Twenty years ago, virtual tours and 3D graphics were mainly science fiction in movies like The Fifth Element, and a “sight-unseen” purchase literally meant a buyer had no experience of the property other than static photographs. Buyers were in essence blindfolded. Today, 3D and virtual technologies have become a reality. They are able to bring a property experience to the “sight-unseen” purchase. Local Minneapolis real estate broker Aleksa Montpetit of Downtown Resource Group noted this ingress of technology into the real estate industry, and how it has given realtors a new tool to present properties. Montpetit, who has personally sold 3 properties sight-unseen in the last year, said the Minneapolis market has recently seen buyers more willing to at least offer sight-unseen.
An article posted in the Wall Street Journal by Katy McLaughlin cites increases in sight-unseen purchases are nationally becoming more common. The annual Redfin survey showed 33 percent of those surveyed said they had made at least an offer on a house “sight-unseen” in the last year. However, this survey did not include the Minneapolis market.
Both Scott Parkin of Verve realty and Scott Stabeck of Sotheby International agreed with Montpetit that potential buyers are more willing to make offers “sight-unseen,” and they added that sight-unseen closing are rare relative to sales in the Minneapolis real estate market. Everyone contacted cited the glut in inventory is making buyers feel pressure to get an offer in. Shows like Flip or Flop can give an impression that buying a house “sight-unseen” is thrilling and most the time is successful.
Stabeck, who has access to 3D tour equipment, emphasized the need to get a buyer to physically see the property before offering. He said, “From a seller’s standpoint, sight-unseen offers are risky as the bidder can like the property virtually and potentially back out when they are onsite for the inspection.” From the buyer perspective, without a trusted broker or family member visiting the site is risky to say the least.
All of our conversations with Minneapolis realtors shared the opinion that technology is impacting the industry. Parkin and Stabeck stated that listing price and anticipated time on the market are main factors on whether a virtual tour is created. The description of the Minneapolis “sight-unseen” buyer was someone looking to relocate from out of state or internationally and has experience in home buying (i.e. not a first time home buyer). An interesting point, technology can actually be a drawback for certain listings. We were told technology removes the interactive sales process; buyers experiencing a virtual tour may never visit the property in isolation from the neighborhood experience.
Even with the ease and accessibility of technology, the Minneapolis metro area housing market has shown low inventory numbers over the last year. The most recent housing report by the Shenehon Center of Real Estate of the University of St. Thomas, shows housing inventories are up slightly from May (2017) but still down 16.9% compared to June of 2016. Even with technology trending further into real estate, it seems, at least in the local market, that increases in “sight-unseen” purchases are mainly attributable as a consequence of local market inventories and pressures.