How Big Data is Shaking Up the Real Estate Industry
Source – insidebigdata.com
In this special guest feature, Matt Murphy, CMO of Chime Technologies, observes that for decades, the real estate industry has chugged along without too many big changes in how things were done. Information was generally fragmented, if it was accessible at all, and processes were paper-based. Big Data has shaken that up, for commercial and residential real estate alike, making the industries more efficient and precise in 5 key ways. Matt earned his Master’s in Business Administration from The Christos M. Cotsakos College of Business at William Patterson University, holds a degree in finance from Santa Clara University and attended executive marketing education courses at Northwestern University’s Kellogg School of Management.
2.5 quintillion bytes of data are created every day. That is a staggering number. 90% of the today’s data was created in the past two years and it’s not only growing in volume, but also in breadth and influence, transforming industries that had previously evolved slowly. Real estate is one of those industries. For decades, it chugged along without too many big changes in how things were done. Information was generally fragmented, if it was accessible at all, and processes were paper-based. Big Data has shaken that up, for commercial and residential real estate alike, making the industries more efficient and precise in 5 key ways.
About 10 years ago, real estate information began migrating to the cloud. Home evaluation reports, sale prices, demographic data and more went online and became more centralized. Agents no longer had to trek down to a local planning office to dig up the information they needed and make sense of it on their own. With that information online, it could be analyzed, interpreted, and visualized, providing agents with clearer insight into estimated values. Appraisals were no longer a mix of guesses and intuition.
Commercial real estate data has historically been opaque, with information like what a building sold for, the rent roll, and square footage hidden away in a black box. At last, those data points are moving to the cloud and becoming accessible to commercial real estate professionals, adding more transparency into the entire sales cycle.
Transparency itself is a key benefit of Big Data, but equally as important is what that transparency enables, which is better decision-making. Big Data and technology, like artificial intelligence and machine learning, do the heavy lifting of number-crunching. The computers do the hard work of driving out analogies, conclusions and insights, which business leaders can use to make strategic decisions. It streamlines and speeds up the decision-making process. Data enables firms to do more objective analyses about value and the potential of investments, which reduces the risk of paying an inflated price or investing in deals that won’t bear fruit.
The real estate process, for both commercial and residential, can be slow. Large amounts of money are involved and bottlenecks emerge along the way. One part of the process that can take a long time is financial appraisal—figuring out if a buyer should be given a loan for a property. A lot of considerations go into evaluating financial fitness and Big Data can automate a lot of that process and make it faster.
Real estate agents are embracing Big Data for marketing purposes. Thanks to social media, there is a veritable goldmine of customer data out there. Agents can use Big Data, as well as machine learning, to target the right people with the right message at the right time. It helps identify customers through demographics, behaviors, and interests who are going to be responsive to messaging. It’s honestly striking how closely you can target and analyze trends, and this data-driven precision allows for a better return on investment.
For example, with social media, agents can see the ages, certain behaviors, and milestones of potential sellers to better pinpoint when they are going to sell their home. In addition, it gives agents tools to help buyers and sellers figure out the right time to buy or sell by looking at trends around housing prices or other factors that drive a neighborhood’s value, such as: Are schools improving from a test score basis? Is there an influx of younger people coming into a market? Is more money being spent in that area because more retail stores are opening?
With the Internet of Things, another area Big Data is shaking up real estate is with maintenance. Sensors can let building managers know when there is an issue, like a fan that stops working or a water leak, which could turn into a much bigger problem if it remains unnoticed. Big Data flags those issues, saving everyone time and headache.
As with so many industries, Big Data is fueling changes to the real estate business that will have a profound impact on how properties are bought and sold, leading to a more efficient, better experience for professionals and clients alike.