Real estate quickly turned into a gamble for the quick when the economy fell. Now that the economy has recovered, however real estate is not much more than just a gamble.
The transactions in real estate are in the midst of a revolution, the big data revolution. Big data is radically changing how buyers, sellers, professionals and banks are looking at real estate transactions.
It is common knowledge that big data is offering an array of education and insight into the complex world of real estate. The human side of real estate, specifically the professional brokers are questioning if a machine can actually replace the human interaction and knowledge.
Big data is pulling data from various sources and formats, breaking and creating patterns in the information, to unlock the knowledge of real estate for the common man. Here is a countdown of five facets of real estate and the big data evolution
5. Who is the real estate data consumer?
Stan Humphries, chief economist at Zillow said, “We’ve moved from raw data to information and context, and finally to real, actionable insight. The company aims to create complete transparency of real estate info. We not only want to create complete transparency but also analytics products.”
Analytics is the homogenous mixture of raw data and algorithms. Websites like MagicBricks and 99acres offer home and property listings for rent and sale, geographic information systems data, census information, the results of various consumer surveys and more. Several websites combine the information that they mine from various sources with their own user generated content.
These websites help foster an understanding of the appropriate value of properties, home value trends and the community property values.
4. How to understand communities better?
The big data that is floating around is doing more than just helping consumers find their next property. The perspective of looking at a development and community planning is also surely getting affected by the influx of this new big data.
Residential and commercial spaces that are in the process of development stand to benefit from the use of big data. For example with sensors that track and monitor the energy use, traffic and air quality, the information can help the community better understand itself.
This information can in turn help real estate developers learn what kind of environments are better suited for energy efficient modules and tenant health aspects can be incorporated into the buildings. The arena that big data has thrown open in the world of real estate is constantly pushing the boundaries of our imagination.
3. Do banks and investors benefit?
Beyond the developers and the consumers, big data can also help institutions like banks and investors understand the true value of a property.
Short sales and foreclosures can make a property value estimation very hard. It is in this particular scenario that the realm of big data holds a lot of answers.
A major real estate investor was quoted as saying, “Banks are much smarter now than they used to be. Banks use big data in a big way to ensure they don’t sell their properties for one penny less than the market will bear. As an investor, we all but avoid foreclosures and short sales these days, in most cases, because big data has given banks so much insight into value that they now expect to get full value – which removes smart investors from the equation.”
2. How has the role of the real estate agent changed?
The foray of big data into the world of real estate has brought the role of the real estate agent under the microscope. How essential is a human agent and human knowledge when pitted against big data?
Real estate agents historically have made their living using knowledge and instincts about properties and their values. Today several agents are of the opinion that big data brings in property values far higher than their true market value.
Jim Esposito with the Fort Lauderdale Real Estate said, “As a tool to help start your property search, big data sites may be useful. However, when you seriously start to focus in on an area or a neighborhood, you really need a local agent who is plugged into the local Multiple Listing Services to give you reliable information.”
Several industry agents have warned buyers that they might be paying a very high price for a property and that sellers are expecting too much for the market value of the property.
Jerry Pinkas of Jerry Pinkas Real Estate Experts said, “Buyer beware. An expert real estate advisor knows what recent sales have been, what developer incentives are offered, and inside secrets to getting the best deal. The internet is a good place to start, but you always want to work directly with an expert working in your best interest to get the whole story before buying. It’s the shortcut to success.”
1. The new real estate equation
Big data seems to be changing real estate one sale at a time. While it seems like big data has been lucrative for consumers alone, real estate companies also stand to benefit from these large pockets of data.
Glenn Phillips, the CEO of Lake Homes Realty said, “Big data lets us known what visitors are doing when looking for real estate online… and we adjust our paid and organic efforts based on this data almost daily. We process data from multiple sources, stripping it down to just the niche we serve. It is this large dataset that allows us to provide true convenience to the buyers and sellers.”
For companies looking to serve their clients better, big data is just a matter of harvesting and sorting the data to find their niche. Several industry insiders are on the fence about the exact void that big data is filling in. Many people claim that the revolution is only helping the consumers and that the real estate human connection is drowning in a sea of data.
Irrespective of individual opinions, the revolution of big data in real estate is surging forward and with tremendous speed and agility.