What happens when too many people know too much?
That’s a question we should ask ourselves now – not later – when it comes to how we’re beginning to use “big data” in real estate.
I’m not talking about listing data. Listings are, if not the least valuable, certainly the least interesting slice of real estate information these days.
I am talking about our rapidly expanding ability to gather information about homeowners for the purpose of gauging the likelihood that they will sell.
“Predictive analytics” is the catchphrase associated with this development.
And it really works.
When you mash together data gleaned from public records, social signals, purchase habits and the like, and then run them through sophisticated models, you can get a pretty good read on who’s going to transact.
This is an exciting prospect. It could save real estate agents billions of dollars, and billions of hours. The days of spray and pray marketing, speed dialing, pavement pounding and online lead dependency may be numbered.
The number of companies offering “predictive” products to agents is growing.
It’s a pro’s dream.
But, perhaps, a homeowner’s nightmare.
Let me explain.
It’s two years from now. Pretty much every agent in America has some sort of predictive analytics tool available to them, either through their broker, franchise, MLS or by buying it directly. They’re all looking at the same geographies with the same lens.
And you’re a homeowner that has been flagged as likely to move.
Hordes of agents have your address. Your phone number. Maybe your email address. The steady drip of agent postcards you got in the past will seem quaint compared to the, um, “focused” attention you’re getting now.
It sucks to be you.
Think I’m off-base?
Could be. But you tell me: what might go wrong when you put scaled and sophisticated consumer targeting tools in the hands of a few hundred thousand realtors?
The companies selling predictive analytics into real estate are not bad actors. To the contrary, they are innovators already delivering value to agents seeking a smarter way to do marketing.
But my hope is that we start asking questions about the consumer implications now, before others outside our industry do.
As long as I’m on data, I thought I’d circle back to a bit of news from earlier this year.
HouseCanary, a startup backed by ex-Google CEO Eric Schmidt and former NBA star Kobe Bryant that claims to “see into the future of real estate”, closed a $33 million funding round back in January.
HouseCanary does pro-level real estate data analytics for investors, mortgage companies, appraisers and (at least in theory) real estate brokers and agents.
It’s heavy duty, big-brained stuff. Graduate level Zestimates. Predictive market forecasts.
It’s $1,000 per month for a “Pro” subscription, which, unfortunately, will probably be considered too expensive by most real estate brokerage companies. I wish this wasn’t the case. Brokers could benefit from tools like HouseCanary, which give them an opportunity to preserve their place as local market authorities.
In fact, a real estate brokerage could build an entire marketing campaign around the insights derived from an investment in high-end analytics.
There’s a lot of flux in the industry these days: Teams proliferating, “expansion teams” becoming a thing, Keller Williams ballooning, BHHS, Howard Hanna and NRT acquiring, Compass blowing money like a drunk at a craps table. Keeping score is fun.
But step back and it’s all just slicing up the same pie different ways. At the same time, though, the number of people feeding off this pie is growing – franchisors, brokers, agents, team leaders, lead generators, referral companies, MLSs, associations and more.
I think scarcity is emerging as the force conditioning our industry. There are a lot of mouths to feed around a real estate transaction.
Eventually, when people get hungry enough, they take risks. It is for this reason that I think true change will be driven from within the industry, rather than from external “disruptors”.
Who at the table will be first to make a big move?
Have a great weekend.