You’ve surely heard the term ‘big data.’ It’s a trend in itself with today’s technological powers and current state of affairs. Data is a far-reaching tool that can be leveraged by so many different industries. So what’s happening with big data in the real estate business?
Real estate agents have traditionally relied on their own professional experience, expertise, and hours of hard work pouring through paperwork to gather any needed information. Today, big data is used by real estate professionals to get accurate data in real-time. Consequently, investors, developers, and homebuyers can make better risk assessments and informed decisions about when and where to buy properties.
There are several ways that big data has completely transformed real estate. Here are five ways that are currently trending.
1. Evaluation accuracy
Property evaluations are the most fundamental calculation in real estate. It is essential to determine how much a property is worth to accurately price homes, which is based on comparative analysis. Most real estate agents understand the delicate balance of pricing properties high enough to maximize profit, but low enough to trigger a lot of interest among prospective homebuyers. Using multiple data points about comparative properties instead of just a few helps to narrow down the pricing window to strike that balance.
Some of the types of data that agents and appraisers are able to use to best price properties include insight into market trends and consumer behavior. Big data has opened the door to information that wasn’t previously available or easily accessible.
Years ago, agents and consumers weren’t clued in on the history of properties or knew much about the neighborhood other than what they knew from personal experience. Now that kind of information is at their fingertips. They can get key facts about properties like insurance claims, permits, and how the land was previously used. Details about neighborhoods are also at the disposal of agents who have access to big data. Information like demographics, crime rates, and schools can be aggregated to give a better picture of a property’s value. More data available leads to less guesswork and allows for better investment decisions.
2. Predictive consumer analysis
Big data goes beyond extracting present information and reacting to the current market. Analyzing historical data can help forecast the fluctuation of the market in the future. This process, called predictive analytics (PA), is particularly useful for real estate investors and their agents. Using predictive analytics helps investors make informed decisions about when and where to buy. Investors can learn what consumers or tenants are moving towards, what amenities they are looking for in a property, how a neighborhood is projected to grow, and other future factors in the market that will affect real estate. Unlike decades ago when predicting real estate trends was essentially based on guesses, projections can now be created by complex computer algorithms that can accurately predict market fluctuations.
Predictive analytics also helps agents find the match properties with buyers looking for residential homes. Especially for luxury properties, agents can use PA to target prospective buyers. Most luxury buyers look for homes that suit their taste and lifestyle as opposed to searching for a specific location. Agents can use big data to target the right customers.
One of the most innovative ways that predictive analytics is used is to track consumer behavior. Real estate agents can collect data points such as the age of a home along with mortgage payments and other key insights to anticipate when a homeowner may be ready to sell. This kind of information can guide them to potential high-quality leads.
3. Organizational efficiency
In real estate, just like other businesses, time is money. Before the digital age, it took significant manpower to crunch numbers, scan paperwork, and manually make calculations that were needed to gain the same insight that can now be gathered in minutes with big data. This saves real estate agencies tons of time and money.
The automation of data collection means faster and more accurate results and less money and time wasted on administrative tasks. Essentially, big data streamlines processes and improves efficiency.
4. Document extraction
If you work in real estate, you understand that managing an abundance of documents is simply part of the industry–PSAs, rent rolls, memos, deeds, etc. There are SO many! A lot of data is contained within all of these documents. Tools that extract organized data have revolutionized the way real estate agents can do business by replacing a burdensome manual process and providing more useful insights. The power of big data helps agents leverage the power of data within documents and ultimately increase ROI for their clients.
5. AI integration
Artificial Intelligence (AI) and Application Programming Interfaces (API) are the glue that brings big data and automation together. The two have an excellent mutually beneficial relationship. Big data feeds algorithms, which in turn allow big data to be used more quickly and effectively. If your organization isn’t using some form of AI to leverage big data in real estate, you may be missing out.
One area in which AI is particularly useful in real estate is in the construction of new properties. Developers and pre-construction home buyers can lose capital if they don’t have good information on the area. AI can help both business and residential buyers make good decisions about when and where to construct.
Ready to use big data to your advantage?
There is more data than ever readily available to be utilized as a powerful tool to increase your ROI. Do you want to optimize the experience of buying or selling real estate for your partners, employees, and consumers? If document extraction sounds like a good place to start, schedule a demo!
BlueSuit has years of experience helping real estate professionals use big data to enhance their businesses. We have a suite of products built to unlock the power of your data and can tailor our partnership based on your needs. Together, we can predict—and build—the future of real estate.
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