How Big Data is Changing the Commercial Real Estate Industry
The advancement in technology all over the globe has not only affected the banking and financial sector, but it is also transforming the real estate sector positively. One such technology that is changing how transactions are carried out in the real estate sector is big data.
In the last few years, there has been a huge move in the usage of big data and analytics in the real estate sector. Big data in the real estate sector offers so many benefits; it does not only mitigate risk and fraudulent activities that are prevalent in the real estate sector, but it also provides endless opportunities.
Big data is also optimizing consumer search and providing recommendations of credible real estate website to potential sellers and buyers; using big data in the real estate sector helps customers to get their desired homes, the type of bedroom they need, the right neighborhood in any region of the world without visiting the location for assessment.
Already real estate firms like Trulia, Redfin, Zillow have started taking advantage of all the benefits that big data have to offer to the real estate industry. Through big data, these firms can provide clear insight into home value trends, the potential value of neighborhood and pricing to customers.
Benefits of big data in the real estate sector
Some of the benefits of big data in the real estate sector include the following
• Accurate Property evaluation: With big data, real estate firms can enable automated evaluation models which replace the traditional real estate appraisal that has high error rates. Big data model applies the latest economic, demographic and geographic data to remove human errors during property evaluation. Although humans cannot be replaced completely, big data algorithms make better decisions y using more data points while increasing objectivity.
• Healthier buying and selling habits: Big data also promotes healthier and transparent buying and selling habits. By understanding the environment and communities, builders can plan properties that improve resident health and reduce negative ecological impact. Big data also helps to reduce the role of half-informed brokers who end up disappointing the buyers or sellers and giving them unrealistic expectations
• Smarter financial institutions: A data-oriented real estate sector also makes financial institution involved in the transactions smarter; banks could take advantage of the information provided by big data to decide whether a foreclosure or short sales is worth the offer made by a buyer or seller. It also reduces fraud and, which is prevalent in the real estate sector.
• Risk Mitigation: Due to the use of big data analytics in the real estate sector, there are currently lots of information on different properties that can be found on the internet; this information helps to reduce the risk associated with customers buying the wrong property or making the wrong choice.
For example, big real estate firms such as Realtor and Trulia are providing an estimated forecast of property values from 1 to 10 years, neighborhood trends, estimated mortgage payment, history of the property, current value and cost of ownership. All this information made available to the public helps to militate against risk.
How is Big Data Transforming Real Estate?
Prior to the involvement of big data in the real estate sector, the real estate sector was known as an outdated sector filled with lots of fraudulent activities.
However, today, big data has totally transformed how business is carried out in the real estate sector.
Here are a few ways big data is changing the real estate sector.
• Property investors will no longer fool investors: Through information gotten from big data analytics, investors can discover whether exclusive offers offered by real estate firms are worth it; this is because big data promotes transparency. People are now aware of which property to buy and those they shouldn’t.
• Enable developers to satisfy customers need: Big data helps customers to experience safe buying and gives a complete idea of the search procedures to follow when buying a property. It also helps real estate developers to promote their business through the eyes of the consumers, they get to know what the customer wants and implement these requirements to meet the customers need and ensure they are satisfied.
• Planning techniques for residential buildings: Big data help property developers know the quality of the environment and a balanced atmosphere, which is necessary when constructing a residential society. Through big data analytics, real estate developers can also have a good knowledge of the energy competence needed for proper construction development.
• Provides accurate information to real estate sellers and buyers: Through the use of big data analytics, real estate buyers and sellers can gain insight on all standard information they need; the application of big data analytics ensures transparency in the real estate sector. Big data analytics tools are also used to study the pattern customer’s use while buying properties, which help to appreciate home values.
• Get rid of fraudulent real estate agents and brokers: Big data has also made it possible for sellers and buyers to get all information they need about a property from a company’s website thereby getting rid of agents who may want to outsmart them. With big data, both buyers and sellers can have access to all information about properties available for sale in various parts for the world online.
Use cases of big data in real estate
A lot of real estate’s firms are already taking advantage of all the benefits that big data has to offer. Uses cases of big data in the real estate industry includes the following:
• Transparent data democratization: Real estate firms like Zillow, Redfin and Trulia are already providing their customers with transparent information and working on data democratization. Most of them have their website filled with information like a list of homes available for sales or rent, surveys and other important information the buyer or sellers need.
For instance, Zillow makes use of the Zestimate tool, which makes it possible for customers to estimate the relative value of property in a different region.
• Advanced filters: Advanced filters allow buyers to find properties in any region of the world and also get information about that region. Most real estate firms have advanced filter options available on their website through which buyers can find the right property they need by different search such as location, distance, cities, ages, sizes, among others.
• Certain peculiarities: With big data, customers can also find all the necessary information they need about a neighborhood, the universities and educational establishment located in such neighborhood. It is also possible to filter these establishments and see those which are highly rated.
• Crime rate detection: Big data can also be used to detect crime rates in any region of the world. Through big data, analytic home buyers may discover areas that are prone to crime and stay away from them.
• Sales growth: Big data also helps real estate firms to understand their customers more, which in turn leads to high yield and more profit. For instance, Trulia provides customers with Trulia insight services, which analyses customers financial status, preferences, purchase history, among others.
Big data in the commercial real estate sector
Big data is changing the traditional way of working in the commercial real estate sector. Numerous site visits are no longer the first step in buying and leasing properties, instead long before investors even visit a site, they have made a shortlist of what they need based on the data provided through big data analytics.
Big data is also helping investors reduce risk and fraudulent activities, which is quite prevalent in the real estate sector. With big data, commercial real estate firms can know where their competitors are, the profile of people visiting certain areas and high choice areas for the millennial.
So many real estate firms are using big data technology to simplify processes and optimize task. For instance, Motionloft makes use of sensor technology to provide real-time pedestrian analysis and traffic information which is essential for a property owner looking to lease his or her property, this data can be used to match the right tenants to the property.
In addition, through unstructured data, property owners can spot opportunities by monitoring leasing trends and staying on top of hot news, online forums and social media. All thanks to big data.
The future of big data in the real estate sector
Big data in the real estate sector is not aimed at only improving business and getting rid of fraudulent transactions; it is also improving lifestyles and the quality of living for real estate investors. Big data makes purchasing of property much easier, transparent and provides a lot of option for the buyer to choose from. Indeed the future of the real estate industry lies in the successful utilization of big data in analyzing information from multiple sources.
Finally, the potentials of big data in the real estate sector are quite enormous, and that is why so many large real estate firms are already taking advantage of all the benefits that this form of technology offers in simplifying tasks, optimizing processes and automating actions.