Thanks to massive advancements in technology, the number of people buying a home without seeing it in person first is on the rise.
According to a recent survey conducted by real estate listing firm Redfin, one in three recent home buyers (33%) made an offer on their home sight unseen. This is up from one in five (19%) a year ago.
Agents and other industry professionals are saying these bids are becoming more common in markets where homes sell quickly or where there is a higher interest in real estate among foreign buyers.
Although rising demand surely is the driving force behind this trend, another component – mobile and communication technology – has likely aided in the increase of sight unseen home purchases. According to a recent article from Builder magazine, many sight unseen bids start with tours conducted via smartphone or videoconferencing. These methods of communication can provide potential buyers with a genuine look at the property in real time, without enhanced listing photos or misleading descriptions. Some brokerages are even putting together 3D photograph and video tours of their listed homes, which can be viewed by interested buyers who have access to a virtual reality headset.
However, with VR technology still very new, it’s more likely that the majority of sight unseen buyers are utilizing the more well-known and more easily accessible apps like Skype, Whatsapp or FaceTime.
Sight Unseen Home Purchases & Millennials
According to the results of the Redfin survey, millennials (those who reached adulthood around the year 2000) are three times more likely than their baby boomer predecessors to buy a home sight unseen.
Forty-one percent of millennials surveyed by Redfin said they had made an offer on a home without first seeing in in person. This is up considerably from the 30 percent of Gen-Xers and 12 percent of Baby Boomers who said they had.
“Millennials are already starting to set trends in the real estate industry,” said Redfin chief economist Nela Richardson. “They are three times more likely than Baby Boomers to make an offer sight-unseen, and they’re more likely than older buyers and sellers to negotiate commission savings.”
Changes in Housing Affordability May Influence Sight Unseen Purchases
The rise in sight unseen home purchases may also be partly due to changes in economic factors. As real estate prices continue to rise in areas with the highest housing demand, it follows that potential buyers who are relocating to these areas may have to make an offer on a home sight unseen in order to get ahead of the competition.
Other economic concerns may also be influencing how, when and where Americans are buying homes. According to the Redfin survey, 40 percent of respondents cited affordable housing as their top economic concern, followed by the income gap between the rich and poor (38%) and the federal budget deficit (27%).
Because so many millennials are struggling with financial burdens like stagnant wages and student loan debt, it’s not surprising that one in five respondents said rising home prices caused them to search for a home in another metro area. Finding a home in a different city may prompt more buyers to place bids before they see the property in person.
Thinking about making an offer on a home, sight unseen? Follow these tips:
- Work with an excellent real estate agent. Find one who is experienced, familiar with the area, and is tech-savvy.
- If possible, send a representative on your behalf (other than the real estate agent) to scope out the home. This could be a family member or trusted friend who is familiar with your taste and preferences.
- Don’t take listing photos at face value. Too many listings use photos that are either out of date, overly enhanced, or shot at angles that make the rooms appear more spacious than they actually are.
- Always get a video tour. You and your agent can either set up a real time video tour via FaceTime, Skype or another similar app, or you can get the agent to create a video tour that he or she records and then sends to you for review.
- Opt for the real time tour if at all possible. Pre-recorded video tours don’t allow you to ask questions on-the-spot like, “can you show me the master bedroom again?” or “is that hardwood or laminate?” or “what’s that huge stain on the carpet??”
- If at any time you feel completely overwhelmed and unsatisfied with the information you’ve been able to gather about the home in question, STOP! Don’t force yourself to put in a bid sight unseen if you’re not feeling confident about the home. Remember, there will be other properties that come along, plus you can always use the extra time to continue saving for your dream home. Buying a home is a HUGE decision and should not be rushed into.
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