Through the capacity to make more accurate appraisals on a massive scale, to more personalised real estate marketing, better risk mitigation and quicker processing times for applications, big data is in the process of completely upending the real estate industry – in a good way.
The real estate industry has traditionally been a slow adopter of technology, but the pendulum is beginning to swing towards rapid adoption very quickly. Venture capitalists and tech startups are beginning to hone their focus on the housing market, in the knowledge that the $33.3 trillion market is in desperate need of disruption. And it’s no wonder. With current processes, selling houses is very expensive work. From valuing one’s house, to staging and marketing it, to paying real estate agent fees and closing costs, it costs a near fortune to be able to make a near fortune. These considerable expenses are driving people to seek more automated, efficient processes that lessen the financial burden of the transaction process – and big data is providing that level of efficiency.
Big data, which describes the large volume of both structured and unstructured data floating round the digital space today, is being used in several ways to automate the once onerous process of the real estate industry.
For example, appraising a house or property for its estimated value was once a fairly arduous task carried out for a hefty fee by professional valuers, who compiled sets of information on spreadsheets and analysed them to build estimates that reflect current market realities. Today, those same appraisers can make more accurate appraisals by comparing the information gleaned from onsite visits with years of historical market data found online, using sophisticated algorithms that pinpoint relevant market information – including crime statistics, education data, property characteristics, pollution levels, employment opportunities and life quality statistics.
Risk mitigation is another area that could be greatly improved with deep big data analysis capabilities. The real estate market is fraught with risk, and buyers like to know what kind of risks they are taking when investing significant sums of money into property. With big data comes enhanced predictive analytics, or the capacity to use sophisticated computer algorithms that can predict market fluctuations, so that potential buyers can have an idea as to whether an investment is well-timed or not. Until recently, all that buyers and investors had to go off was gut instinct and a basic understanding of how the market is currently performing. It is easy to see how predictive analytics could be a complete game changer.
Perhaps the most exciting changes brought by big data, for real estate agents and marketing companies at least, is that of personalised marketing and advertising. Roughly 90 percent of buyers search for properties online today. What does that mean for agents? That almost all the information regarding what kind of property a potential buyer is looking for is available online. Using predictive analytics and machine learning to glean useful information on a potential buyer’s preferences through their social media profiles and other digital interactions such as real estate searches, real estate agents are able to engage customers far more easily than previously possible by interesting them with potential properties that suit their exact budget, preferences, investment demands, and so forth. Big data algorithms are entirely responsible for this.
Digital capabilities beyond the application of big data is changing the industry, too. The entire industry is gradually shifting to online. Online lenders are increasingly moving the needle by offering up the lowest interest rates and seamless application integration for the want it now prospects. Two examples we found are Quicken Loans Rocket Mortgage and All Reverse Mortgage, Inc. ARLO .
With Quicken, borrowers can apply online and on average close 40% faster than bank lenders with the industry’s first completely online mortgage experience. Niche lenders like All Reverse Mortgage are leveraging their online technology attracting seniors to investigate reverse mortgages with instant eligibility with their online mascot ARLO calculator.
There is also a move to online, electronic settlements. This last stage in transaction has traditionally been carried out physically, with both parties of the transaction meeting in person to sign papers physically. But with digital signatures and a growing number of buyers purchasing property from overseas, this too will gradually shift to the online space, with buyers and sellers signing on a device of some kind instead.
If these are the changes being brought to the industry by big data alone, just envision the future of real estate once blockchain, automated robots and cryptocurrency really begin to make their mark on the property market too. What we are about to see is the complete transformation that – for a very, very long time now – has remained largely unchanged, defined with onerous, burdensome processes and high costs. The future of real estate is an exciting one, thanks to the possibilities that big data brings.