We all know that technology is changing the real estate market for both buyers and sellers in a big way — adding even more options to a big decision that has a lot at stake. One of the bigger impacts on the market is big data algorithms and the resources they provide, which in the right uses can help you make better decisions. You might already be familiar with other ways big data can be used to help you make decisions in other areas, but big data can be used in the real estate market in a number of different ways.
Buyers and sellers can use big data to determine when the best time to buy or sell a property is. Investors can use big data to determine where to buy their next properties in order to maximize both low costs and high values. But what does this all mean for you? Read on to learn more about how to utilize big data to help you make big real estate decisions.
Quickly understand new trends
With big data, buyers are able to have a significant amount of data at their fingertips to better understand the market before buying a property. When evaluating a property, buyers can review walk scores and traffic estimations; detailed school information; access to restaurants, parks, and activities; and more before deciding to make an offer.
Even better—this means that buyers can use this information to better spot trends in neighborhoods and evaluate and eventually purchase properties. This allows them to evaluate timing based on trends and maximize their timelines for buying a property.
As an investor, using big data algorithms gives you an edge on possibly finding properties in up-and-coming areas that others might overlook. Staying ahead of trends can maximize profits if you can buy low and sell high in areas over time.
But sellers can also use big data resources to evaluate trends to better market their home to a potential buyer. Looking at comparable properties gives a small picture of the competition in their area, but using other big data resources lets sellers and real estate agents evaluate popular features and then market the features that their property has that are desirable. It also gives potential buyers a bigger picture of the factors your home has in value other than just the property itself.
Most importantly, big data is unbiased. This means that the data speaks for itself and is not manipulated in a way that makes the sale. It doesn’t hide potential problems with a property or features that may not be a fit for a buyer. Buyers and sellers can truly target a property’s value to minimize situations of buyers’ remorse or deals that fall through.
Value maximizing algorithms
Big data can also be used to maximize value on a property. Sellers can use algorithms evaluate the market and sell at the best time that maximize their profits on a property. They can also work with their real estate agent to use the more detailed information available about their property to price the property based on something more than just comparable listings. Buyers can also use value maximizing algorithms to evaluate a property’s projected future value when making a decision on what to buy.
For investors, this is especially important as it can show what the property is worth over the course of owning it so they can predict the right time to sell if needed and predict the amount of income that can be made off of rental payments and the likelihood the property will be able to be stably rented.
Quick and accurate property valuation
Using big data to analyze a property value provides a more accurate figure. It removes human error and takes into account more than just a comparable property in the area. Big data algorithms can take into account geographic, economic, demographic, and other more specific features of a home to create a better picture of a home’s true value. This optimizes the property for sellers, investors, and buyers, but also financial institutions that are providing funding for home purchases. Banks can also use big data to determine whether a property they have listed as a short sale or foreclosure is worth the price being offered.Related: How iBuyers Are Changing the Real Estate Landscape for Rental Investors