Big data has started to change the real estate industry. Companies like Trulia and Zillow have been helping real estate agents find the information they need to stay on top of their game in processing the massive amounts of data unique to the industry.
Despite the talk to understand big data and how it affects the industry, only a handful of real estate companies are in the position to become leaders in the rising phenomena.
Processing an avalanche of data with Hadoop
Some companies like Trulia and finance giant Morgan Stanley seeking to process massive amounts of information have turned to Hadoop as a service to stay ahead of the game. Morgan Stanley turned to Hadoop to do portfolio analysis using a low-cost infrastructure. Their transition to the Apache product has proved to be a scalable solution.
Using Hadoop gives companies a full ecosystem of tools from Hive to Oozie for accessing, storing, querying, analyzing, mining and processing big data. Since Hadoop is open source, it helps real estate companies handle information efficiently and in a scalable fashion.
Opening access to data for the real-estate consumer
Real estate used to be an old-school business controlled by brokerages and local multiple listing services known as MLS's. In an industry where there are a few leaders in the development of handling big data, companies like Zillow have been able to move from raw data to information and context and then to real, actionable insight. Stan Humphries, chief economist at Zillow, and his team seeks to create complete transparency of real-estate info and analytics products.
Companies like Zillow, Trulia and Redfin combine what they pull from databanks and their own user-generated content giving them consumer information about home value trends in a specific ZIP code or even a property’s potential value based on neighborhood trends.
Understanding communities better
Real estate companies who have jumped on the big data train may not fully understand where the train is headed but have been able to see benefits early on. Big data has put companies in position to look at developments and community planning. Real-estate developers, using gathered information, can learn what kinds spaces work best in terms of tenant health, energy efficiency and other key points.
Some real estate companies in New York City are looking to tap into the City Hall for the valuable insights that can be gained through the acquisition of data owned by the city. The city has plans to use its data it possesses as a catalyst to update old laws like the ban on the use of residential apartments as short-term rentals. Officials are starting to see the value from gathered intelligence from better understanding where to build to which real estate laws need to be updated.
Investors, banks and the roles of real estate agents
By gathering and processing Big Data, banks can run analytics to determine whether a foreclosure or short sale is worth what a buyer or investor may offer. Banks can make better decisions in line with business objectives. Investors can avoid foreclosures and short sales that can prove detrimental to their respective institutions.
Consumers using Big Data resources can find valuable information but aren’t able to tap into the knowledge and experience of human real estate agents who know a community’s ins and outs. Consumers can’t understand the social environment or which potential neighbors have loudest dogs with real estate search engines. Expert real estate advisors know the recent sales, developer incentives offered and insider secrets to saving money.
Some agents point out that Big Data valuations can come in too high leading sellers to unrealistic expectations as to sale price and buyers overpaying for a new property. Companies like Opendoor are changing the real estate game in another way eliminating the traditional real estate firm and agent working directly with the seller to purchase homes and even eliminating loan contingencies and appraisals. Agents have yet to see how their industry will change with the increased use and development of Big Data applications in the real estate industry.