Virtual Reality and the Future of Real Estate | Extra Mile

Years ago, virtual reality was so new that public knowledge of the technology was mostly relegated to science fiction shows and movies. In fact, the term “virtual reality” was created some 30 years ago, but took years to enter the general lexicon. Fast forward to today, though, and the technology is pretty much everywhere—from video games to real estate sales.

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If you haven’t bought or sold a home in the past few years, you may be surprised to discover just how much the current sales environment can resemble what was once a science fiction plot device. A $15 pair of ocular goggles, when paired with current virtual reality technology, can transform the way a home shopper envisions a space.

How Does It Work?

In a word, the current technologies can be described as just plain cool. “Instead of trying to imagine their dream home from a two-dimensional floor plan drawing, virtual reality lets real estate buyers experience the property from every vantage point, inside and out,” says Dogu Taskiran, CEO of the Vancouver-based virtual reality tour creator Stambol Studios. Because of the technology, “clients can examine properties in a more fun and engaging way.”

The technology comes in two types—virtual and augmented reality. The former is an all-immersive experience, in which a buyer experiences a virtual world that’s viewable through goggles. This solution works fine if you’re at home or viewing a tour alone from a remote location. The latter lets a buyer experience the virtual tour while also interacting with a real estate agent who’s right there. By using a smart phone or tablet, a buyer can view a virtual world that’s laid atop the actual, physical world. It’s like a real estate version of Pokemon Go, without the creatures.

Some companies, like the Los Angeles-based luxury real estate firm Mercer Vine, are designing virtual reality studios in their offices. Once the studio is complete, prospective home buyers will be able to stop by, don a pair of goggles, and view a dozen or more homes in one office visit. Condominium and new home developers are also creating studios within their sales centers, so home shoppers can envision the property as it will look when the project build is complete.

In addition, the tours are often available via a mobile device, which can be more immersive when used with a specially-designed headset. Without the headset, the tour will appear as augmented—instead of as virtual-reality.

Partly to encourage adoption of the technology, “people are giving inexpensive headsets away as a promo,” says Bharat Ahluwalia, a former member of the Microsoft HoloLens team who later founded Seattle-based Z-Axon, which creates augmented and virtual reality solutions for the real estate market. “It’s easy to build a solution where you plug in a $10 to $20 headset so you can view [the tour] in virtual reality.”

Traditional costs to build a virtual reality tour can range in price, depending on vendor, location, and the size of property. One agent I spoke with pays between $500 and $1,000 per listing. Ahluwalia estimates that his firm’s new offering, scheduled to launch soon, will bring that price down to $100 to $200 per listing. That lower price point has the potential to drastically increase the number of agents willing to take the new technology for a spin.

Who’s Using Virtual Reality Tours?

Virtual reality tours aren’t a necessity for buyers, but if you’re looking at a new construction or buying remotely, an augmented or virtual reality experience can help enhance the process. Imagine you’re interested in buying a condo in an up-and-coming neighborhood. A virtual tour can offer a 3D depiction of how the unbuilt property will look, including the home’s layout, type of hardwood used, and selected cabinet finishes, for example. If “the entire neighborhood is under construction, you can [also] get a sense of what it will look like once those buildings are created,” says Ahluwalia.

More than two out of every five home buyers are relocating from another city. Work and personal commitments can make it difficult to travel frequently to visit open houses in person. Viewing virtual and augmented reality tours from home can cut down on the number of listings a buyer needs to see in person, which allows that buyer to make the most of their time when they’re in town for in-person visits.

“Everyone is looking remotely, now,” says Michael Kelczewski, a real estate agent with Brandywine Fine Properties Sotheby’s International Realty who sells homes in Delaware and Pennsylvania. “It could be snowing, raining, 2 a.m. on a Saturday,” and, with virtual reality, a buyer can still “see a home in its best light.” In other words, you don’t have to search from a distant city to reap the rewards of house shopping from home. That’s why Kelczewski expects virtual reality tours will explode in popularity and will “be crucial for marketing properties in the near future.”

Virtual reality home tours have the potential to impact more than just the viewing process. Think about staging a home, for example. An interior designer can charge thousands of dollars to stage a home. In the future, Kelczewski expects VR releases will allow real estate agents to “virtually stage” a home instead, saving a seller the expense of having their home staged, and giving an agent the ability to cater to a buyer’s specific tastes. “We can show them where they’d put their Christmas tree, what their cooking space would look like, that their kids’ stuff would go here,” he explains.

Ahluawalia agrees, especially as the service becomes better integrated with current listing services like MLS, Zillow, and Trulia and—perhaps more important—as the price of the service comes down.

Will Virtual Reality Replace the Real Estate Agent?

No matter how exciting the new technology is, though, it’s really just one more tool in the seller’s toolbox. “I’m a big believer in checking every box when you sell your home,” says Sissy Lappin, co-founder of the For-Sale-By-Owner site ListingDoor.com. Virtual reality tours won’t replace traditional tried-and-true sales tools like still photos or custom printed brochures, she adds.

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“We still do custom yard signs,” explains Lappin. “Some people might think they are a thing of the past, but probably 15 percent of people visit an open house because they drove by and saw a yard sign.”

That means the technology probably won’t replace your real estate agent, either, which is great news for the majority of home buyers, who prefer to work with a real person. In fact, the next wave of virtual and augmented reality tours is being developed with the buyer-agent relationship in mind.

“We’re building out a piece now where the agent can be in the same tour as the client—they can actually be guiding the client through the virtual tour,” explains Ahluwalia, even if the client and agent are miles apart. “The agent can take the buyer from room to room, and can see what the buyer is looking at. If the buyer is looking at the fireplace, for example, the agent can see that, and can respond to questions about the fireplace,” even if the buyer never specifically mentions the fireplace.

“There will always be an avenue for the real estate agent,” maintains Kelczewski. “What we’re looking for are ways to enhance the process through technology.”

And all of this is just the start, which should give real estate buyers a reason to rejoice. “Virtual reality has been spoken about for the past 20 years but I firmly believe that these technologies are just starting to get mainstream,” says Ahluwalia.

Kelczewski agrees. “Real estate has been an anachronistic industry for a long time,” he points out. “We’re going to see things in the next few years that will be very interesting. A part of that will be these virtual reality tours.”

READ MORE: Does the Home You Want to Buy Have Hidden Secrets?

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