By Ashreen & Sabreen
What is Big Data?
This is another buzz word in the digitalization nomenclature, but what does Big data really mean? Big data forms the basis of a movement through which the processing and organization of data is progressing to its optimal level. It essentially allows us to collect, analyze and manipulate enormous amounts of data to high degrees of sophistication and accuracy. With an increasingly digitized world, the Big Data movement has been embraced by many industries with efficiency driven goals and the real estate market is no exception. In parallel with the advent of Big Data, Proptech is the digital transformation of the real estate industry, through the use of information technology, where Big Data is being utilized, to allow for automated property valuations, more personalized real estate marketing and better risk control.
Automated Property Valuations
Property Valuation and/or real estate appraisals is the process of developing an opinion for the value of a certain property. This is a significant process for properties, as each one has unique features such as location, lot size, floor plans and amenities. Secondary features are also taken into consideration, such as distance to mass transit, distance from schools and event the crime rate. A property’s value is generally realized over a longer period of time, compared to other assets that are identical in nature and are frequently traded; for example stocks and shares.
Before the integration of technology into the real estate space, property valuation was a particularly onerous task. It would require professional valuers and appraisers to manually compile and analyze spreadsheets to form an opinion on the property’s value. With the introduction of Big Data, manual appraisals are being replaced by the AVM (Automated Valuation Model), which makes use of hedonic price modelling combined with a database. AVMs streamline valuations, by removing the human element from the valuation process, largely relying on automation to replace human bias and subjectivity.
The RICS published a thought piece that clearly outlines the considerations on AVM and argues the point that the professional valuer and appraiser is still very much needed in this process of change. The AVM uses historical property prices and incorporates large amounts of variables to make real time valuations. More recent AVMs have been optimized to make use of ML (machine learning) and artificial intelligence, to increase the breadth and depth information available to make accurate insights. As AVMs continue to expand their use cases and incorporate additional features, we will see an enhancement in the valuation technique and real time accuracy.
IoT (Internet of things) plays another role in the assimilation of data through automation and technology into the real estate appraisal process. IoT stands as a system of interconnected devices that are able to transfer data over a wireless network. This ‘internet backbone’ can be used to collect real time data, via sensors, to provide insight into the wear and tear of the property, making it a valuable source of information to determine its value.
Big data increases precision of connecting buyers to sellers
Big Data has allowed us to move away from traditional marketing practices such as paper, adverts and mailing. Social media has raised its ranks to provide agents with the ability to capture their preferred audience type with targeted advertisements allowing them to to grab potential buyers and sellers with ease and control. The unique platform provides agents with marketing flexibility to keep up with the changing trends in the real-estate market. Functionalities such as ‘like’ and ‘share’ and ‘repost’ keep real-time information on agents’ fingertips, keeping them well-informed of current market conditions as well as changes in level of interest.
With the entire industry moving online, from the buyers perspective, there is access to information on the property as well as the surrounding area, such as schools, retail and even crime data. This makes it a seamless process for customers to search their desired requirements.
As a consequence we can now see the role of the traditional agent diminishing and transitioning to a modern real estate agent, one who has to manage social media accounts and crunch big data in order to make marketing decisions.
Augmented Reality and visualization tools are the future of remote home viewing
Seeing the role of real-estate agents diminish since the global financial crisis and now being accelerated by the COVID era, having to be physically present with an agent in the property is becoming less of a requirement. Augmented and virtual reality technologies are now increasingly being used to view and test-fit furniture sizes without having to enter the property. This has seen its sudden spike of popularity due to the Covid-19 pandemic, as potential buyers now look for alternative ways of viewing and inspecting.
PropSherpa 