How is Big Data Changing the Real Estate Industry?

Every industry – including real estate – can benefit immensely from big data. These massive data sets have long been used in the financial and healthcare industries with great success, providing invaluable information about human behavior and interactions, as well as critical patterns and trends among consumers.

Big data involves the large volume of information that businesses gather every day. While there is a humungous amount of data that is constantly coming in, that’s not necessary the crucial part: instead, it’s what businesses do with this vital information that’s important. Big data can be carefully analyzed to make better decisions and take strategic action.


The real estate industry has now embraced big data to provide the real estate industry with relevant insight into consumer behavior within the industry. It’s changed the way real estate professionals, buyers, sellers, and lenders approach real estate transactions.

Here are some ways that big data has impacted the real estate industry.

Simplifying the Appraisal Process

Appraisals are an integral part of the real estate process, and as such, real estate professionals must deal with appraisals all the time. Lenders depend on the valuation of properties that their appraisers provide them with before they determine whether or not a loan can be approved. Financing is typically not approved by lenders if the property’s value is deemed to be less than the loan amount requested.

For many neighborhoods, the appraisal process is rather straightforward. With many homes in subdivisions featuring very similar traits, and with the plethora of recent sales to look at, appraisers are much better able to come up with an accurate value for a property.

However, there are plenty of other circumstances where appraisals have been complicated and difficult. With so many factors to rely on which can often be inaccurate, sometimes appraisals might not be entirely on point.

In these cases, big data has helped simplify the process of appraising and pricing properties. While there is often plenty of information about how much similar properties recently sold for, big data has helped greatly reduce any gaps as far as errors and omissions are concerned.

Improving the Financing Process

Big data has been helping the real estate sector make much more sound financial decisions. Real estate professionals can use big data to learn about owners’ financial health, and how much of a risk they would be to take on additional financing. This information can also be used to determine the integrity of a building structure, and whether or not recent improvements have been made on it.

These key pieces of information can assist real estate professionals in determining risk levels for specific buyers, sellers, and even communities as a whole. Such information is also vital for helping investors and developers make smart investment decisions. 

Identifying Future Trends

Buyers want to know whether or not a community they are buying into is primed for growth in value in the future. Nobody ever has the intention of purchasing property in an area that’s headed for decline. Whether it’s a first-time homebuyer or a seasoned investor, knowing what the building will be worth over the short- and long-term is extremely important.

Big data has helped plenty of buyers gain insight into where property values in a particular area are headed. Thanks to innovative real estate investor software programs, buyers have been given the opportunity to predict the future values of properties they intend to purchase. Such information can help guide buyers in the right direction, and avoid areas that show little promise, thereby maximizing equity and profits.

Improving Building Management

Managing a building can be an in-depth and tedious process. Luckily, big data has been able to help simplify and streamline this endeavor. From identifying issues, to speeding up repairs, to slashing expenses, big data can make the management of a building much more efficient and effective.

Any data that is collected on equipment within a structure can be fed into an algorithm to determine how every component within the space is functioning. As soon as a deficiency is identified, a work order to fix the issue will be immediately generated. With much smarter buildings, it’s possible to significantly cut down on waste and spending.

Big data is certainly transforming the face of real estate. While it may be a costly investment up front, big data systems can make the job of real estate professionals much more effective and efficient, and provide buyers and sellers with helpful information to make better decisions.