Big data: benefits for real estate
Data, data, everywhere
11 January 2018
Chris Bolam ventures into the maelstrom of big data to report on its benefits for real estate
Big data has become a bit of a cliché in recent years, to the point where few people can define it – let alone say whether it’s a problem or a solution. What we’re sure of is that data sounds a bit technical, so anyone who can handle a big chunk of it must be pretty clever.
Doug Laney, a US IT industry analyst, was clear that big data isn’t just an unwieldy amount of information when he defined it in the early 2000s with the now classic ‘3 Vs’ model.
- Volume: big data doesn’t fit neatly into traditional concepts of disk and database storage, and probably needs multiple machines to store and process.
- Velocity: big data is also being collected very quickly, all the time, from business transactions, algorithms and sensors that are ever vigilant, so there is an operational imperative to process it in close to real time.
- Variety: big data isn’t homogenous. It’s not a predictable set of database tables, populated with the same points day in day out. It’s both structured, alphanumeric data and unstructured documents, emails, social media posts and so on.
In more recent times, a 4th V has been proposed – veracity – that really starts to get to the nub of the issue: big data is about processing a maelstrom of data and extracting a truth from it so quickly that it adds unprecedented business insight.
Imagine the 2.3bn smartphone users on the planet all walking around passively recording a new GPS point every few seconds, and feeding it back to perhaps a few hundred mobile providers. Collecting and working out what you can do with all that consumer insight is intensive and expensive – but is a good example of big data.
Applications in real estate
So where is the big data in the property surveying profession, and what should we be doing with it?
Let’s think in terms of those 4 Vs. Decision engines pull in automated valuation models (AVMs) or environmental, geological and flood data from numerical, documentary and map-based formats, so there is both a large volume and wide variety analysed to inform valuation decisions. And with the accuracy of a property valuation and the legitimacy of the mortgage application being of paramount importance, there are few data applications that require greater veracity.
We can argue that big data has been around for a long time
However, as the average UK property sale takes several months, it would be difficult to make a compelling argument for the velocity of data. That change is nevertheless coming, and we need to look upstream of the surveying profession to understand its origins. In many sectors, it is the frenetic nature of consumer activity that creates the wealth of disparate data points accumulating into big data, as in the GPS example above.
Estate agency is undergoing unprecedented transformation: as the primary contact point with the homebuying process for consumers, it was always ripe to be democratised by services such as Purplebricks, Yopa and the like. As the model becomes more fluid, dynamic and driven by digital self-service, consumer expectations of real-time access to transaction information and insight will increase. How many times has a given viewer looked at my property on my estate agent’s site? Are there trends that indicate their impatience to move, and perhaps therefore their propensity to be held to my asking price?
Start using this digital data to assess the overall stability of a chain, and suddenly a set valuation service level agreement becomes less relevant. Why not prioritise vulnerable cases as a function of the transaction value?
A clearer future
Transparency and democratisation are synonymous with big data. The expectations of estate agents will be felt downstream by lenders and surveyors: consumers will require more clarity on how their valuation is calculated, and demand more control over what surveyors look at on site once they are equipped with better property information upfront. But rather than fear this, we should welcome the opportunity it brings to gain 360° understanding of the property transaction process and better comprehension of the property and environment as well as the consumer psychologies that so frequently disrupt processes.
Estate agency is undergoing unprecedented transformation
There are other areas of property valuation that big data can support. Replace veracity with opinion and emotion and we can argue that big data has been around for a long time in the form of the stock market. There are few better mechanisms for turning a prevailing political zeitgeist into an appreciable set of numbers – and few factors have so big an impact on the property market.
Imagine an AVM that modifies constantly and takes real-time economic indices into account. Big data is an ecosystem, not a discipline and, it’s our willingness to adapt to its evolution that will divert or deliver future opportunities.
Chris Bolam is Head of Product, Landmark Valuation Services