The thing about Big Data is that it’s so—well, big. The name itself is an understatement, though. We’re not talking about datasets that are merely big. We’re dealing with the facts, trivia, minutia, and all other even tangentially related material for whatever information you’re trying to mine—datasets that are large, complex, and beyond the scale of a traditional database to make sense of. Much has been made of how retail giants like Walmart and Amazon hoard every last bit of information about their customers and sales to increase their efficiency and reduce operating costs, resulting in profits as large as the datasets themselves. Big Data isn’t new, but it’s starting to make its way into previously untapped industries.
In the last few years, led by websites like Zillow or Trulia, the real estate industry has started to feel the ever-creeping presence of Big Data. Even as I write this, news of the Zillow-Trulia merger has been lighting up the real estate-trade newsfeeds, with analysts clamoring to chime in on how this news affects the industry as a whole. The two biggest owners of distinct sets of real estate—and related—data are combining every statistic and factoid into a single set of Really Big Data. For some, this is a worrisome prospect. Consumers already have more information at their fingertips than ever before; by the time a homebuyer shows up at your office, she’s often got a pretty good idea of the neighborhoods and houses on her radar.
She knows the comps, demographics, school systems, and local businesses of the towns she’s targeted. Using Google Street View, she may have even toured the streets without ever leaving her computer. This leaves the real estate agent at a crossroads, then. What’s your value in the process?
Plenty, as it turns out. See, data—whether in small or enormously large amounts—is still just raw information sitting in storage waiting to be interpreted. Think of a room full of musical instruments. You may have all the right hardware in that room to make music, but without musicians to play them, they’re just useless scraps of metal cluttering up the place. With the Big Data of residential real estate, you’re the musician. It’s up to you what tune you want to play, and you’ve got more instruments at your disposal than ever before.
The key is not to look at Big Data as your competition, but as an enabling tool to help you work smarter and faster than ever before.
As with any business, you’ve got to start with a plan. It sounds like elemental advice, but its importance can’t be overstated. The value of the soon-to-be “Zulia” (or “Trillow”) dataset isn’t just to consumers looking to be armed with as much knowledge as possible. Though their industry-focus is real estate, don’t forget that these are two tech-media companies with a robust infrastructure that can parse through and analyze their data in a variety of complex ways. You can get all the basics, of course, like comps and neighborhood demographics, but even more valuable is the amount of consumer information that’s available: people who are prequalified for mortgages, for example. Zulia is already investigating opportunities to sell their data and analytics to contractors, investors, and, yes, real estate agents. This gives you the ability to focus your practice in any number of ways. Wouldn’t your job be easier if you could target people you know are looking in your area and have already gotten that approval letter from the bank? Not only will your transaction time increase, but you’ll also be able to weed out buyers who may end up just wasting your time. Step one of your plan, then, has to be identifying what neighborhoods and what buyers you want to work with. The age of specialization has finally reached real estate.
The opportunities to specialize are limited only by your vision of what you can accomplish with Big Data on your side. As so-called “smart homes” become more ubiquitous—the ones with advanced heating, cooling, and lighting systems that learn a homeowner’s behavior and adapt to fit their needs—the network connected devices that make the home smart in the first place can be used to track things like energy consumption and efficiency. Imagine reinventing yourself as the eco-friendly broker with the ability to narrow searches down to the most efficient homes—and give detailed information on past consumption and operating costs of a home. Or maybe you want to start helping out underserved populations of potential buyers: renters who may not even be aware that they can afford to buy a home. Find your specialty, and then get the right data to support it.
Big Data isn’t a game ender for agents and brokers; it’s a game changer. As things progress, you’ll be able find the Who, What and Where of your transactions before a buyer even walks through your door. It’s an exciting time to be in the real estate business, and I’ll be continuing to explore more ways to make these tools work for us in future articles. Don’t be left behind.
Dave T. Garland is a principal with Rainmakers Group. For more information, please email email@example.com or call 650-353-7757.