VR poised to take over real estate

Consumers may no longer need realtors as they shift to online shopping: study

The traditional face-to-face approach of real estate agents and mortgage brokers may be a step closer to extinction, says a new study that suggests online shopping is taking over those sectors, too.

The report from HSBC Bank also says the day may be coming when consumers will be able to test drive their homes for a few days — albeit on a virtual basis.

“New technologies are poised to transform the way people buy a home,” says the bank in an international study on home ownership called Beyond the Bricks.

James Dearsley, a PropTech expert based in the United Kingdom quoted in report, suggests the days of physically visiting an agent’s office may be almost over.

“Virtual reality will allow home buyers to live in a virtual version of a home for several days to truly try before they buy,” says Dearsley.

Jonah Brotman, 32, who with his brother recently founded the House of VR in Toronto, which allows customers to experience virtual reality, said about 90 per cent of Canadian have not had any virtual experience and the lack of access to technology is probably the main hindrance to a change in real estate habits.

“Entertaining and gaming is the first vertical that has succeeded in the VR space,” he said. “But the technology is incredible and will be a game changer in many industries. Real estate is one industry that has picked up that.”

He said new real estate projects are dominating the VR space because customers can be put in a headset before a project is even built and walk around their future unit, and even make design changes to it. “The person can be in a headset and decide if they want the counter tops say marble or granite.”

The HSBC study looked at three key elements of home-buying: researching property, financing and then actual contact with an agent for purchasing.

The bank said funding of disruptive property technology, so-called PropTech firms, has jumped from US$221 million globally in 2012 to more than US$2 billion in 2016.

Looking at the United Kingdom, Canada, Australia, France, the United States, Malaysia, China, Mexico and the United Arab Emirates, it found on average among those countries 83 per cent of recent buyers had searched for their home online. In Canada, the figure was 90 per cent.

The HSBC study also looked at financing and found 74 per cent of Canadians had researched their options online and 77 per cent had used online tools to determine what they could afford.

Rob McLister, the founder of ratespy.com, said Canada has been behind the curve when it comes to consumers completing a transaction online.

“The trend is starting to pick up steam but we are nowhere near the point where the average (person getting a mortgage) is going to close a mortgage online,” he said. “It is changing. You have banks promoting an end to end no human being mortgage process. You can apply online, upload your documents. You can do everything but sign the paperwork with a lawyer.”

It’s all leaving mortgage brokers fighting to keep clients and that means less profits. “They are taking their commission and giving over half of it away to consumer through rate buy downs or cash back,” said McLister, explaining why some of the online mortgage sites have discounts you usually don’t see at a bank.

The survey found in Canada that 39 per cent of respondents were dealing with agents completely or mostly offline, but 29 per cent were dealing with their realtors completely or mostly online. The remaining 32 per cent used a combination of meetings and online contact.

At the Ontario Real Estate Association’s town hall meeting Thursday, technology was high on the list of issues the group said it has to tackle.

“We believe that technological disruption currently posses the biggest risk to the livelihood of realtors,” said Ettore Cradle, president of the group, promising to work to enhance realtor access to technology and innovation. “Technology is changing everywhere. It is changing the way business happens. And real estate is not by any means an exception.”

Virtual reality will allow home buyers to live in a virtual version of a home for several days to truly try before they buy.