked through it?

In the era of COVID-19, there are increased numbers of transactions where the buyer and seller negotiate the sale of a home and close the deal without the buyer ever having physically set foot on the property. 

This practice is known as buying a house, “sight unseen” and the housing market website Redfin.com reports that for the year 2020, almost two thirds of those who bought real estate in 2020 had not seen the property in person.

What does Redfin make of “the highest share since at least 2015″, according to a Redfin-commissioned survey in November and December”.

That survey consisted of more than 1,900 homebuyers across 32 major markets, “up from 32% a year earlier, and 45% in July, which was previously the high point.”

There is an extremely important professional service you should never do without in a situation like this–you need the services of a qualified and experienced home inspector to perform a home inspection.

Some borrowers complain about the expense of a home inspection, asking why they have to pay twice for a service that should be performed once. But this reveals a misunderstanding about how the appraisal process works.

The appraisal is not intended to act as a full-blown inspection and does not. The appraiser does not have to step out onto the roof, for example, and your home inspector will take a very good look at your roof.

The home inspection is far more in-depth than any appraisal. The appraisal is nowhere close to an inspection and anytime you purchase a home without an inspection you take a gamble on finding a serious, undiscovered issue with the home only after you have closed the loan and moved in.

We receive reader questions all the time asking, “I closed my loan with no problem with the appraisal but after I moved in we discovered a leak in the roof” or “After we moved in we discovered problems with our foundation”.

When asked if an inspection was peformed? The answer is the same much of the time. “We didn’t pay for the optional home inspection.”

No matter how you choose the home you want to purchase (with no in person walk through or with an in-person tour of the property) the home inspection is a crucial part of the purchasing process.

The FHA and HUD official sites even have a publication warning borrowers never to purchase a house sight unseen by a home inspector–and this is the agency that guarantees the FHA Single Family Home Loan program. Don’t ignore this advice.

If you are one of those need to buy a house without personally visiting it, make sure you get to know the availability of the home inspection service providers in your area and book your inspection as early as possible–you are going to need their help.

Joe Wallace - Staff Writer

By Joe Wallace

February 2, 2021

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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