Gautam Pant, a UI professor of business analytics, says they studied thousands of real estate transactions in southern California, based on a range of factors like list price, size, features, high school district, and neighborhood.
“The data that we analyzed is from Orange County and the average closing price there is in the range close to $1-million,” Pant says. “Two percent there is, as you can imagine, close to $20,000, and it could be as high as 3% in some of our analysis, which means about $30,000.”
Of the 19,000 transactions studied from 2016, Pant says about 19% of the homes had a virtual tour included in the online listing. As technology has improved and become less expensive, he estimates even more real estate agents are using virtual tours now, especially during the pandemic.
Why are the virtual tours so effective?
“Providing them an experience about how they could use the house, how they would feel within that space, can really enhance their interest in the house,” Pant says. “As you know, in home buying, a lot of things can be all about how you feel about the new space that you’re going to live in.”
While the study found that listing a home with a virtual tour could boost the price by two to three percent, Pant says it also found a tour could increase the amount of time the house spends on the market by six-percent.
“One of the explanations for greater time on the market could be that virtual tours elicit greater interest from potential buyers, leading to more visits from them,” Pant says, “so the increased interest from the buyers might then make the sellers more confident and increase their willingness to wait for better offers.”
The UI study also found agents who included online virtual tours as well as scheduled more open houses sold more homes than those who did not, while agents who relied more on written text to describe their listings sold fewer houses.
Pant says the findings suggest virtual tours may make agents appear more professional, so sellers of desirable homes that are more likely to fetch a higher price are more likely to choose an agent who uses virtual tours in their marketing package.
The study is to be published in the Journal of Real Estate Literature.