Real estate is an enormous industry, and while it’s been slow to change, big data is finally entering the scene and forcing the industry to adapt. Data science and artificial intelligence have been making major inroads in the real estate industry, innovating an old industry and disrupting traditional ways of doing business.
Property Matching Software
The big revelation in data science in real estate is the evolution of property matching software. In other words, AI bots filter through the wealth of property listings to find the best matches for individual buyers.
Models have been developed using public data and market information to determine things like the quality of the neighborhood and the price per square meter.
Property matching software can provide a wider range of options and parameters than a real estate agent could on their own. But as a tool in an agent’s hands, they provide clients with more accurate information and better matches in less time.
Valuation Models
Data science isn’t just being used to match clients with the perfect property. Other applications include more accurate estimates of a house’s price (which may differ considerably from the appraisal, depending on the market) or even attempts to time the optimal moment to purchase an investment property.
The goal of valuation models is to use data taken from past transactions to create a better estimate of the property in question. It’s a technology already used by various real estate platforms to provide more accurate pricing information rapidly at a low cost.
Cluster Analysis
Real estate is far from a uniform industry. Performance can vary widely based on location and subsectors. Luxury mansions and mass-market condos operate in completely different conditions. Real estate trends can vary widely from one city to the next or even between neighborhoods.
Cluster analysis is about identifying such patterns and determining which subsets of properties will perform similarly.
Should Real Estate Agents Be Worried?
Some real estate agents are worried that the evolution of data science and AI bots will make them obsolete. At least one innovative tech company in the real estate industry doesn’t think that’s going to happen, although it does think data science will disrupt the industry in major ways.
Nobul is the world’s first open digital marketplace where real estate agents compete for home buyers and sellers. Not only is it a marketplace for consumers along the lines of Uber, but it’s also giving real estate agents tools such as AI technology and blockchain to do their jobs more efficiently.
Nobul Founder and CEO Regan McGee started Nobul to shake up the industry and create a more consumer-centric option. McGee told BNN Bloomberg, “We are building a full eco-system, end-to-end real estate, consumer-centric. Buyers and sellers never pay us anything. They never see an ad. It’s a competitive process throughout the whole buying and selling of real estate. Real estate transaction fees are at 1.9% of our GDP. That’s not property value, that’s transaction fees. There’s a lot here to change.”
Data science has changed the real estate agent’s job considerably, and as platforms like Nobul scale, more and more agents will have to adapt, but buyers will always want someone to help them personally with such a significant transaction.
Where Does Data Come From?
Real estate is such an enormous industry that there is a wealth of data available, intersecting with various economic and social factors. Data is drawn from open data sets, transactional data, and even data directly related to a building.
Data science will increasingly play an important role in real estate. Agents who neglect data science could lose a lot of business as competitors apply smart data analysis to help their clients make better decisions.