Are open houses dead?
As the world begins its slow and cautious return to pre-pandemic social and work arrangements the great guessing game is which before-times activities will recover and which will continue to fade.
Will white collar workers all return to a cubicle? Will we wear pants without elastic waistbands? Will we ever take public transit again? Will we wear masks wherever we go? And for real estate agents a big question is: Will open houses come roaring back?
“I built my business on open houses,” said Andre Kutyan, broker with Toronto’s Harvey Kalles Real Estate Ltd. “Every weekend I hosted an open house … until March of last year. And I don’t know if I’ll ever do one again.”
To be sure, some agents never stopped doing open houses, maybe they just modified the usual rules for COVID-19 protections. But Mr. Kutyan and many agents like him have found that virtual tours – or 3-D guided tours – are more than sufficient to weed out the looky-loos from the potentially serious buyers and he still does individual in-person showings.
The virtual tour is the key tool in this transition, and many of the companies that provide them have seen booming growth. Waterloo, Ont.-based Planitar Inc., makers of the iGuide measuring system and virtual tour platform, has seen its share of its home market nearly double.
“iGuide is the market leader in Canada with about 12 per cent of the national market,” Alexander Likholyot, CEO of Planitar, said. “In 2019, we were probably around five or six per cent of the market. During COVID our growth rate doubled overnight.”
In its hometown Kitchener-Waterloo region close to 60 per cent of home sale listings use iGuide, and in Alberta it’s close to 30 per cent. The funny thing is, the visual element of the virtual tour is a by-product of the company’s technology that uses LIDAR (Light Detection and Ranging) technology to measure an interior structure, with 99.5 per cent accuracy.
“We make our money on selling cameras: our customers are not real estate agents, they are real estate photographers,” Mr. Likholyot said. “When we started in 2015 we did run our company for a few months as a direct service, but very quickly we figured out we cannot grow fast if we provide a service, instead of a platform.”
Until the pandemic virtual tour platforms had to prove their worth to agents deciding between standard photos, video tours, drones or what have you. In some cases that meant making partnerships with real estate brands or companies. But now that some of these platforms are becoming a verb, the other applications of the technology are beginning to show up outside of real estate.
Sunnyvale, Calif.-based Matterport Inc. – is also seeing great growth in Canada: as much as three-to-five times the number of tours were added in 2021 over 2020 said its Chief Revenue Officer Jay Remley. The company, founded in 2011 has begun to turn the data its camera’s capture into new tools and new business applications.
“About 50 to 55 per cent of the business is still residential real estate,” Mr. Remley said. “We have partners like Keller Williams, Compass, Redfin, who ‘Matterport’ 100 per cent of their listings.” With six million buildings scanned, and hundreds of thousands of listings worth of data, the company is able to provide analytics to large scale clients. “If you’re Keller Williams you want to know, like, does a home with windows facing southwest sell faster?” he said. Matterport’s data suggests the presence of a virtual tours drive 30 to 40 per cent more consumer engagement with a digital listing, and can result in prices 9-10 per cent higher.
Pricing is also part of the equation: agents have seen costs shoot up during the pandemic, and have to juggle not just hiring a photographer but also buying a subscription to host the tour for as long as the listing is active, and all the companies offer introductory rates to lure agents and discounted subscription plans in many cases. “Our pricing is less than a Tim Hortons coffee per month; that’s 2 bucks per space per month to host,” Mr. Remley said.
Both iGuide and Matterport have proprietary specialty cameras photographers can use to construct the tours, but Matterport also has used AI models to allow a user to scan or a room with an iPhone (and recently some Android phones) without the LIDAR, claiming close to 98 per cent accuracy. That has enabled other types of users to begin “Matterporting” their spaces, such as retailers (to avoid site visits); insurers (for claims assessments) even home renovators or construction companies. Mr. Remley said these extensions of the virtual tour business are growing even faster than the real estate users.
“We have been talking to first responders, for when a fire crew is en route if they would like to know the interior layout of the house,” said Mr. Likholyot, noting iGuide is also finding new uses for its scanning tools. “It’s a great potential, data is always data, it doesn’t go stale.”
But will all home sellers prefer to stay digital even if health concerns some day recede?
“There’s a lot of sellers who’d like them; 50 per cent of the time the ultimate buyer has come through the open house,” said Jennifer Jones, a sales team leader with Toronto’s EXP Realty. “We would do 12 to 18 open houses a weekend as a team, everyone’s looking forward to getting back to them.”
For Phil Soper, CEO of Royal LePage, another element to consider is time. Maybe some buyers and sellers like the nostalgia of a plate of cookies and a handful of business cards, but just because that’s the way it was always done doesn’t mean there’s not a better way to spend a weekend.
“The real key take-away from the pandemic is to look at what made you successful and hang on to some of those things,” Mr. Soper said. “If you’re able to do virtual showings and it took one-quarter the time, that’s a massive savings in your costs.”
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