Key takeaways
- Buying a home in another state involves a significant time investment that can be as long as several months.
- Researching affordability, neighborhoods, tax rates and local real estate laws is an important part of the process.
- Finding a trustworthy local real estate agent, particularly one who specializes in relocation, can ease much of the stress associated with buying in another state.
Whether your motivation is to move closer to family or a new job, invest in a second home or take advantage of a remote work opportunity, there are many reasons you may be looking to purchase a home out of state. Long-distance house-hunting is a process, but with careful planning, you can find the right home across state lines, or even across the country. Here are the steps to get started.
Timeline for buying a house out of state
Finding a home in another state will require you to invest a bit of your time — obviously more than moving across town would do. On the low end, it could take anywhere from three to six weeks to buy a home, since most lenders need at least that amount of time to approve your mortgage loan. On the high end, the process could take several months.
Some questions you’ll want to consider when figuring out a timeline include:
- Will you be selling your current home first? If so, it could sell faster than the time it takes you to find another one, which can complicate your timing.
- Do you need to move quickly? If so, you may have to buy the home (or at least make an offer on it) sight-unseen.
- Does your new home have to be move-in ready, or do you have the flexibility to do renovations?
- Are you prepared to move tomorrow, or do you need time to sort through your belongings?
- Will there be considerable time spent traveling for your move?
These and other factors can all influence your plan and timing.
One thing is for sure: When moving out of state, you will not have the luxury of spending a lot of time touring properties and going to open houses. This is the reason that getting organized and creating an effective strategy is the first thing you need to do to relocate to a new state.
10 steps to buy a house out of state
1. Create a plan
As with any home purchase, begin by evaluating your finances.
Whether you’re a first-time homebuyer and relocating or selling your current home to move out of state, you’ll need enough funds for a down payment — the amount of which depends on home prices in your new state and the kind of mortgage you plan to get.
If part of your down payment is coming from a relative or friend, plan to have that money in your possession well ahead of applying for a mortgage (and if you’re switching to a local bank in your new area, make sure it’s in this account). If, instead, you plan to use some of the proceeds from the sale of your current home, consider how much of your current mortgage you have left and how much you stand to profit after paying it off, along with closing costs and taxes.
There are also costs associated with buying a home, including:
- Buyer closing costs
- Property taxes
- Homeowners insurance
- Mortgage insurance
- HOA fees
Taking these expenses into account can help you determine how much house you can afford in your new state.
2. Compare costs of living
“Moving to another state is a much bigger deal than moving within your neighborhood,” explains Steven M. John, SCRP, SGMS-T, of Global Mobility Advisor. “Everything changes, and it’s important to do research to get an idea of how things may be different.”
You can begin initial research about your new state online, John says. Family or friends who live in the area can also be a resource for information. You’ll want to learn about:
- Affordability: The housing market in your new state could be cheaper or costlier than where you currently live, so explore the local market to get a sense of what homes are going for. You can use Bankrate’s cost of living calculator to see home prices and cost of living information for certain cities.
- Neighborhoods: If you don’t know which neighborhood you want to buy a home in, consider what’s important to you in a community, such as the schools, public transit or walkability. Have an understanding of the school district boundaries, too. With a quick search, you can find several websites with neighborhood rankings and information, and for an insider’s perspective, check out local Facebook groups or Nextdoor.
- Job market: Unless you’re already relocating for work, look into the local job market to see which companies have a presence in the area and what jobs are currently available. The local Chamber of Commerce’s website can be helpful in this search. Ideally, you’d have a job lined up before your move, but if not, it can’t hurt to start applying and interviewing in advance.
- Local real estate laws: Property and real estate transaction laws can vary by city, county and state. Your new city could have different rules (or even definitions) regarding disclosures, for example, or zoning variances, inspections, deeds and property lines.
- Property taxes: Property tax rates vary by municipality. If you have your eye on a property, contact the state’s Department of Assessment and Taxation to learn what the tax rates are in the area. It can be smart to consult with a tax professional, as well, to learn about any differences in state or property taxes.
- Varying closing costs: Closing costs vary by location (partly due to the property tax rates and transfer tax rates, if any), property type and the type of mortgage you have. Your real estate agent should be able to furnish a sense of how much it will cost to close on your new property.
3. Visit your new city and shop for a home
If possible, plan a visit to your new city and coordinate a tour of the area and prospective homes with your real estate agent. By visiting in person, you can get a better feel for the local culture while also experiencing various neighborhoods and investigating the nearby amenities. An in-person visit also allows you to assess features of a community like noise levels, traffic patterns and proximity of businesses or facilities that might negatively impact your quality of life.
Alternatively, if you’re unable or unwilling to travel, your agent can help facilitate this remotely. Your agent can even facilitate virtual showings of properties, walking you around homes while using FaceTime, Zoom or other similar technology.
4. Find a real estate agent
As you research your new city, now’s the time to find a real estate agent you can trust — especially if you’ll be relying on your agent to handle much of the home-buying process remotely.
“Some agents may specialize in relocation and not only understand the extra stress of being in a new and unknown location, but who also go above and beyond to provide their clients with information about auto-registration, schools, voter registration and even referrals for childcare and home care,” explains Chuck Garrett, general manager and managing broker for Coldwell Banker Island Properties.
When searching for a real estate agent, consider:
- Researching potential agents online
- Interviewing two to three local agents in person or via telephone
- Discussing and confirming an agent’s commission up front
- Checking references before making a final decision
If you’re moving for a job, you might also be able to take advantage of your new company’s relocation services. “Relocation management companies generally work with employers to facilitate company-sponsored benefits for work-related relocations,” explains John. “If you are moving at the request of your employer, work closely with the RMC counselor assigned to you.”
