How to Buy a House in Another State Before Moving?

How to Buy a House in Another State Before Moving?

Time Stamp: May 15, 2024 11:59 PM
Source Node: 2580880

Buying a house in another state can feel like navigating a maze blindfolded. You’re leaving a market that you feel comfortable and familiar with and entering another that’s unfamiliar. You don’t have relationships or connections and have to learn everything about neighborhoods, cost, and offer culture. Furthermore, every state has its old legal environment.

Whether you are relocating, investing, or buying a vacation home, you need to know how to buy a house in another state before moving. 

This article gives you step-by-step guidelines for finding and buying a house in another state. Learn what local real estate laws, financing, and offer processes you need to familiarize yourself before your next real estate purchase. 

Can You Buy a House Out of State? 

If you are moving and crossing state lines, you’ll be happy to know that there are no restrictions on buying real estate in another state for US citizens or permanent residents. Many people purchase homes in different states for various reasons, such as for investment purposes, as a vacation home, or in preparation for a future move.

However, the process can be more complicated, especially if moving to an unknown market. You have much to learn, starting with connecting with the right real estate professionals.

Start your search with FastExpert. Connect with top local real estate agents and mortgage brokers to streamline your out-of-state home purchase. 

Steps to Buy a House in Another State 

Buying a house in another state is very similar to buying a home in your local market. However, you must learn about the market and connect with local real estate professionals.

The buying process can change slightly from state to state and can even be dependent on the micro market. Be prepared to spend more time researching and getting to know your market. 

The steps to buy a house in another state are as follows:

  • Step 1: Define Your Goals and Budget
  • Step 2: Research the Target State and Area to Select Your Preferred Neighborhoods
  • Step 3: Secure Financing
  • Step 4: Hire a Local Real Estate Agent
  • Step 5: Begin House Hunting
  • Step 6: Plan a Visit to the Target Location
  • Step 7: Make an Informed Offer and Negotiate
  • Step 8: Conduct Due Diligence
  • Step 9: Finalize Financing
  • Step 10: Prepare for Closing and Relocation
  • Step 11: Consider Temporary Housing Options

When preparing to buy a house out of state, have confidence that the process isn’t completely foreign. You just need to take more time to build relationships with the right professionals to guide you through the process and to get to know your new area.

Define Your Goals and Budget

When changing states, you need to get acquainted with the cost of real estate, closing costs, homeowners insurance, property taxes, utilities, and the cost of living. A budget in one state might be completely different than another.

For example, property taxes in Texas are notably higher than in California, but the purchase price of homes is usually more affordable in Texas. Talking to a mortgage lender and even getting a mortgage pre-approval can be a great place to start when determining your budget.

Budgeting for a Home

Budgeting for a home purchase in another state means you need to understand the costs of buying a house in that area. Research expenses such as: 

  • Property Taxes: Property taxes change by state and county. 
  • Homeowners Insurance: How much you spend to insure your home will depend on your area and associated risks. For example, southern states like Florida and Alabama have some of the highest homeowners insurance costs due to hurricane risk. 
  • Closing costs: Closing costs vary by state and provider. The average is between 0.7% and 5.4%, depending on the state. 
  • Interest Rates: Banks charge different interest rates across the country. Look into the market interest rate in the area you’re buying. 
  • Homeowners Association (HOA) Fees: If buying into a community with an HOA, expect to pay a monthly fee. 
  • Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home’s purchase price, your mortgage lender will usually require PMI to protect themselves if you default on the loan.

Once you understand these expenses, you should understand how much you have left for your down payment. Your downpayment amount can greatly impact how much you can afford to pay for a home. A higher downpayment makes homeownership more affordable and gives you greater flexibility in your budget.

Assess the Cost of Living

Cost of living changes based on state and city. The cost of living is more than just how much it costs to own a home; it includes all your expected outgoings. Make a budget of your total expenses and then look into what those expenses cost in your new area. 

Think about expenses like: 

  • Groceries
  • Utilities
  • Gym memberships
  • Clothing
  • Transportation
  • Childcare 
  • Education
  • Entertainment and recreation
  • Pet expenses

Considering these costs will help you create a realistic budget that reflects your lifestyle and financial obligations.

Research the Target State and Area to Select Your Preferred Neighborhoods

When venturing into the unfamiliar territory of another state’s real estate market, your first order of business should be thorough research to identify the most suitable areas for your needs. The location of your future home influences not just your lifestyle but also the long-term value of your investment.

Start by gathering information from a variety of online platforms that provide insights into different neighborhoods. Websites like Zillow, Niche, and Realtor.com offer comprehensive data on housing market trends, demographics, and local amenities.

Also, look for community forums and social media groups where residents share their experiences and advice about living in those areas. Look into historical price trends, current market conditions, and future predictions to understand the economic stability of the neighborhoods you are considering.

Quality of life is paramount when choosing a new neighborhood. Consider what matters most to you: proximity to good schools, access to public transportation, safety statistics, availability of parks and recreational facilities, and cultural amenities. Each of these factors can dramatically affect your satisfaction with a location.

