Are Virtual Tours Still Worth It in Real Estate? Evidence from 75,000 Home Sales
In an era where technology continues to reshape the landscape of real estate, the role of
virtual tours remains a topic of debate. According to a recent study published by
HBS Working Knowledge,
virtual tours, which surged in popularity during the COVID-19 pandemic, might not significantly enhance home sale prices or reduce the time properties spend on the market.
The comprehensive research, conducted by Isamar Troncoso of Harvard Business School and Mengxia Zhang of Western University, analyzed over 75,000 home sales in the greater Los Angeles area. Their findings suggest that while
virtual tours offer certain advantages, their impact on sales outcomes is less pronounced than previously thought.
Troncoso’s study, accessible
here, reveals that the quality of photos and listing descriptions often overshadow the benefits of
virtual tours. “Maybe it doesn’t help you to get a 5 percent sales price rise by using visual tools—but it might help sellers in many other ways,” Troncoso notes. In the post-pandemic world, the initial boost
virtual tours provided seems to have waned, with traditional factors like location and presentation regaining their prominence.
The study utilized cutting-edge machine learning techniques to sift through data from the real estate platform Redfin, examining various aspects such as sale prices, market duration, and initial pricing strategies. Interestingly, only about 22 percent of the listings included
virtual tours, and these often came with higher-quality photos and longer descriptions.
One intriguing insight from the research is the nuanced role of
virtual tours in different neighborhoods. In areas served by smaller real estate firms or those less sought after,
virtual tours might still offer a marginal benefit. Troncoso explains, “These are areas in which these technologies penetrated less. So that’s why you see a little bit more of a marginal effect when those sellers have
virtual tours.”
For buyers,
virtual tours can streamline the house-hunting process by helping them eliminate properties that don’t meet their criteria, making their search more efficient. “Maybe it doesn’t really get you to say, ‘Oh, now I really like that house,’ but it’s going to help you to be like, ‘Oh, I don’t like this one, so I won’t bother to go and see it,’” Troncoso adds.
As
virtual tour technologies continue to evolve and become more affordable, their application might expand beyond home sales to areas like long- and short-term rentals. However, for now, the key takeaway for sellers is to prioritize high-quality photos and descriptions unless specific conditions suggest otherwise.
In conclusion, the study underscores the importance of context in leveraging
virtual tours effectively in real estate. For further insights and related topics, readers can explore articles such as
When Glasses Land the Gig: Employers Still Choose Workers Who ‘Look the Part’ and
Shrinking the Racial Wealth Gap, One Mortgage at a Time.
For more information and to view the original research, visit the
HBS Working Knowledge website.
