Sellers and agents have one common goal in a real estate transaction: efficiency. The faster a seller is able to locate a buyer and close a sale of their home, the better – for the seller’s convenience and the agent’s payday.
Smart home technology may increase home sales efficiency. Over half of homeowners polled are willing to invest in smart home technology in order to close a sale more quickly, according to a recent survey by Harris Poll on behalf of Coldwell Banker.
Of that 54% of willing homeowners:
- 65% are willing to invest $1,500 into smart home technology; and
- 40% are willing to invest $3,000 or more.
Survey respondents suggest a home qualifies as a “smart home” when it has three or more types of intelligent home systems technology. Different types of smart technology include:
- interactive smart televisions;
- speaker systems;
- advanced security systems;
- automatic temperature control; and
- programmable or motion-sensor lighting.
Related: FARM: Smart home
Smart home tech and home sales
Although improvements like smart home technology will increase a property’s value, sellers may not experience benefits of the investment just yet. The Federal Reserve (the Fed) recently began the upward interest rate trajectory, meaning home sales will begin to fall in the latter half of 2016 after a year-long 10% rise in prices. Higher mortgage rates, if they come about, mean fewer buyers will be willing to pay for more expensive homes, technologically improved or not.
However, homeowners with household incomes of $50,000 to $100,000 are already investing in smart home technology at increasing rates – roughly 25% having adopted some type of technology or another.
The good news is real estate agents don’t need to try and sell fully automated homes to take advantage of the smart home movement. Different types of smart technology appeal to different types of buyers. For example, homeowners over 65 are more likely to invest in temperature control technology than younger homebuyers. Additionally, 44% of smart technology users are parents with children 18 years old or younger.
Agents and brokers can use this information to find homes better suited to their clients’ demographics. A home with a feature technology, like a sophisticated security system, may be the deciding factor in a home purchase.
Faster home sales transactions
The remaining question is whether investing in smart home technology really will expedite the sales process. The answer isn’t quite as simple as some sellers may expect.
Affluent buyers who are able to tackle the higher mortgage rates and property value for a smart home may be inclined to jump on an advanced home, especially when an agent leads them directly to the type of technology and home they want. However, much of the process is still dependent on buyers’ financial qualifications, preparation and personal taste.
A buyer who doesn’t like a house or its location is not likely to be swayed into a purchase by smart home technology. Instead, buyers interested in the technology are able to add it themselves at relatively low cost to a home they purchase more specifically suited to their needs and tastes.
Additionally, buyers still trying to save for a down payment are unlikely to match the increased value of smart homes due to limitations student debt and stagnant wages place on mortgage amounts they can borrow. These buyers are further limited by gradually increasing interest rates. Thus, the window of opportunity for expedited smart home sales may quickly close.