There's been a lot of talk about Big Data in the real estate industry over the last few years, increasing quite a bit in recent months. Several industry executives have spoken about wanting and needing every piece of data they can get on sales, consumers, and neighborhoods. The myriad articles on Big Data often make it sound as if the information itself is the key to improving your real estate business. That's really not it at all. Big Data is old news. The real wave of the future is BI aka business intelligence.
Large volumes of information have been available to agents for a while, even raw Big Data is openly available. You see it in RPR and other resources to which we have access. It's overwhelming for many agents, just as it is for most people. Consumers also have huge amounts of information online but that doesn't stop them from needing a good agent to make sense of it all. This is where business intelligence comes in.
BI is about making information useful, understandable, and actionable. Raw information itself is useless. BI makes it useful by putting it into a form that makes sense. The form that makes sense varies from user to user. More on that later.
Getting To Actionable Insights
Business intelligence isn't just a bunch of nicely formatted charts or reports. It's interactive information used to answer questions you have about clients, markets, trends, and more. Think of it this way, Big Data is the ingredients, Business Intelligence is the oven, and you're the cook. When you put good information into the right BI software you get something tasty when you're done. Well, perhaps tasty is the wrong word but you get the idea.
As a REALTOR, you might want to know the profile of the most common sellers in a neighborhood. A BI tool could combine MLS sales data with Big Data on homeowners to create a profile of who is actually selling. You might find that the top two typical sellers in an area are older homeowners and those with kids who have lived in the house for 7-9 years. That's actionable information because you could then create a farm that targets only those similar homeowners still living in the area.
Predictive Analytics Isn't What You Think It Is
This is NOT a crystal ball. It won't tell you the future or give you magical answers nobody else can get. If it did, we'd all be using it. So, that said, predictive analytics may (and I carefully chose that word) give you insights into a trend. Predictive analysis is about trends and patterns. To be useful, you have to know what questions to ask.
Keeping with seller example from above, predictive analysis might show a trend in which the average ownership period for families is dropping from 10-12 years to 7-9 years. From that, you might predict in a year the average would be even lower, perhaps down to 6-8 years. That insight tells you who to focus on with your postcard farm. Once again, this is actionable information.
How To Use BI
For the real estate industry, BI is likely to come in two primary forms; dashboards and analysis tools. A dashboard is a collection of visuals, usually simple charts, that show pre-selected trends based on known data. This could be powerful for an agent might who simply wants to show common trends and other basic insights. This could be easily done by combining Big Data with your local MLS and tax records. Such tools exist now.
The analysis tools are another story. They would give you the ability to "slice and dice" the data to suit the questions you want answers to. While some of these tools can be fairly easy, these tools will take some training to be effective. The benefit of these tools is that you'll get a lot of insight into who is buying and selling homes. If you're willing to invest the time in learning them, you'll save yourself time and money. These tools also exist but are not as well known.
The point is that the future of our industry will be driven by broad implementation of BI by brokers and agents. The real estate industry still needs that "killer app" that combines of power and easy-of-use. When that happens, BI will redefine the value agents deliver in the office and in the field.
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Bryan Robertson, CEO | T: 650.799.9951 | Email: firstname.lastname@example.org | Website: http://www.BryanRobertsonHomes.com |CA BRE# 01191946 | Catarra Real Estate, Inc | 171 Main St #220 | Los Altos, CA 94022