Someday soon, buying real estate will be as smooth and fast as buying a car, stock or bond. And it will happen because innovative companies are making real estate more transparent every day.
Whether you’re a business or a consumer, decisions related to real estate are some of the most important and challenging decisions you’ll ever make.
They’re important decisions because they have a significant impact on income, wealth and quality of life.
And they’re difficult decisions because information that can assist in making more informed real estate decisions is multi-dimensional, complex and often scattered.
But despite the historically distributed nature of real estate data, much of this information has now been consolidated and made easily accessible to anyone.
In the early 1990s, new types of information companies were born, most of which specialized in a particular category of property data.
Some companies aggregated for-sale listings. Some focused on past transactions. Some collected land and environmental data.
At first, these niche companies collected property data in limited geographies and later expanded nationally.
As each niche segment matured, one or two firms inevitably separated themselves from the pack, achieved scale and emerged as the class of their niche. And at roughly this point, their growth began to plateau.
Slowing growth rates and evolving customer needs motivated these niche players to re-examine their growth strategies. No longer could acceptable growth be attained by operating solely within a single core niche.
After all, customers had diverse information needs that spanned multiple sectors and were sourcing data from multiple suppliers. Because managing many such relationships was expensive and time consuming, customers began consolidating relationships around suppliers that could meet many, if not all, of their needs.
These forces motivated leading property data companies to leverage their existing data sourcing, quality control, data warehousing and sales capabilities and extend them into adjacent markets leading to the formation of several holistic and nationally comprehensive real estate data warehouses.
As real estate continues its evolution toward total and inevitable transparency, the next stage of the journey will be built upon four pillars.
First, property data companies will transition beyond data that describes a property’s past to also source data that quantifies a property’s current characteristics. Smart, connected technologies are now able to capture real-time performance data that measures everything from energy usage to water consumption to indoor air quality.
Furthermore, once captured for an individual property, this data can be easily compared to similar properties. Whether a result of new seller disclosure rules or more comprehensive pre-acquisition property inspections, every property will become more transparent as real-time performance data becomes an expected element of every transaction.
Second, both historical and real time property data will continue to be integrated more directly into customer workflows making the information front-and-center to users.
Whether you’re a consumer visiting a real estate portal, a lender logged into a loan origination system or an insurance adjuster using an underwriting or claims platform, everything you need to know about that property will be embedded directly into the application for easy consumption.
Third, more important that the data itself is the story hidden inside the data and extracting these stories, patterns and correlations is what data analytics is all about. Ultimately, the reason humans consume information is so they can process it to make wise decisions.
Humans are innately good at this when the information being consumed is limited and simple; which is rarely the case in real estate decisions. Given the massive volume of data that needs to be processed for wise decision making, people are rapidly exploiting analytic engines to separate the signal from the noise and, in some cases, automate the entire decision making process.
These analytic solutions are growing more complex and accurate by the day and will continue to do so.
And finally, the business of supplying critical property data will shift towards a data-as-a-service model because of the superior experience this model provides the end user.
In most cases, users prefer to not deal with ingesting, cleansing, updating and warehousing massive real estate databases in order to accomplish their goals.
A much better scenario is one where data and analytic needs can be satisfied on demand and without incurring the heavy costs associated with internal data warehouse infrastructure.
Outsourcing the work to a firm that specializes providing instant and reliable access to data will allow the customer to re-allocate more resources towards their core mission and, simultaneously, realize an economic benefit resulting from the services provider’s costs being distributed across their entire customer base.
This rapid increase in transparency is impacting real estate transactions and making the asset class more easily tradable.
When combined with future generations of homebuyers who may not place the same emotional value on real estate as our parents did, we’re not far away from a meaningful portion of purchase transactions having similar characteristics to purchasing 100 shares of Apple or a new BMW — fast and low-friction.
Rob Barber is the CEO at Attom Data Solutions.