Welcome to Virtual Reality in Real Estate, by Default
As the global impact of the coronavirus expands, real estate agents are finding creative ways to continue connecting buyers and sellers.
Guidelines for social distancing and mandatory closures have changed daily since the start of the coronavirus outbreak, with real estate agents adapting continuously to attempt to keep transactions moving. Virtual reality and virtual tours provide a way for buyers to continue their property search from their homes.
“Real estate agents and brokerages are chameleons and entrepreneurial by nature, so we’re quick to adjust,” said Eddie Shapiro, CEO of Nest Seekers International. “In addition to virtual reality and virtual tours that are already available on many listings, we’re using Google meetings, YouTube Live and Facebook Live to orchestrate virtual open houses.”
Conventional open houses, typically held for several hours on a weekend for anyone who wants to see a property, usually don’t meet the social distancing guidelines of keeping six feet from other people. Many jurisdictions have banned gatherings of more than 10 people at a time, which many open houses would violate. In addition, many people are voluntarily staying away from other people in general to prevent the spread of the coronavirus.
Approximately 60% of Nest Seekers’s listings have a video component now and they anticipate reaching 100% of listings soon, Mr. Shapiro said.
International Buyers During Pandemic
Since other countries experienced the virus a little before the U.S., the assumption is that international buyers may come back to the real estate market sooner than domestic clients, said Rory Golod, New York regional president of Compass real estate brokerage.
“Foreign buyers have been engaging in virtual reality showings for a long time, so they’re used to searching for properties this way,” Mr. Golod said. “Over the past four or five years, we’ve seen more international clients purchase homes sight unseen, especially if they know the specific building or neighborhood. Right now, most domestic buyers use virtual tours as a screening tool, but we’ll see more domestic buyers purchasing sight unseen too, I think.”
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While most of the globe has yet to see the epidemic peak, China’s economy is beginning to rebound.
The number of cases of the coronavirus in China reached 80,928 with 3,245 deaths, but the number of daily new cases has been dropping since Feb. 12 and has now dropped to near zero.
Chinese buyers, like other international and domestic buyers, are now relying more than ever on virtual tours. In February, there were about 350,000 virtual tours per day by Chinese real estate agents and buyers, which was about 35 times the amount of virtual tours in January, according to SupChina, a global news site that focuses on information about China.
Meanwhile, Chinese builder Modern Land recently live-streamed a sales pitch to prospective buyers that generated 600 contracts in five locations in one day, according to the South China Morning Post.
Chinese buyers represented 11% of international real estate investment in the U.S. in 2019, according to the National Association of Realtors, purchasing the highest dollar amount of international buyers at $13.4 billion last year.
Chinese buyers have purchased the highest dollar amount among international buyers for the past seven years.
On the other hand, social media inquiries and web traffic from Europeans and people from the U.K. have been increasing in the past week or so, with traffic from Asia dropping, said Mr. Shapiro, who acknowledged that it’s too soon to know the details of how this situation will play out in the real estate market.
Remote buying is already common in California’s Silicon Valley, said Redfin real estate agent Kalena Masching.
“Virtual tours are well-suited to the luxury market because sellers want to attract attention from buyers all over the world,” Ms. Masching said. “All our listings have 3-D walkthrough tours and floor plans that allow people to tour each level online.”
Until now, though, most buyers have asked a trusted friend or relative in the area to do a physical tour of a property before an overseas buyer finalizes the sale to make sure the virtual tour is accurate, Ms. Masching said.
“I had one client who purchased a $5 million house site unseen because both partners were traveling in different parts of the world,” Ms. Masching said.
New Reality for Real Estate
Now that a number of areas, including the San Francisco Bay Area, is under a shelter-in-place order, it’s an advantage to have virtual reality and virtual tour capabilities in place, Ms. Masching said.
Many real estate companies are quickly increasing their use of virtual tools and training their agents to use them.
“Most of our listings have videos and virtual tours, but we’re also holding online classes for our agents to provide them with tips for how to do video tours and how to upload them to share with clients via email, Instagram and Facebook,” said Mr. Golod, of Compass.
Jessica Swersey, a real estate agent with Warburg Realty in New York City, said she has a new listing she’s preparing for the market now.
“I’ll be doing a video walkthrough as a first line of defense and then hopefully we’ll be able to get a serious buyer into the place to see it in person,” Ms. Swersey said. “One buyer recently saw a video and signed a contract without seeing the property, but that’s still not the norm.”.
So far, virtual reality is mostly used as a screening tool to cut down on showings, said Anthony Askowitz, a broker with RE/MAX Advanced Realty in Miami.
“Two years ago I sold a luxury condo entirely sight unseen, but that’s a rarity,” Mr. Askowitz said. “Most people like to use all five senses and see a place in person before they buy.”
Investors, however, are more likely to buy via a virtual tour since they don’t plan to live in the property, he said.
“The top real estate forms have used online virtual tour slideshows for years,” said Corey Burr, a real estate agent with Sotheby’s International Realty in Chevy Chase, Maryland. “More recently, video tours have been used, along with 3-D navigation. These tools are of the utmost importance if buyers’ access to a property is curtailed and they need to rely on computers to do home shopping.”
Not everyone agrees that virtual tours are a replacement for in-person showings.
“For the last 10 to 15 years we’ve had sophisticated property search sites that allow buyers to see floor plans, photos of staged properties and images of virtually staged properties,” said Rachel Ostow Lustbader, a real estate agent with Warburg Realty in New York City. “Adding a virtual tour or virtual reality won’t add much to what’s already available.”
No one wants to buy anything if they can’t actively see it, Ms. Lustbader said.
Most of Ms. Lustbader’s international buyers search online for property and then see it in person when they come to New York on business.
“I can’t imagine buyers purchasing property in any price range sight unseen, so if we are forced into a lockdown, I believe the market will be put on hold for a short period of time,” Mr. Burr said.
Technology’s Impact on the Future of Real Estate
As video tours and virtual reality become more common, they should also be more realistic, Ms. Swersey said.
“If you want buyers to purchase based on a video, it needs to be more than just sparkly and showing the highlights,” Ms. Swersey said. “You need them to be more nitty gritty and granular so people can see the baseboards and watch someone turn on the faucets to make sure they work. Technology means you can make everything look perfect, but serious buyers want a more detailed experience.”
For now, said Ms. Swersey, this technology is meant to keep the conversation going and generate interest in properties. But she pointed out, there’s pent-up demand that will generate more sight unseen purchases depending on how long everyone needs to continue social distancing.
“Virtual reality is seen as an alternative marketing tool for now,” said Mr. Golod, “but I expect it will grow in popularity as people see how helpful it is during times like these.”
© 2020 Mansion Global | All Rights Reserved | March 24, 2020
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