As an occasional viewer of Homes Under the Hammer, I am always surprised by the number of investors who buy a property without viewing it first.
Sometimes they get a fantastic deal, and on other occasions, their first visit to the property after acquisition reveals a host of problems ranging from damp in the walls to toilets in the kitchen.
While this can make for a degree of schadenfreude for the viewer, the consequences for the investor can be disastrous. The traditional way of viewing properties by physically visiting them has largely remained unchanged for hundreds of years, but increases in the availability and diversity of different digital property viewing options has the potential to disrupt the market – and the use of these technologies is set to expand.
Examples of digital viewing can be seen on the UK’s three main property sale sites, with Zoopla, OnTheMarket and Rightmove all offering 3D viewing experiences. These range from Youtube video tours to virtual reality walkthroughs. The technology certainly allows the potential buyer to get a better sense of the sizes and shapes of the property and to get a good “feel” for the property’s layout.
However, these kind of viewing experiences appear to be assisting purchasers in deciding whether or not to physically visit the property rather than replacing the viewing altogether. One area where this technology is likely to have the biggest impact is in respect of new builds where the building is yet to physically exist.
The traditional way this is dealt with is by a show home on each development site, but often this will only be one house type whereas the development may be made up of several unit variations. On other occasions, developers may wish to start selling plots before the show home has been constructed. Additionally, virtual reality tours could be a useful tool for upselling more premium house types or for demonstrating the effect of a higher specification finish.
Another way technology is being used to sell properties is by helping purchasers to visualise how their finished property will look. Developers often go to great lengths to ensure that their developments are liveable communities with attractive amenity areas and facilities. However, it is difficult for purchasers to get a sense of these areas from a visit to a show home on a partially-constructed development.
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As well as the traditional drawings, housebuilders are now using a variety of different tech solutions to give purchasers a sense of the layout and feel of the development. For example, Taylor Wimpey is using their ‘VUITNOW’ tool to allow customers to take a virtual tour of their Chobham Manor development in Stratford giving them an insight into everything the development has to offer. In a competitive market, developers will be keen to enhance their competitive edge and using technology to augment the sales experience is likely to become increasingly important
However, the use of the technology for property transactions is not without its legal and commercial pitfalls. From a purchaser’s perspective, the risks in relying on 3D walkthrough videos or virtual reality tours are self-evident. In respect of new-builds, whilst a virtual tour of a digitally-rendered show home is likely to give the purchaser a good idea of the layout, it is unlikely to give them a sense of the quality of finish used. For example, in a digitally rendered image, cheap laminate wood flooring is likely to look the same as a hardwood floor. The purchaser would, therefore, need to be extra diligent in checking the building specifications and asking the seller the necessary questions.
In respect of existing properties, the risk in purchasing the property without physically visiting it first is, perhaps, even greater. A 3D video walkthrough would be unlikely to reveal hidden problems like damp beneath the kitchen sink or rust on the boiler, which may have been discovered by physically visiting the property.
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From a seller’s perspective, there are risks associated with the fact that the technology gives the purchaser more information. A virtual reality tour of the property would allow the purchaser to see more of the property than would normally be shown in rendered drawings, allowing them to see everything from the light fittings to the location of trees next to their garden.
It is therefore important that developers have a finalised idea of how the property will look before making the virtual tour available. At the very least the developer should ensure that there are sufficient contractual protections in place to ensure that minor changes to the property, the landscaping and amenity areas are permitted.
The advancements of digital viewing technologies certainly have a great deal of potential to disrupt the way properties are bought and sold.
The ability of technology to enhance a purchasers’ appreciation of development layout and amenities is also likely to be a useful sales tool and may come to be expected by millennials who are used to using technology in most aspects of day to day life. However, there are pitfalls in the use of the technology and, in the immediate future, virtual reality tours and other tech solutions are likely to enhance rather than replace the way in which we view and carry out diligence on properties.