The global pandemic has changed buying and selling luxury real estate.
These changes are particularly evident for out-of-state buyers looking for second homes or to relocate from densely populated regions to areas with single-family properties and land. These changes bring benefits and risks to the luxury market.
Although the shift to digital transactions and technology-based or small-crowd interactions is not new to top luxury real estate agents, the surge of COVID-19 has accelerated the use of these best practices in luxury real estate.
Our firm, Valley Luxury Partners, eliminated public open houses in favor of private showings for security reasons prior to the pandemic and will continue these practices for the added health benefits as we navigate through the COVID-19 world. In terms of marketing, while high-end video and photography have been the norm in the luxury space for some time, these techniques are now being used more widely in the industry.
Pre-crisis, face-to-face interaction was still a part of the equation. What is new in the post-COVID-19 environment is the desire to close a luxury property in a completely digital manner, sight-unseen, with the subsequent purchases of multi-million dollar estates being transacted using digital technology.
Virtual reality has become more user-friendly as technology evolves.
Luxury buyers can view 360-degree virtual tours on their electronic devices and curate a portfolio of properties from afar. They can decide which homes are worthy of further exploration digitally before any in-person visit is made. Tools like DocuSign replace paper contracts and remote notarization creates a true digital closing process. This adoption of digital technology in the closing process is here to stay and the ease with which luxury real estate transactions can be consummated is a benefit to all.
The question remains whether buyers or sellers are well-served to use digital technology in lieu of actually visiting a property. Real estate, particularly the luxury space, tends to be a tactile experience where textures and finishes must be appreciated in-person to truly determine if a property is suitable for purchase. Previewing neighborhoods and gaining a sense of a community “vibe” is an important factor for many families.
There are potential legal issues surrounding remote, sight-unseen purchases and buyers and sellers are advised to consult with their agents and attorneys before proceeding.
As a luxury real estate agent and real estate attorney, I am sensitive to the legal risks associated with remote buying and selling, and the new contract provisions being created by real estate associations. These COVID-19 amendments can have unintended consequences in shifting risk from one party to another.