Housing USA: Virtual Leasing Is Here to Stay

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6 min read

The sudden rise of Coronavirus—and the subsequent four-month shutdown of society—sped up certain technology shifts. Digital communications like Zoom, Skype and Amazon were already bringing disruption to work, education, shopping, medical provision and more. Using these services became even more mainstream during the pandemic, when people had no other choice. Now it seems there’s no looking back.

Add to the list of paradigm shifts the practice of virtual real estate (VRE). This is when housing units are sold or leased remotely, through virtual tours, self-guided tours and digital paperwork.

VRE has been particularly useful as open houses were restricted in many states. Even as laws loosen, people may still avoid appointments due to health concerns, compelling them to shop for housing online.

This was happening even before the pandemic, as sophisticated technology had been developed and was being used by housing marketers and Realtors.

Virtual Tours
One form of VRE is virtual tours via enhanced video technology. Products like Virtual Xperience, roOomy and Matterport let shoppers see the intimate details of homes. Matterport, for example, gives a 3D view of the home exactly how the client would see it if walking through, and from every corner of the unit. These 3D tours are now a common feature for listings on realty giants, like Redfin and Zillow.

Another form of VRE is self-guided tours. This trend has been pushed by Redfin and Zillow as well, and allows prospective clients to enter a home, have a photo taken of them (to alert the seller), and tour the home without needing to contact a Realtor. In multifamily buildings, a digital entry system is placed at the main entrance, and on the specific units available for view. Companies, such as Kleard and Latch, build devices that can be unlocked by phone, making them perfect for these self-guided tours.

A third technology—which at this point isn’t cutting edge—is online forms that allow real estate transactions to be digital. Companies, like DocuSign and LegalZoom, enable the remote exchange of forms, contracts and signatures.

VRE has thus made the real estate transaction process much more streamlined – in some cases, the buyer and seller don’t even need to meet. The technology that allows for VRE is part of a larger trend known as “PropTech.” Like FinTech in the finance industry, it’s a somewhat amorphous term referring to the use of technology throughout the real estate development industry – regarding planning, construction, administration and more. VRE just deals with the marketing and realty aspect of PropTech.

A Daughter’s Advice
One developer who had installed VRE before Coronavirus was Marcel Wisznia, president of New Orleans-based Wisznia Architecture+Development. His daughter is involved in the family business, and has a keen understanding, he said, of how her own generation shops. She said that if he wanted to better sell his inventory, he’d need to retrofit his website for online viewing.

Wisznia listened, sinking $110,000 on VRE tech for The Garage, a luxury apartment building in downtown New Orleans. As can be seen on TheGarageNola.com, each unit can be toured digitally through Matterport technology, and toured in-person alone using Latch. Wisznia said that while sales have slowed during the pandemic, the upgrade really helped with rentals.

“We have been leasing just slightly less than the pace that we had anticipated in our absorption before the virus,” he says. About half these leases have been signed without the tenant having first touched the building, he continues.

This does not mean VRE is a mainstream practice. Two recent developers I’ve contacted—Holly Wiedemann, president of AU Associates in Lexington, KY, and Richelle Patton, owner of Collaborative Housing Solutions in Decatur, GA—say they haven’t gotten on the VRE train. They’ve instead responded to social distancing protocols by doing some business remotely (like rental collection) and meeting in-person only when necessary. Wiedemann wrote by email that the lack of tech savvy from her older clients was a barrier, and so too might be money. Installing VRE hardware and software is costly, making it only feasible at this point for developers with large or high-end portfolios.

But VRE, long-term, has the smell of a disruptive force that is scalable cross-industry. It boils down to the fact that buying homes isn’t all that much different from buying other products. If someone is shopping, say, for a laptop, they’re still going to research online beforehand. After reading product reviews, they may settle on two to three models. But, it may not be until they enter a retailer, and manually test the computers, that they make a purchase.

Wisznia says real estate is similar. If someone’s moving to a city, they may search in advance for listings, narrow on a few, and make plans to tour them. The listings with virtual tour technology will have a competitive advantage over ones that share simple photos. As Jerry Clum, CEO of Hommati, a company that sells real estate technology, told RocketHomes.com:

“You have to use your imagination to link the images together to understand the flow of the space. [But] a virtual tour allows the home buyer to explore each room completely with 360° movement…You can see each room from every angle and perspective. You can look down to see the flooring and up to see the ceiling. You can move through the space however you want. You are able to walk up and down the stairs and hallways.”

Once a prospective tenant is in the city, self-guided tours will prove more convenient and possibly more comfortable, since not everyone wants to deal with Realtors. Self-guided tours may, in fact, reduce the need for Realtors or real estate marketing professionals.

At the very least, these VRE innovations—like Coronavirus itself—has made the industry adjust. But hopefully unlike the virus, VRE will stick around, disrupting old ways of doing real estate.

“I’m confident that this change in marketing is going to be more permanent,” concludes Wisznia, “and is not just a short-term reaction.”

Story Contact:
Marcel Wisznia, President, Wisznia Architecture + Development
[email protected]