Nothing beats visiting a potential new home and its neighborhood in person. Plan a reconnaissance trip to walk the streets, visit local businesses, talk to potential neighbors, and get a real feel for the area. This firsthand experience can be invaluable and might be the deciding factor in your decision-making process.

Secure Financing and Mortgage Pre-Approval Letter

Securing financing is a crucial step in the home-buying process. It not only solidifies your purchase budget but also positions you as a serious buyer in the eyes of sellers. You should get a mortgage pre-approval before you start house hunting. The pre-approval process involves a lender reviewing your financial information to determine how much they will lend to you. 

While national banks might offer familiarity, find local lenders who provide valuable insights into the real estate market of your target state. They are often more adapted to the local economic environment and may offer more competitive or flexible terms based on local conditions. Furthermore, they can expedite the closing process as they know local real estate laws and requirements. 

Make sure you shop around for the best rate. Don’t hesitate to compare offers from several lenders, including credit unions, mortgage brokers, and online lenders. Pay special attention to interest rates, loan terms, fees, and any penalties. Each lender may have different offerings, and the right choice could save you thousands of dollars over the life of your mortgage.

If you’re unsure where to start, consider using FastExpert. This platform can help you connect with and review local mortgage brokers across the country. FastExpert provides access to a network of professionals rated and reviewed by real homebuyers, giving you confidence in their reliability and expertise.

Hire a Real Estate Agent

When buying a home in another state, it’s important to hire a local real estate agent experienced in assisting out-of-state buyers and those relocating.

Your agent brings invaluable insights into the specific conditions of the local market. They understand the neighborhood dynamics, trends, pricing, and inventory levels of homes that match your criteria. Their expertise can help you make informed decisions, ensuring you’re using your time wisely and looking at the right homes in the right places at the right prices.

Let your agent be your local guide to: 

  • Local laws and regulations.
  • The closing process. 
  • Manage appointments.
  • Conduct virtual inspections. 
  • Connect with the community.

A local agent is your on-the-ground liaison, ensuring your interests are voiced and addressed. They are skilled negotiators who can engage with sellers to get you the best terms and prices.

With a vast database of professionals, FastExpert takes the guesswork out of finding an agent. Review agent profiles, read customer reviews, and choose someone who fits your needs and buying situation.

Begin House Hunting

Once you’ve secured your financing and teamed up with a knowledgeable local real estate agent, the exciting phase of house hunting begins. Before diving into home viewings, clearly define what you want in a property.

Consider factors such as the size of the home, number of bedrooms and bathrooms, layout, and any specific features important to you, like a home office, backyard, or proximity to certain amenities. Make sure your expectations fit within your budget, or you will be left disappointed.

While knowing what you want is important, keep an open mind. Sometimes, a property that doesn’t tick every box can still be a fantastic home if it meets most of your important criteria and feels right. Be open to suggestions from your local agent, who may understand nuances of the market that aren’t apparent online or in data.

Utilize Online Tools

Make the most of online real estate listings to begin your search. Websites can provide detailed information and virtual tours of available properties. These tools allow you to refine your search based on your criteria and see potential homes without having to travel immediately, saving both time and resources.

Ask Your Agent For Virtual Tours but Commit to In-Person Inspections

In today’s market, virtual viewings are a standard practice and can be especially beneficial for out-of-state buyers. Request virtual tours from your agent to get a better feel for the layout and features of each home.

However, if possible, scheduling in-person inspections of your top choices is crucial. An actual visit can offer insights no virtual tour can, such as the neighborhood’s atmosphere, noises, traffic patterns, and other subtle yet critical aspects of living in a new area.

Plan a Visit to the Target Location

Visiting your target location in person is an invaluable part of the home-buying process. A physical visit allows you to immerse yourself in the community, experience the local lifestyle firsthand, and inspect potential homes beyond what photos and virtual tours can offer.

Take the time to explore the community beyond the homes you’re considering. Visit local shops, parks, and restaurants.

When planning your visit, aim to maximize your time. Coordinate with your real estate agent to schedule multiple property viewings each day you’re in the area.

During property tours, ask your agent detailed questions about each home and the surrounding area. Inquire about the property’s history, any recent renovations or repairs, and potential issues that might not be immediately visible. Also, discuss the home’s long-term value and how it has appreciated over time.

Document Your Visits

When visiting homes, take notes and photos to help you remember and compare properties later. This documentation can be invaluable when you need to make decisions and can’t recall specific details about the numerous homes you’ve viewed.

Consider Temporary Housing Options

Temporary housing reduces the pressure to quickly buy a home that may not fully meet your criteria. With a short-term rental, you can take the necessary time to attend showings, evaluate different neighborhoods, and make a well-informed decision.

Consider options like: 

  • A short-term lease
  • Airbnb or VRBO rentals
  • Extended stay hotels

While living in temporary housing, keep your belongings in storage if necessary, and plan the transition to your permanent home. Stay organized with timelines and checklists to ensure you can move smoothly once you purchase your new home.

