Why Virtual Buying is Nothing New For Investors
With many people working from home, the idea of virtual showings has become a relatively common practice in the real estate industry during the past month. Platforms like FaceTime, Zoom, Skype, Google Hangouts, and many others allow clients and their agents a workaround while we are all practicing social distancing. With these technologies, the real estate industry can act as essential business (depending on your State), while avoiding face to face interactions, like we do in California. While it may seem a bit weird getting a property tour without stepping foot into the house you put an offer on, don't worry, as this has been going on for many years!
Relocation buyers have had a good deal of experience with this. Say a spouse finds out they're getting relocated to a new State for their job, but want to ensure they have a house to move their family into. Technology has come to the rescue countless times with virtual tours. Agents will help their clients identify properties through their multiple listing service, send links to the client to preview on their computers/phones, then go to the properties in advance, either taking pictures, or using a form of video technology to show the property in real time to their clients. While it's strange not being in the home, a live video conference is often the next best thing.
For investors that purchase properties out of State, this is a much more common practice. Say an investor chooses an out of State market to purchase units in after doing their research on the potential returns (cash flow, appreciation, maybe a combination of the two). From there, they typically build a team of trusted local sources (real estate agent, property manager, lender, and contractor), to seek out and budget advantageous deals on behalf of the investor. Though it may scare some, many investors opt to not travel to see the physical property, utilizing the same virtual touring that we are seeing in place today. Once you have your trusted team, you can rely on those professionals to make smart recommendations, and with your input, acquire properties for your portfolio. I personally have two single family investment properties in Alabama, and have never even seen them in person! I covered more of this in my previous blog on property managers here.
More recently, virtual open houses are helping sellers and buyers transact deals when there really is no other option for buyers and sellers. Below are some key areas that have (or already have) adapted to the latest societal changes:
- Lenders: many lenders have long utilized their proprietary apps for loan applications, document uploads, and to provide loan processing updates. Many also use electronic disclosures when you are beginning the loan process. The mortgage section of the real estate world has long been setup for tech.
- Appraisals: with the Federal Housing Finance Agency (Fannie Mae & Freddie Mac) having approved "alternative home" appraisal methods, this now includes "drive-by", getting as much visibility of the home exterior without going inside, "desktop" using Multiple Listing Services website. In some cases the homeowner walks the property on a video chat with the appraiser.
- Notary: notaries are also going digital to address current needs, though that varies by State. As we all know a thumbprint is core to their part of the real estate process, many States are relaxing this requirement, while companies are beginning to thrive going digital.
- Developers: many new builds are going digital. Buyers are able to pick their lots, finishes, and even watch the construction process over live video to see the progress being made on their dream home.
- Inspections: again, this varies by State, as many inspectors (home, termite, etc.), are not conducting business, while others are preferring to visit vacant properties.
Could virtual showings be the new normal? While it's too early to tell, I do feel there will be a percentage of buyers that will prefer this method, especially those with crazy schedules, and looking to preview properties in large volumes. From there they can narrow it down for a physical walk through on the homes they want to place offers on. Agents and brokers have come to embrace video in recent years, with newly listed properties often marketing with a video component (some with 3D touring), drone photography, all creating sleek, professional tools to showcase their listings. With YouTube being the second largest search engine in the world, it's no wonder real estate professionals and their clients are seeing the value in video. Many agents are also offering pre-recorded video walkthrough tours they upload to YouTube, Vimeo, and many other platforms which are great alternatives during these times.
These are the very platforms I've utilized many times when evaluating the purchase of rental properties. You can imagine the amount of money not spent on airfare, rental car, hotels, meals, etc., that helped me be ahead of my investments. Many new investors feel the pressure of pulling the trigger on a property when they're spending the funds to travel across the Country, and often end up acting more on impulse. Technology (along with a solid team) has made the out of State rental property investing world a whole lot easier.
While no one knows how long we will need to stay home, the great thing is real estate can still continue. By embracing virtual open houses, you can find your dream home or sell your current one while keeping the real estate market running for the good of the economy!
Please let me know if you have any questions about virtual touring, with experience purchasing multiple properties using these very tools, I would love to be your trusted resource for your home listing or buying needs.