The residential real estate market is no stranger to floor plans — they’re often part of the home-buying process, typically as a marketing asset on a listing. However, in recent months, floor plans have significantly increased in importance to the sale, moving from a nice-to-have to a must-have for real estate professionals.
Why have floor plans shifted to secret superpower status? And how can real estate professionals take advantage of them before they become table-stakes on listings? Read on to find out.
What’s Changed?
It’s no secret that we’re currently in a seller’s market. Although forecasts say the market is plateauing, low inventory and rising prices mean that challenging times will continue. Used as a marketing tool, a floor plan can make a listing even more attractive to buyers, and especially in the current market as sellers expect buyers to make an offer immediately.
But to understand why floor plans are more important than ever to the home buying process, it’s important to look at current market context.
Floor plans and desktop appraisals
During the pandemic, the Federal Housing Finance Agency allowed appraisers to complete home appraisals remotely (called desktop appraisals). This temporary measure was implemented permanently for single-family homes as of March 19, 2022, with Fannie Mae and Freddie Mac accepting desktop appraisals.
Because appraisers no longer have to do a physical inspection of qualifying residential properties, other data, such as tax records, public records, and — you guessed it — floor plans that show gross living area and other standards, are part of the new requirement.
What’s more: This news illuminates the deficiencies in the traditional appraisal process.
Where traditional appraisals go wrong
Traditionally, when a seller accepts a buyer’s bid, the buyer works with their mortgage company to kick off the loan process, which involves sending an appraiser to assess the property. Today’s hot market combined with a lack of appraisers means this can take up to 20 days or more to get an appraisal back. This two- to three-week time frame opens both sides up to potential issues.
For sellers, some of these issues include:
- Uncertainty about the buyer being approved for the loan if the appraisal comes in too low
- Change in contract if the appraisal is too low
- Lost potential buyers if the original buyer is unable to move forward
- Personal setbacks, such as inability to prepare for closing or packing
For buyers, some of these issues include:
- Lost opportunities to purchase other homes if they’re unable to secure this loan
- Personal setbacks, such as timing the selling of their current home or packing limbo
Why this matters
Remote appraisals narrow the waiting period to a few days, resulting in quicker closings. Because floor plans are a requirement in the remote appraisal process, they are now more important than ever.
How floor plans give agents an edge over competitors
Instead of waiting until the property is sold and an appraisal is needed, real estate agents that proactively acquire floor plans at the time of listing gain an advantage over the competition.
Floor plans have historically been a useful marketing asset. Buyers like them, because floor plans help them visualize their movement through a house before visiting it. Plus, floor plan measurements help the new owners determine the size and placement of furniture in each room. So, it’s no surprise that more than two-thirds of online home shoppers found floor plans to be “very useful,” according to the National Association of Realtors 2021 Home Buyers and Sellers Generational Trends Report.
The news from Fannie and Freddie, however, makes them even more beneficial because it ensures quicker closings, positively impacting all parties involved — buyers, sellers, agents, mortgage brokers, and more.
When agents proactively acquire a floor plan, the remote appraisal and mortgage approval process can start as soon as the seller accepts an offer, saving valuable time.
Additionally, for brokerages that have a mortgage arm or preferred mortgage company, the quick close is even doubly attractive.
Making floor plans a part of the process
One of the best ways to implement floor plans as an asset is to make it a part of the listing preparation process. A checklist of important items might look like:
- Secure agency and sign seller’s contract
- Recommend staging and cleaning
- Schedule top-notch photography
- Acquire a floor plan from a third party
- Schedule formal inspection
- Identify listing price
Keep in mind that for remote appraisals, Fannie and Freddie have specific floor plan requirements, including certain standards and that it must be created by a disinterested third party (not by the seller, buyer, or agents.) Be sure your floor plans are created by a well- established provider who understands the law, rights, IP, licensing, etc. It’s the best way to limit your exposure and liability for licensing and copyright infringement.
Whether you hire an individual or a service that allows you to get your floor plan done in conjunction with your photography, getting a floor plan created ahead of the sale gives sellers and their agents the edge to stand out in a crowded market.
The evolution of the lending process to include remote appraisals only drives home the floor plan’s growing importance, elevating it from a marketing tool to a sales closer.
How is your team implementing floor plans today?
Brian Balduf is CEO, chairman and co-founder of VHT Studios.