5. Line up a mortgage
Unless you plan to pay with cash, you’ll need to get a mortgage for your new house out of state. These steps can help you secure one:
- Begin by getting your finances in order, including reviewing your credit score and paying down debt.
- Decide on the type of mortgage you want, whether that’s a conventional, jumbo or government-backed loan (e.g., an FHA, VA or USDA loan).
- Research mortgage terms and APRs available from multiple mortgage lenders licensed in your new state.
- Get preapproved with the lender you select. You’ll need to provide the lender information about your credit and financial situation.
- Review the loan estimate provided by the lender, paying attention to the interest rate and other fees associated with the loan
Keep in mind:
If you’re moving for a new job, provide your lender a copy of the offer from your new employer that includes your start date and pay. If you don’t have a new job yet, avoid changes like transitioning from full-time employment to contract work or switching to a new industry, since your lender’s main concern is going to be your ability to repay a loan. There are exceptions, however, including military service members returning from deployment or full-time students just starting in the workforce.
6. Make an offer
If you’re buying in a competitive market, be prepared to make an offer quickly once you find a home you like. Along with the offer price, the proposed purchase agreement should include:
- Earnest money: This is the deposit you’ll put down before closing, usually between 1 percent and 3 percent of the home’s purchase price — although it can be as high as 10 percent in a really hot market. These funds are typically placed in an escrow account and then applied to your down payment or closing costs at closing.
- Contingencies: These specify that the purchase of the home will only happen if certain conditions are met. Some buyers may forgo contingencies like the home inspection to get their offer accepted, but this is not a wise move, especially if you’re already buying the home sight unseen. You can consult with your real estate agent to determine the best strategy, but it’s always better to have an inspection than not.
- Expiration date: This states the expiration of the offer (ideally, 24 hours) as well as a projected closing date. Stipulate that the listing agent and seller can’t disclose your offer to any other interested parties — this could be a tactic to bid up the price.
Depending on where you’re buying, you might have to prepare to pay above list price, or for your offer to be turned down. Your agent can help set realistic expectations ahead of time, and guide you if you receive a counteroffer or want to outbid another buyer. If you’re considering raising your offer, know your limit and don’t get caught up in the drama if you can help it — over a 30-year mortgage, a bit of patience can save you lots of money.
7. Get a home inspection
A home inspection is an examination of a home’s condition and can help you identify any areas in need of repair or decide whether to move forward with the purchase. Your real estate agent can connect you with a local home inspector in your new state, but you’ll be responsible for paying for the inspection. The cost can vary from location to location, as well as by the age and size of the home.
While it’s generally a good idea to be on-site during the inspection, it’s not mandatory, and might not be feasible if you’re several states away. In this case, your agent can attend, share the inspection report with you and discuss the next steps.
8. Hire a reputable long-distance mover
While it’s possible to do a long-distance move yourself, buying a house out of state and then moving there isn’t as easy as it sounds, so it’s best to hire a reputable moving company.
When reviewing prospective long-distance movers, make sure to:
- Consider how long the company has been in business. A company that has been around for at least several years or more is likely to have far more experience.
- Review the company’s licenses. You’ll want to make sure that a long-distance mover is licensed for interstate moves. License information should be on the company’s website or available through the Department of Transportation.
- Look for transparency in pricing. Make sure the company will provide a firm estimate of how much the move will cost and there are no hidden fees.
- Ask about protection policies for your belongings. You’ll want to make sure you receive compensation should any accidents happen. The most reliable companies will offer this type of policy.
- Research the company online. Look for past customer reviews and a Better Business Bureau rating, if available.
When comparing quotes, keep in mind that the cost can depend on how far the truck needs to travel, the weight of your furnishings and whether you’ll need packing or storage services. Ask whether the move will be a partial or full load, and whether it’ll be direct or require multiple stops. Be sure these are factored into the quotes so you have accurate estimates.
9. Schedule a remote closing
Remote online closings are allowed in 47 states and the process is very much the same as a typical closing. You can expect a remote closing to generally include the following steps:
- Provide the required documents. Just like with a traditional closing, you’ll need to provide notary documents and present your ID. This can be done by uploading the required documents online. Then you’ll connect with a notary over video.
- Pay closing costs. You’ll pay closing costs via electronic or wire transfer, so contact the institution where the funds are coming from several days ahead of the closing to make sure you understand how transfers work.
- Obtain a new homeowners insurance policy. If you currently own a home and aren’t sure if you want to stick with your current insurer, now’s a good time to get quotes from other providers. Just be sure to keep your current policy in place until the closing.
If possible, though, do your best to attend the closing in person and bring a certified check. Wire and escrow fraud is becoming more and more common in real estate transactions, and scams are becoming more sophisticated. If you absolutely need to wire the funds, call your settlement or title company directly to confirm the instructions.
10. Make final moving preparations
After closing, it’s time to finalize preparations for the big move. These arrangements might include:
- Changing your address and forwarding your mail
- Contacting local utility companies to set up or transfer service
- Changing your driver’s license and vehicle registration
- Registering to vote in your new state
- Updating your health insurance provider and finding local healthcare practitioners and a pharmacy
Bottom line
Purchasing a home out of state can be a time-intensive process. Finding an experienced local real estate agent can eliminate much of the stress associated with this type of move. In addition, do your research ahead of time to gather information about local mortgage lenders and the cost of living in your new state, among other things. And, in the best-case scenario, visiting the state and examining the neighborhoods and other factors in person will allow you to develop a fully informed opinion of the area and ease your mind further before you purchase the home.
FAQs
Additional reporting by Josephine Nesbit
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