Is data the new oil in real estate?
Data is the new oil they say, and in real estate there is lots of it.
Consumer eyeballs are fuelled by investor money and backed property portals are cashing in everywhere. Access to capital is an advantage when you want to unlock the value of that oil with consumers. For this reason, most portals have also ring fenced any access to that data.
Imagine portals paying you for your listings
Funny enough, I’ve explored this for some time now as I love game theory and the ever increasing problem of high property portal fees agents face. The catch is that the portal will just increase their pricing back to you. It then boils down to what holds more intrinsic value: the listing data or consumer eyeballs?
Should an agent decide not to pay for advertising on a particular portal, but the portal is desperate and still wants their listings (otherwise they risk losing consumer eyeballs) the agent wins as the portal needs to pay or at least provide free advertising.
In real estate, it is the battle of consumer (buyer) eyeballs that triggers the start of a property transactions. The hard work is still done by the real estate agent. Some of the hard work boils down to stuff that is difficult to measure, like experience. E.g. the ability to price a home right for a quick sale, or your negotiation skills. These things take time to master and in the end can make the difference in a home selling within 1 day or 1 year.
Data alone doesn’t make a sale happen
Data is the new oil, but data alone doesn’t make sales happen in real estate. The agent then, provides two highly valuable items to the table:
- the product : listing mandate data.
- the experience: ability to sell that product
Portals are trying to unlock the value of the experience part by offering FSBO listings or as we’ve seen in the US, iBuyer instant offers. Investors are demanding this so portals need to move closer to the transaction to generate more revenue.
The real future danger for agents I believe, is machine learning algorithms that are constantly learning to provide more accurate home values. Portals are in many parts of the world the custodians of listing and sales data and this data is used to train these machine learning models.
The opportunity for agents then, is to get access to all (their) data, have the tools or platform to build their own machine learning models and input their experience to train these models faster. They need to act as custodians of this model through a cooperative.
Agents + data = the new oil