To stage, or not to stage? That is the question builders and developers ponder today thanks to the advent of virtual reality (and I did too in my last Builder and Developer magazine column). VR has become a requisite due to the way buyers search for homes a whopping 93% now use the internet, a National Association of Realtors study notes motivating builders and developers to favor it over merchandised model homes.
Market fundamentals make it clear VR is a critical part of the sales process. It lets builders and developers create models of properties long before they’ are built, a huge plus when pre-sales are required to break ground. And Generation Z, almost one-third of the U.S. population and the first generation of digital natives, is entering the housing market. VR will become ubiquitous because internet usage, already a pervasive 99% in Millennials, will become universal as older generations with lower usage rates (77% for those 71 and older) pass.
Adding fuel to VR’s brightly burning fire is its cost equation, which amounts to a fraction of the sum it takes to merchandise a model home. So does all this mean it is time to kill the model home? Just as Hamlet realized in his famed soliloquy to be or not to be that the alternative might be worse, eliminating model homes may decrease sales velocity and diminish ROI.
Why model home merchandising is still important
While this is my belief thanks to our work merchandising model homes, which has given us substantial proof merchandising spurs velocity and conversion for every type of housing, the points above came from five building industry pros in a telling article on Builder headlined VR Won’t Replace Model Homes Anytime Soon. Here is why they, like us, believe merchandised model homes (done right, of course) are here to stay.
Builders and developers hold their sales statistics close to their proverbial vests. But studies substantiate that staging a home helps it sell. The NAR’s 2019 Profile of Home Staging found 83% of buyers agents believe staging makes it easier for buyers to visualize a property as their future home, while more than half of sellers agents say it decreases the amount of time a home spends on the market.
While staging is not as demographically driven and tactically executed as model home merchandising, it is safe to say these stats are applicable to all aspects of the residential housing market, whether a home is for sale or rent, a single-family or apartment, and an affordable or luxury property. And the homebuilders featured in Builder’s story prove this point.
Model homes give the buyer the opportunity to truly experience and understand what it would be like to live in a home, Fulton Homes VP of Operations Dennis Webb noted. While virtual/internet home tours certainly make it more convenient for buyers to learn more about our homes, these tools simply help buyers narrow down the selection of which communities/models they will actually visit in person. Most buyers prefer to see and touch the details of our homes and communities before they sign a contract, Miller & Smith VP of Marketing Kim Ambrose pointed out.
As great as technology is, there is nothing that can quite replace the experience of physically being in a model, Empire Communities Regional President James Miller said. Buying a home is a big investment and commitment and has a lot to do with what the buyers feel and experience. Virtual reality and internet-based home tours are excellent tools but we are not sure technology can totally replace the tactile experience of visiting a model.
So Model Home Merchandising or VR? Both are Indispensable
Today, the builders and developers we work with use both. Since floorplans or pictures do not do justice to how a room’s proportions and features really feel, VR gives potential buyers a more accurate and meaningful sense of a space and how it will live before a project is completed, or when they cannot visit a property in person.
But once projects are completed, VR and physical models are complementary. If a project has multiple floorplans, VR can supplement physical models to assist buyers as they choose which unit to buy. Even better, it can also help hesitant buyers who need additional decorative input before signing on the dotted line. Let us say they prefer different fixtures and finishes or need to see a total style 180; VR can help them more clearly see what a home can be and seal the deal.