With COVID-19 making in-person property inspections more challenging for the commercial real estate industry, many are turning to virtual inspections. Some in the industry have declared traditional inspections a thing of the past. There are clear benefits to virtual inspections during this era of social distancing, and there are practical and fiscal benefits as well. Just as increased comfortability with video conferencing will likely decrease the need for business travel in the coming years, companies will also opt to tour a property via an app, saving significant time and travel costs. But the shift to virtual inspections isn’t as simple as it seems, and the value of the human touch can’t be discounted.
Reliance on Onsite Staff
Virtual inspections depend on a property’s onsite staff to showcase every portion of the property with integrity, being completely forthright about issues that may impact the appraisal or funding. The comprehensiveness of the inspection, particularly when it is conducted virtually, is in many ways, out of the inspector’s hands. Some intricacies of the property may be willfully hidden or never discovered. Ultimately, it is difficult for an inspector to feel completely confident in the thoroughness of an online inspection.
While connectivity (Wi-Fi or cellular) may seem ubiquitous in this country, there are still many locations with spotty, or even nonexistent, coverage. This issue proves challenging when touring a property virtually. Even in areas with a relatively strong Wi-Fi or 4G signal, some portions of a building will lack a strong or consistent signal. When video calls are continually dropped or unable to connect altogether, virtual inspections can be time consuming, frustrating and ineffective.
Storage & Security
Security breaches with video conferencing apps are widely documented. Once a virtual tour is conducted, companies must possess a reliable system for storing data securely. How the resulting data fit into the loan documentation must be determined. Should all video footage become part of the official documentation? If so, how long must it be stored, and what other photos or assets must be included? Given the large size of video files, long-term storage adds additional considerations, planning and, likely, expenses. As the popularity of virtual inspections increases, preserving these files is a mounting concern that companies are forced to address.
Despite these pitfalls and challenges, the value inherent in virtual inspections remains. Technology has evolved significantly in recent years, with apps such as HappyCo streamlining the virtual inspection process. Rather than relying on a different video and documentation platform for each inspection, these apps incorporate a checklist of necessary items to inspect and centralize the documentation process. The thousands of virtual inspections already conducted through these apps demonstrate widespread demand. As the adoption of the solution grows further, enhancements to the associated technology offerings will likely address some of the current questions and concerns.
Time & Cost
The significant time and cost savings of touring a property via an iPad have created significant interest in virtual inspections. However, online inspections sometimes cost several hundred dollars in fees so, depending on the situation, they may actually be more costly. For lenders like Sabal with inspectors located across the country, a short flight often equates to a similar, or even lesser, expense. Online inspections do offer significant time savings. The pros and cons exist for each situation and may be weighed before an approach is decided.
While technology streamlines and simplifies aspects of the inspection process and lending in general, it’s important to keep its limitations in mind. Technology will evolve and become more pervasive; however, it will never replace human judgement, experience and reasoning. Virtual inspection technology should be utilized as a tool to enhance, rather than fully replace, the personal touch needed for a successful inspection.