This approach allows you to make thoughtful decisions about your permanent residence without feeling rushed or inconvenienced.

Make an Informed Offer and Negotiate

Once you’ve identified a potential new home and have a solid understanding of the local real estate market, the next crucial step is making an informed offer and entering negotiations. This phase requires precision and strategic thinking, especially when handling it remotely.

Be Ready to Move Quickly

In many markets, desirable properties can go off the market quickly. Be prepared to make decisions promptly. This means having your financing in order, knowing your must-haves versus nice-to-haves, and staying in close communication with your agent to schedule viewings and discuss potential offers.

Your Offer Strategy

Ask your agent for a list of the recent selling prices of comparable homes (comps) in the area. Have a detailed discussion with your real estate agent about your offer strategy. Factors such as the amount of earnest money, the proposed closing date, and contingencies like home inspections and financing can all influence the seller’s response.

Your agent’s expertise is crucial as they understand what is likely to appeal to the seller and what might cause them to reject an offer. If your initial offer isn’t accepted, be prepared to negotiate. Your agent can guide you through this process, advising you when to stand firm and when there’s room to adjust your offer.

Be Available 

Effective communication is crucial, especially when negotiating from afar. Keep your phone close and your ringer on loud. Regular updates and discussions with your agent can help you stay on top of any developments. This open line ensures that you are promptly informed of any changes or new information that could affect your offer or negotiation strategy.

Conduct Due Diligence

Once your offer is accepted, you may have the opportunity to do further due diligence to clear contingencies before the contract is unconditional.

Some items to consider are:

  • A home inspection to check the condition of the building, roof, plumbing, electrical systems, and HVAC systems. 
  • A title search and title insurance to ensure the title is clear. 
  • A review of any HOA or community bylaws. 
  • A property survey to clarify property lines.

If you uncover major issues in the property you are buying, you may have the opportunity to negotiate a price reduction or seller concessions.

Finalize Financing

Once your offer on a home is accepted, it’s important to lock in your interest rate with your lender. Interest rates can fluctuate, and locking in a rate can protect you from increases while your loan is being processed.

Ensure that you promptly submit all required documentation to your lender. Delays in submission can lead to delays in closing. Documents you should be prepared with include: 

  • Financial statements
  • Proof of income
  • Employment verification
  • Any additional documentation requested by the lender 

Your lender will provide a Loan Estimate (LE) document that outlines the mortgage terms, the interest rate, monthly payments, and the closing costs associated with the loan. Review this document carefully to ensure all the figures and terms are as expected. If there are discrepancies, address them with your lender immediately.

Prepare for Closing and Relocation

Coordinate with your lender and real estate agent to schedule a closing date that works for all parties involved. This is when all parties meet to sign the final paperwork, and property ownership is officially transferred to you.

Conduct a Final Walkthrough

Before the closing, conduct a final walkthrough of the property. This is your last chance to make sure that the home’s condition is as agreed upon in the contract and that any required repairs by the seller have been completed. If you can’t do your final walkthrough in person, ask your agent to do it via video chat.

Prepare for Relocation to Another State

The demands of the physical relocation are often overlooked during the excitement of buying a home. Early planning is particularly important when moving to another state, as it involves more logistics than a local move.

Start by researching moving companies that specialize in long-distance relocations. Check for reviews and ratings on platforms like the Better Business Bureau (BBB), Yelp, and Google to gauge their reliability and customer service quality. Request quotes from multiple movers to compare prices and services.

Once you have selected a moving company, book their services as early as possible. Movers can get booked quickly, especially during peak moving seasons like summer and at the end of the month.

Discuss the timeline of your move with your movers. Depending on the distance of your relocation, transporting your belongings could take several days to a week or more.

Virtual Closings are an Option Depending on Local Real Estate Laws

As of 2024, 45 states allow remote online notarization (RON), meaning buyers and sellers do not need to be physically present at closing. States that do not allow virtual closings include: 

  • Connecticut
  • South Carolina
  • Georgia
  • Alabama
  • Mississippi 

Close on Your Home

On the closing day, you will sign a lot of paperwork, including your loan documents. Your lender will then fund your loan, which may happen on the same day or shortly thereafter. Once the documents are signed and the funds are disbursed, you will receive the keys to your new home.

Ready, Set, Move: Wrapping Up Your Interstate Home Purchase

Buying a home in an unfamiliar state can seem daunting, but it doesn’t have to be with the right preparation and support. Rely on the expertise of local real estate professionals to gain insights into neighborhood trends, navigate local laws, and find the best properties.

Your team is invaluable in providing tailored advice and ensuring your purchase aligns with your personal and financial goals.

By leveraging expert guidance and detailed planning, you can easily navigate the complexities of an interstate home purchase. Let Fast Expert help you connect with the right professionals to make your home-buying experience as seamless and positive as possible.

Begin your journey today by contacting a local real estate agent and setting the foundations for a successful move.

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