Consumers are hungry for information, and the Internet gives them unprecedented access to all kinds of it with a few clicks. When it comes to searching for a new home, buyers want as much data as possible to help them make informed choices. And sellers want to quickly find market trends and activity to make informed decisions about their home sale.
This is where the concept of big data comes into the picture. Truth is, we’ve always had access to big data, but the Internet makes it easier for people to find it faster, says John Heithaus, chief evangelist for RealEstate Business Intelligence (RBI). RBI is a big data subsidiary of mega-MLS MRIS in the U.S. Mid-Atlantic.
Social media, new advertising platforms, improved transactional business processes and more all rely on big data every nanosecond of every day, Heithaus says. Real estate agents need it, too, to help map out their businesses and research market trends so they can expertly advise their clients, armed with the best information possible. While the concept sounds intimidating to some, it’s really not, Heithaus adds.
“Patterns and trends in real estate data can be used to help decide where to locate a new office or how to identify and recruit top-producing agents to your company,” Heithaus says. “Big data can also help you qualify buyer and seller prospects more accurately and achieve higher closing rates. Using big data not only adds value to client interactions, but also differentiates your business as a high-tech service firm.”
Pros and Cons
While consumers and real estate professionals alike are benefiting from a huge inflow of data, there’s also such a thing as too much bad data, Heithaus says. Outdated information on websites or data that’s not relevant or value-driven can overwhelm consumers and cause them to make ill-informed choices, he adds.
“That’s why knowledgeable real estate agents make all the difference in the buying and selling process,” Heithaus says. “Having access to big data can never replace the expertise and skills of a trained professional who knows a market inside and out.”
One example of data that can be skewed is the Automated Valuation Models (AVM) used by large real estate search portals. Heithaus says even the best of these algorithm-driven models shows an 8 percent national median variance (and can range as high as 30 percent in some markets.) For a $325,000 house, this is huge in terms of dollar impact, creating a value range swing from $300,000 to $350,000.
“Human nature being what it is, we mentally lock into the higher number, which creates a formidable challenge for real estate agents to overcome, depending on their own estimated value. That’s why we need the most recent and relevant local market statistics on hand to back up our valuations.”
What big data might tell us about buying and selling behaviors is one area that promises to help the industry in the long term. At the most recent REALTORS® Conference & Expo, a special session focused on the future implications of big data, particularly how advances in mobile technology could radically change the ways consumers search for real estate online.
Todd Carpenter, NAR’s managing director of Data Analytics, says that mobile devices are providing a wealth of information about how consumers search for homes, and it’s transforming consumers’ experience of buying and selling a home.
“Buyers will increasingly use their smartphone during the search process—oftentimes before first talking to an agent. REALTORS® who adapt and embrace big data will add considerable value to their relationship with clients.”
Winning New Business with Big Data
How do you take an abstract concept like big data and apply it to your day-to-day business? It starts with explaining big data trends in an intelligible way and whittling it all down to relevant, meaningful insights that add value to a real estate transaction.
Jon Wolford is already finding success with using big data. The real estate manager and branch vice president of McEnearney Associates in McLean, Va., says he uses RBI SmartCharts to sift through mountains of information and translate it into easy-to-digest visual charts that inform his agents of the latest Washington, D.C., market trends. In turn, agents take the information—recently sold listings, newest listings and months’ supply, for example—and embed it on their websites as just one avenue of delivery.
“Most often, we’re using the SmartCharts data on social networking sites or in face-to-face meetings with consumers and prospects,” Wolford says. “You can’t just put the data out there, though. It’s what you say about the data that piques people’s interest and sets you apart from the next agent.”
As technology continues to evolve at a rapid pace (particularly mobile technology), big data will become a necessary and more immediate part of real estate agents’ businesses.
“Let’s face it: Consumers are far more connected and educated than ever before, and it’s only getting more competitive out there,” Heithaus says. “Smart agents are becoming local market experts and are finding clever ways to show their marketplace what they know to win the business.”
Deborah Kearns is an award-winning writer based in Denver with more than a decade of experience in corporate communications and news journalism. She has covered the real estate industry for more than seven years. For more information, visit www.deborahkearns.com.