Out of state real estate can be tricky. You’re getting ready for a career relocation move, want the perfect vacation property in an ideal destination, or are planning for retirement. Whatever the reason, you’ve set your sights for the Sunshine State and want to make the purchase go as smoothly as possible. The problem is you are several hundred, if not thousands of miles away, and that means house hunting won’t be a simple matter. Sure, you can tour homes virtually, that’s the power of the world wide web, but it isn’t the same as seeing potential purchase properties in person.
Not only does distance provide a substantial gap in terms of geography, but it also puts a strain on your wallet because you’ll have to traverse that gap by car or plane sooner or later. What’s more, is if you aren’t yet familiar with the area, it will be absolutely necessary to become familiar with it, understanding the surroundings comprising the community.
Something else big to take note of is your timeline. This will be essential to making a smooth transition and to try and coordinate the sale of your current property with the purchase of another in a different state. You obviously don’t want to have the obligation of handling two mortgage payments for any longer than completely necessary.
Understand the Differences between Real Estate Markets and Taxes
If you’re moving permanently or purchasing a vacation property in Florida, you’ll be pleasantly surprised by the fact real estate taxes are low. What’s more, there is no state income tax and the state also allows for a homestead exemption, if this will be your new primary residence. Some more good news is that property values are on the rise, yet prices remain affordable.
Keep in mind that because of its location, having a wind mitigation inspection for the purpose of lowering insurance costs will be a smart decision. In addition, if you live on or near the water, you might be required by your lender, or just take the precaution of purchasing flood insurance.
“Buying a home in another state can be very stressful, especially if a buyer doesn't know the area very well. An out-of-state buyer may be at a disadvantage because the buyer may not know the best neighborhoods, any of the real estate agents in town or the state laws. It can be frightening to embark on a new direction without a guidebook.” --Real Estate, About.com
You’ll also notice that it’s a pleasure to live here because of the wonderful weather. Sarasota boats some of the most mild winters, with gorgeous fall and spring seasons. Summer is typically warm and balmy, but, with a near constant cooling gulf or bay breeze. The cost of living here is usually lower than in many states in the northeast and midwest and because of the weather, outdoor recreational opportunities abound almost every day of the year.
How to Buy a House in Another State
When you're ready to buy in a different state, be sure to form a game plan that includes the following:
Get your financing in order as soon as possible. The more prepared you are, the better. Get pre-qualified for financing and work with your lender in an open and honest manner. If you’re making a career change, this can have an impact on how much you can borrow. If it’s for a second home, the lender might ask for a larger down payment.
Don’t change your debt-to-income ratio before closing. Big ticket purchases can really wreak havoc with your debt-to-income ratio, or the difference between your gross monthly income and your monthly obligations. If you need to purchase furniture or a car, wait until after closing on the new home.
Set out a timeline and a strategy. Trying to coordinate the sale of your current property and the purchase of a home in another state will be a bit difficult, but it’s certainly not impossible. Make contingency plans in case your current home sells before you’re ready to make the move out of state.
Create escape hatches in contingency clauses. Speaking of contingency plans, be sure to have those clauses in your purchase offer. They’ll act as an escape hatch should there be something revealed during the home inspection or pest inspection.
Form an impression of the neighborhood. Because you’re going to conduct most of your search over the internet, you’ll have the ability to “see” the neighborhood through several websites which provide information about specific areas.
Enlist the help of a local buyer’s agent. This will be your best resource, a professional who is intimately familiar with the area and can act as your eyes and ears. Previewing properties in person to put them on the “must-see” list, while passing on homes which do not have the features you most want and need.
Lastly, make sure you understand your responsibility for closing costs and be prepared to pay all or part of them, as well as storage and moving expenses. These will add-up quickly and can impact your budget for weeks or months after the purchase.