How is Technology Changing the Way We Buy Houses?
By Space Coast Daily // November 8, 2020
Technology over the past twenty years has changed more than we imagined with buying a home being no different. It is estimated that 45% percent of homebuyers will start their search online, out of which 13% percent will start searching on a smartphone says Israel Ramirez, founder of We Buy Houses Arizona.
Only around 11 percent will start their search by browsing through newspaper listings, and those numbers are steadily decreasing.
Back in 1981, around 22% of home buyers would start their search by reading ads in the newspaper or browsing through the classifieds according to a report by the National Association of Realtors (NAR).
However, the vast majority of people relied on friends for that information. Fast forward, and in 2016, we have 44% of home buyers starting their search on the internet.
Not only is technology changing the way people search for homes, but also what they expect to pay for it. So, the vast majority of people will lean in favor of paying what they perceive is the market value of a home that’s estimated on the internet.
Often that means an approximate ballpark figure of all the homes they have seen for sale with a price tag on it. For instance, if home buyers see the majority of homes for sale in an area are for $100,000, they will lean in favor of paying $90,000, $95,000 and even $110,000.
New Homes are Now Easier to Find
Not very long ago, the best way to search for a home and eventually buy one would be to call up a few real estate agents or browse through flyers. Today, prospective home buyers have a myriad of online services that offer listing information.
Many of these services will also send out an SMS or email alert when a home that fits your description hits the market. The criteria usually are the location, size, and features like having a granite countertop or perhaps being located near the beach.
Today, buyers are more hands-on than they once were, and many want to be the first to find out something, especially if it a piece of property. The benefit of online listings apart from being easy to access is that they provide useful information like about the community, transportation, taxes and the schooling zone.
Photos Will No Longer Be Enough
Up until now, the best way to view property was through a series of photos. That was later slightly updated with a few listings including a 360-degree view of the property. The future is going to be about 3D virtual tours, and things are already changing.
Unlike a regular image, a 3D virtual tour immerses a prospective buyer in the experience. While at present, it does require special cameras, it also improves the chances of selling an often expensive piece of property. The 3D “tour” so to speak gives prospective buyers a sense of how the place feels.
While some brokers and apps are using this technology on mobile devices and computers, there will soon be more advanced versions that use virtual reality headsets.
All a prospective buyer will need to do is strap on a headset, and it will transport them to the property. A buyer can then look up to examine the ceiling for instance or look down at the tiles, and even flip open the cabinets.
3D virtual tours will enable people to examine, finalize and buy property from halfway across the world. Not only that, but it will probably also be a good idea for those who don’t have the time to get stuck in traffic to see a property in person they may not like.
Already there are people buying property without ever having set foot in the space. That said those are exceptions to what is currently still the norm of seeing the property in person before finalizing it. However, the introduction of these new tools may probably change things.
Finding and Comparing Mortgages is Changing Too
Mortgages are a significant part of buying a home for the majority of people. Prospective buyers need to compare mortgages offered by often competing lenders.
Just last year the Consumer Financial Protection Bureau created what’s called the “Know Before You Owe” mortgage disclosure project, that allows buyers to compare all the loans available. The upside to the system is that now prospective buyers can’t be blindsided by undisclosed costs or hidden charges as they are referred to.
The project has led to the creation of numerous online tools that make it incredibly easy for prospects to find and assess different loans that help getting the best deal easier.
Once borrowers find a loan, they can apply for a pre-approval online, and that should speed up the process of being approved. However, before you think about getting a loan, we’d advise that you start with a tool that calculates out how much you can afford to pay each month.
Many realtors have also gone paperless, which is made easier with the ESIGN Act, signed in 2000. It makes electronic signatures legally binding. If anything it decreases the time involved with finalizing and eventually closing a deal in often “hot” markets.
New Ways to Work with a Realtor
Today we are obsessed with reading online reviews, and it’s the same with finding a real estate agent, i.e. read reviews. What was once a service that relied solely on referrals or a large yard sign, now heavily relies on user reviews. Prospective homebuyers can quickly search for a real estate agent near them, read reviews and then decide to contact them.
Unlike in the past technology has made buyers more self-sufficient. The transparency you get online via numerous tools has reduced the reliance on having face-to-face relationships at least during the initial buying journey.
Though 70% of people would still prefer to speak to their real estate agent in person, after all buying a home is still the single biggest purchase for most Americans. However, thanks to technology making the right, informed decision is easier and faster than it ever was before.