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| Image source: Mashable.com |
It may not be that way for much longer, however. Big data is changing the way real-estate professionals, buyers, sellers — and even banks — think about transactions involving property.
On one hand, companies promoting services that plug consumers into big data real estate info are heralding a future of better education and insight. On the other hand, real estate professionals are questioning whether big data algorithms can replace the human-wisdom side of property sales. Other players have points of view on the changes underway as well. Analyzing enormous swathes of information — much of it aggregated from disparate places and formats — big data proposes that accessing the patterns locked up in a myriad of real-estate info could remake the game. And so, let's look at five key facets — the people, organizations and trends — of real estate's ongoing big data evolution.
1. Democratizing data for the real-estate consumer
If you want to identify the kind of platform that's emerged to combine big data with real estate, one way is to look to Zillow and companies like it.
"We’ve moved from raw data to information and context, and finally to real, actionable insight," said Stan Humphries, chief economist at Zillow, during a phone interview. The company aims to "create complete transparency of real-estate info," Humphries said. "We not only want to create complete transparency but also analytics products."
Analytics is where raw data and the algorithms that crunch it come together. Mining census information, the results of consumer surveys, listings of homes for sale and rent, geographic information systems data and more, companies such as Zillow, Trulia, and Redfin, among others, offer similar services — combine what they draw from numerous databanks with their own proprietary user-generated content. The tools can deliver to consumer’s information about their property's potential value and help them understand home-value trends within a particular milieu, such as a neighborhood or a ZIP code.
2. Better understanding communities
Big data isn't just providing new information to consumers, it's fueling new ways of looking at developments and community planning. For example, the Hudson Yards project, in Manhattan, stands to create a new bank of commercial and residential units. But it could also be a big data engine. A proposal by the developers and New York University is on the table to equip the planned spaces with sensors that would track air quality, traffic, energy use and much more.
From that gathered information, real-estate developers stand to learn what kinds of spaces work best in terms of tenant health, energy efficiency and other points. Meanwhile, researchers would get to build sociology and civil-engineering projects around the data. If privacy matters are handled properly in the process, it could be a win.
3. Investors and banks: Foreclosure and short-sale changes
Beyond the consumer and industry-facing aspects of big data, institutions such as banks can plug into big data resources to determine whether a foreclosure or short sale is really worth what a buyer or investor might be offering.
"Banks are much smarter now than they used to be," said Phil Pustejovsky, a real estate investor and author, in an email interview. "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."
4. Roles of real estate agents
Deeply empowering consumers is good for the consumer, perhaps, but casting into question some of the basic underpinnings of the real-estate industry — a human agent who knows a community's ins and outs — isn't the first choice for professionals who've made their living by using their brains and instincts about property sales.
"As a tool to help start your property search, big data sites may be useful," said Jim Esposito, of Fort Lauderdale Real Estate. "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."
Agents maintain that big data delivered valuations can come in too high. One result, sellers can have unrealistic expectations about the likely price of their home. Likewise, agents warn buyers could get into a new home for more money than they might have otherwise paid.
"Buyer beware," said Jerry Pinkas, of Jerry Pinkas Real Estate Experts. "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."
5. Boosting pitches
Other real estate professionals are using big data themselves to work the market in refined ways.
"Big data lets us know what visitors are doing when looking for real estate online … and we adjust our paid and organic efforts based on this data almost daily," says Glenn Phillips, CEO of Lake Homes Realty, regarding online marketing of his inventory. "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."
And Phillips says he's aware of both sides of the developing big data equation for real estate.
"It will become increasingly difficult for individual real estate agents to be visible to consumers, both online and offline, as the consumers follow the larger data sources online," he says. "And those with big data have more information needed to rank higher in online searches. This is, in most cases, a win for the consumers, but not for individual agents trying to be noticed by new clients."
It is almost certainly the future that is unfolding, however. For real estate, big data seems set to fuel what is to come, one sale at a time.
For more on real estate buying and selling, visit this Marian Khosravizadeh blog.
