Increase of Virtual Real Estate Transactions due to the Pandemic

Virtual Real Estate

Prospective buyers getting their first glimpse of potential homes through smartphone cameras connected by FaceTime and Zoom. 3-D modeling technology used to create digital walkthroughs that can be replayed at any time from nearly any angle, and can even fill an empty room with virtual furniture.

Shelter has always been a basic personal need, but coronavirus and the ensuing lockdowns have made it more critical than ever. Home is not just a haven from the pandemic, it’s now the office, gym, movie theater and cocktail lounge in one. For real estate, an industry dependent on how people feel about a potential home in-person, the pandemic and the ensuing need for social distancing, cleanliness, and minimal contact, has changed technology’s role from nice-to-have into a must-have.

New technology tools like virtual walkthroughs, 3-D mapping and drone surveys, were adopted years ago, but only on a case-by-case basis with select properties. “Some of the technology out there was neat stuff,” says Quentin Dane, CEO of real estate brokerage Dash Carolina, which serves North Carolina’s “research triangle” of Raleigh, Durham and Chapel Hill. “You did it for a certain type of extensive home, but you wouldn’t do it for all of them.”

Coronavirus has transformed these specialty tools into de facto industry standards. “The video conference is now the norm,” Dane said. “Technology caught up to where we live.”

How video calls are changing real estate deals

One of the most mentioned technologies seeing widespread use is in fact one of the simplest: the video call.

“I’ve been working with a client who’s under contract, I showed them two dozen places virtually, on FaceTime, and they see the stats online,” says Scott Straus, a Chicago-area broker at Better Homes And Gardens Real Estate, Star Homes.

Real estate broker Coldwell Banker says its agents are embracing TikTok for virtual showings, and even hosting virtual open houses through Facebook Live. The technology used is typically consumer-grade because that’s where the customer is, says M. Ryan Gorman, president and CEO of Coldwell Banker.

“There’s an awareness of the risk of people coming into my space,” says Kate Kaufmann, a writer in Portland, Oregon, who is selling her condominium. Kaufmann says neighbors are also jittery about having complete strangers enter the shared complex to view her property.

Los Angeles-based realtor John Maseredjian says he’s using video calls not just to show properties, but to handle other, more mundane aspects of real estate. Maseredjian, who is the co-owner of JohnHart Real Estate, says he relies on teleconferencing software like Zoom Video Communications and Verizon’s Bluejeans to get face-to-face with clients during the pandemic. “Where we used to meet people in the conference room of the office, we can share screens, go over data and analytics, things that we used to go over in person.”

The housing market was battered by Covid-19. Existing home sales experienced the largest decline since 1982 (when mortgage rates were 18%), but the worst may be over. Pending home sales bounced back for a record gain in May, while new home sales are starting to rebound as well, and more quickly than homebuilders expected. Properties are selling at a faster rate compared to the same time last year, and new contracts and new listings — while lower than a year ago — are easing in their rates of decline, according to the National Association of Realtors’ weekly housing market monitor.

The virtual walkthrough is accelerating the existing home search, with buyers winnowing down the list of potential properties faster than before. “Rather than going and seeing 30 different homes in person, you can see them virtually,” Maseredjian said.

Redfin says it’s seeing a rise in sellers using 3-D scans to create virtual walkthroughs that are “almost like playing a video game,” says Redfin CEO Glenn Kelman.

Coldwell Banker has been using the augmented reality technology from Streem to prepare homes for showing without needing to send an agent to the physical property.

These trends are reflected nationwide: a May survey conducted by the National Association of Realtors found that 35% of realtors are seeing sellers rely on virtual tours.

Record low mortgage rates are adding fuel to the residential real estate market. The latest weekly data showed a continued rise and mortgage applications 33% higher than a year ago. Online-based mortgage provider Better.com says it has seen a 40% increase in purchase applications and it has conducted appraisals through the iPhone.

But despite the coronavirus-accelerated move to digital and rethinking of physical home priorities, most buyers do want to see the property in person. “A majority of homeshoppers still do want an in-person tour before putting down their hard-earned down payment,” says Amanda Pendleton, Zillow home trends expert.

Online-focused real estate companies that have evolved their own buying and selling marketplaces, are adjusting to that demand. Redfin, Zillow and Opendoor all say they are installing smart locks on unoccupied properties they own and are selling, restricting in-person walkthroughs to one group at a time. That technology is not new, but it has become more relevant to monitor homes and control the traffic in and out, as more consumers are demanding a contact-free experience.

While most of the process of homebuying, from negotiating a deal to writing an offer, can be done electronically, Nick Bailey, chief customer officer at RE/MAX, believes the in-person walkthrough is essential. “We will continue to see almost all buyers want to step into the home to feel it,” said Bailey.

Even homeowners who have bought properties “sight unseen” say the visual walkthrough is critical. “For a major life purchase like a home, you’d prefer to see and touch and feel it in person,” says homebuyer Jarrod Schwartz. Schwartz is in the process of buying a home in Brentwood, Tennessee.

“The tactile experience is important,” Maseredjian said. “If you’re gonna spend that much money on a property, you really want to see it in person.”

In fact, the biggest changes of all coming out of the pandemic may be less about technology and more about how buyers define the idea of a home. Stay-at-home orders forced households to re-evaluate what they need and what they don’t, says Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors, everything from the importance of a home office to yards for people to exercise or grow their own food.

“Some people are saying I want more space. Others may need to accommodate more older adult relatives. Others are expecting new babies or pets,” said Lautz.

Source: CNBC

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