How Big Data is Affecting Real Estate

by Parks Associates | Sep. 7, 2017

Guest post by Gary Ashton

Before the Internet, if someone wanted to sell buy a home, they would hire a real estate agent, who would utilize their network of information, research houses, neighborhoods, school districts, and more, and then finally bring their findings back to the homebuyer. Now, because of big data, much of this process is obsolete, since information is more accessible than ever.

The term “big data” is used to describe a compilation of data that comes from both digital and traditional sources, such as social media and business invoices. The data is collected and analyzed in order to look for past trends that could be used to predict new trends.

Like it or not, big data is transforming the way real estate business is conducted, and here are four ways it’s happening.

Accessible Information for Everyone

Homebuyers no longer have to rely solely on a real estate agent to help them through the process of buying a home. Thanks to Google and websites like Zillow and Trulia, information is only ever a few clicks away. These websites utilize big data to sift through information from surveys, property listings, and even the Census to make data accessible to the average person. And for the average person who also wants to buy a home, websites like this are invaluable because they give homebuyers a place to start their search. If or when a homebuyer does seek out the help of an agent, they already know what they want and what they don’t, thus wasting less time.

Of course, it’s important to know that websites like Zillow and Trulia aren’t always completely accurate. They can still give homebuyers an idea of what to expect, but a professional real estate agent will always be able to obtain correct information.

The Same Process, Faster

Virtual tours are becoming more and more common as time goes on, giving buyers the chance to see if they’ll be interested in the home without ever stepping foot inside. This doesn’t just help buyers, though. Websites can create an analysis who visits the pages and how they interact with things like virtual tours, and this can help agents predict if the home will sell quickly, or show them a fault in the home that’s turning buyers away by identifying where they close the virtual tour. By using data in this way, it can help all three parties involved: buyers, sellers, and agents.

Insurance for Every Situation

Analyzing data to gain information, identify risks, and predict damages before they happen could revolutionize how homeowners buy their home insurance. Insurance agencies could analyze regions and identify which areas are at risk of floods or tornados and build a specialized package to cover any risks that the home may have based on its location. This could even go further than weather, too. Big data could tell analysts if a home is at risk of having lead paint based on its age and the age of the homes around it, or even what sort or repairs it may need.

Parks Associates research shows the opportunity for insurance companies to benefit from big data is tremendous. In a smart home, detecting a water leak quantifies a risk. Sending a plumber to investigate and correct the issue mitigates damage, but having a valve that automatically responds to a water leak signal and shuts off water to the home is even better. By leveraging the data found on smart home devices—now part of nearly 20% of U.S. broadband households—insurance companies can prevent risk faster and more seamlessly.

New Roles for Real Estate Agents

Because it’s now easy for homebuyers and sellers to act with their own agency and not rely solely on real estate agents, agents may feel threatened. However, technology alone isn’t going to replace the real estate agent in the near future. The existence of Zillow isn’t going to put all real estate agents out of business because a computer that compiles data doesn’t have the same nuance that a human does. A computer can spot trends, but it doesn’t understand human connections and relationships.

Real estate agents can use big data to their advantage and give them an edge on the real estate market in a broader scope than what their own network would be able to supply. But on top of that, they will still always have their own resources that are more accurate than big data, and they can also build a relationship with their clients and better understand their individual needs.

For better or for worse, real estate is changing, and big data is at the helm. It’s a new tool that everyone can use regardless of profession. Buyers, sellers, and agents can work together and utilize big data, whether it’s as a starting point for finding a new home or pricing one to be sold. From here, big data will only grow and become more accurate as time goes on, and it will continue to be an important tool among many in the box.

Gary Ashton is the CEO and owner of The Ashton Real Estate Group of RE/MAX Advantage. His real estate team is #1 in Tennessee, Nashville and now #4 in the world.

Next: Infographic: Insurance as a Smart Home Channel
Previous: Samsung Makes Strides in the Smart Appliance Market


    Be the first to leave a comment.

Post a Comment

Have a comment? Login or create an account to start a discussion.