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REALITY CHECK: USING VR TO SELL HOMES

The benefits of virtual reality systems go beyond the sales center, but are they worth the cost?

Oct 03, 2017

By Drew Vass

Twenty years ago, builders used to advertise a new listing with a small, pixelated photo of the home’s exterior that appeared in a black-and-white newspaper ad. Maybe they took a few interior shots, too, or paid extra for a four-color advertisement.

Thanks to the internet and digital photography, new-home marketers have much better options these days. Savvy building firms are capturing entire environments in super-high-resolution, three-dimensional, and 360-degree photographs and renderings. Viewed through virtual reality (VR) headsets, the images whisk potential buyers away to unbuilt homes and let them see all of the available options and upgrades. Others are utilizing gaming-engine software to create graphics-based, 3D models so detailed that they’re hard to distinguish from the real thing.

For many home building firms, the approach has become an integral and lucrative part of the selling process.

“At this point, five of our sales and two of our reservations all came from home buyers who experienced models through virtual reality,” says Rachel Peyton, marketing manager for San Diego–based Brookfield Residential, about the company’s Rancho Tesoro development in San Marcos, Calif. Brookfield began to offer VR walk-throughs in February and, based on the results, Peyton says she expects the technology to become a standard practice.

Using a variety of VR-based selling techniques including headsets attached to gaming consoles, Atlanta-based Pulte Homes, the third largest home builder in the country, is able to sell as many as half of the homes in some of its communities before breaking ground. In fact, builders across the country are employing VR in a variety of ways to reap dividends in sales and lower model home costs. Its main benefit is that it helps buyers—from anywhere in the world—visualize unbuilt structures from two-dimensional plans and drawings.

“There are people who have incredible imaginations and can walk into blank spaces, then imagine what could be there. But then there’s the rest of us,” says Rob Parker, president of Pinewood Forrest, a mixed-use development located south of Atlanta

“The rest of us kind of need this support and help to imagine.” After releasing its first home sites in April and deploying VR, by press time Parker’s company had around 50 reservations. There are other benefits, too, besides helping prospective buyers imagine a new home inside and out. Builders use virtual homes to test new floor plans and gain approval from zoning officials or architectural review boards and avert early snags in the development process. Custom builders can show buyers what their designs will look like before breaking ground. But like any new technology, VR capability comes at a price, and the real question for builders considering the technology is whether the benefits are worth the time and expense.

The good news is that it’s not an all-or-nothing proposition; builders can select the level of sophistication that’s right for them and their budget. Here they are, broken down by good/better/best scenarios:

Good. The first and least expensive method includes utilizing a 3D, 360-degree digital camera, the most common of which is made by Matterport. Using a Matterport camera, room by room, users can take 360-degree images of existing model homes, then, utilizing the company’s web-based platform, upload and automatically stitch them together into VR tours. This option starts at $3,995 for a camera and $49 per month for a subscription that includes three projects (per month). To avoid those upfront costs and forgo the time and hassles of doing it themselves, many builders hire local photographers for about $300 per property.

Other types of professional-level 3D cameras include the Insta360 Pro Spherical VR 360 8K Camera ($3,499), Orah 4i Live Spherical VR Camera ($3,600), and the GoPro Omni MHDHX-006 ($4,999).

Virtual walk-throughs made from digital images of real model homes produce the most lifelike results, but of course this option requires a fully constructed model home finished, furnished, and ready to photograph.

Better. A slightly higher–priced option allows builders to forgo model home construction altogether and sell via a fully virtual unit. For this approach, builders provide CAD files or drawings to a VR developer who creates renderings that are navigable in a 3D format from a laptop or video game system like PlayStation.

Costs for commissioning this type of experience range from about $1,500 for basic designs (mostly with preset architectural details) to $10,000 to $15,000 for a detailed model that’s fine-tuned with a builder’s specifications. A few of the companies offering this service nationwide include BDX (owned by Austin, Texas–based Builder Homesite), Trick 3D in Atlanta, and Laguna Niguel, Calif.–based Focus 360.

While a $10,000 to $15,000 glorified video game might seem expensive, the costs are often worth it, as industry experts say VR tours generated by gaming engines are nearly as convincing as physically being in the home. Gaming-engine tours also have a leg up by, in some cases, providing smoother motion and allowing users to navigate with greater accuracy.

What’s more, builders using the technology should compare this cost with the expense of constructing—and sometimes reconstructing—real-life models, according to Tim Costello, chairman and CEO of Builder Homesite.

“At the onset of a development, you might build three to five model homes, and then, once people start showing up, your sales team might call to inform you that people really just don’t like one of them,” Costello says. “Then you have to tear the model down and renovate, or possibly sell at a steeply discounted price, discontinue the plans, develop new ones, and start all over.”

Valerie Dolenga, director of corporate communications for PulteGroup, says her company previously used temporary model homes, constructed in warehouses, to conduct focus groups ahead of on-site construction. Now the company uses virtual models for its market research.

“Before a floor plan even gets to market, we have consumers walk through our homes and provide us with feedback,” Dolenga says. “People make substantial suggestions for changes, like where a door is placed, or the amount of space in a dining area. Virtual reality now plays a critical role in that process.” And at a cost, she says, that’s exponentially lower than constructing real model homes.

San Diego–based development firm Zephyr is using VR to sell its 60 condos at The Park, which won’t be complete until the end of this year. Zephyr CEO Brad Termini says his firm sees many applications for these realistic renderings. “Someday, we’ll be able to design homes on the spot, change out features and finishes, and add a room, all in real time while buyers ‘stand’ in the homes and provide feedback,” he says.

Best. For builders who can afford to splurge, the most expensive option is a full VR setup with all the bells and whistles. In model homes and sales centers, builders combine the latest VR headsets, 4K large-screen televisions, and interactive gaming controllers to create more robust versions of their tours. The cost for this setup runs from $2,050 to $4,600 plus $10,000 to $15,000 for the renderings.

To achieve the ultimate experience builders use headsets like the HTC Vive or Oculus Rift, which connect to a gaming-level computer system. HTC Vive headsets utilize internal screens, rather than internally mounted smartphones, and small, gaming-style controllers.

This approach helps entice would-be buyers into a sales office, where staff can engage with them personally. Most people, Costello says, can’t resist giving the VR headset a try, even if only for a few seconds. Some builders use the curiosity about VR to draw people—regardless of whether they’re in the market for a home—into their sales office. Pinewood, for instance, is taking its VR experience on the road via a retrofitted Airstream trailer that the company will use as a mobile sales office. Similarly, Brookfield offered VR tours of Rancho Tesoro for four months via kiosks located in a shopping outlet.

The technology also offers benefits that can’t necessarily be quantified, such as giving building firms a boost with certain types of buyers, says Lisa Lenhart, marketing director for Charlotte, N.C.–based Fielding Homes.

“I think that, for some people at least, when they see that you’re on the cutting edge of marketing technologies, they tend to feel that you’ll also be on the cutting edge of building technologies,” she says.

After implementing Matterport tours, Lenhart says Fielding’s social media clicks increased by as much as 300%, while engagements rose more than tenfold. But the biggest feat of all, she notes, might be the property her firm sold based solely on VR.

“They selected their plan and wrote their contract remotely,” she says of the home buyers. And at a cost of about $300 per listing, that’s a whopping return on investment.

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