Someone who isn’t in the real estate world probably doesn’t realise how much of a game of information it is – a quality it shares with a large number of other businesses in the service industry. To put it simply, you always need to know what the customer needs even before they do themselves in order to provide the best possible service that you can.
This is why it’s crucial that you have access to the current real estate data at all times, especially considering how quickly the average listing prices and base commission fees can change.
However, this raises a few questions. Namely:
- What are the best real estate data sources?
- Which data should you pay attention to the most?
- What does it accomplish for your clients?
- How can this data help your company grow?
We’re going to go over each of these questions and help you figure out the major pitfalls that you want to avoid when looking for reliable data sources as a real estate agent and offer some advice on how to utilize them properly.
Real estate data sources
Simply put, real estate data is the information that property management and real estate companies gather in order to get a picture of what the current real estate market in a certain area is like and how it might change in the near future.
This information is vital for investors and helps them decide if a property they might be interested in is worth buying at the time of reading the data, or if it would be a better idea to wait for the prices to change in the future.
The sections below will cover how this information is obtained, the different types of data that exist and how each affects a certain sphere of the real estate market.
How to collect real estate data
The data in and of itself is incredibly easy to get access to, since real estate data is taken from commercial and tax records, as well as mortgage and lender data and multiple listing services. When vetting your data, you’ll need to consider many different factors depending on if you primarily work with residential, commercial, industrial, or land data.
Most of the real estate data sources we list below are from public documents that can be found either in a city or country department building or by searching for publicly available commercial records online.
Sales data will let you know if the market in a certain area is stable enough for property purchases. By comparing the number of sales and the increase or decrease in prices you can roughly evaluate what the state of the local market is gonna be like in the coming months.
You will, of course, need to sort the data and find the exact type of property that you are looking for in order to be able to form a more concrete picture of what the state of the market is currently, for, say, a single bedroom apartment as opposed to a duplex.
It’s recommended that you focus on a single property type rather than try to cover everything and end up spreading yourself too thin. A more concentrated approach will allow you to be better prepared for that particular market and will be more beneficial in the long run.
Home flipping reports
Home flipping reports can give you valuable insight into how saturated a particular market is and how worthwhile it would be to invest in such a venture. You also gain insight into the gross yield that a flipped property brought in by comparing the selling price before and after it was refurbished.
However, the reports won’t be able to tell you exactly how much you’re going to need to invest before the property can be resold for a higher value.
The best thing is to warn your investors that you can give them an estimation, but that there’s still the possibility that they’ll need to sink a bit more time and money into the project than they assume. However, if you have a good lay of the land as to the property and its value, and they have a good handyman with a knack for home improvement, then things should go pretty smoothly.
The difference between the gross yield and the net yield is, of course, that the gross yield is the calculation of the profit before the taxes and expenses are deducted. Gross rental yield lets you compare properties with different values and rental returns by allowing you to calculate the annual income of a property as a percentage of the property’s value or purchase price.
Reviewing the dollar value and percentage of the funds that were gained when a property was flipped or sold can tell you the state of the market and what properties are in demand. However, be mindful of the fact that gross yield doesn’t take interest rates into account, so you’re going to need to calculate those on your own.
The foreclosure process begins after a homeowner has not been able to keep up with their payments and is found to be in breach of their mortgage agreement as a result. If the payments are not made after a set time, then the contract is terminated and the lender will evict the current residents of the property.
Foreclosure reports are a very good way to swoop in on lucrative opportunities early. You can usually tell the foreclosure rate in a specific area if the number of sales and the number of days that properties have been on the market increase, while the property prices decline. This will result in a possible increase in foreclosures, which investors can take advantage of.
However, while the height of the mortgage may give you a rough estimate of the state of the property, a more thorough investigation will of course be in order before any definitive conclusion can be made as to the actual value of the property.
When looking around for real estate data providers, the first thing that you’re likely to consider is the balance between the cost and the quality of the product. While we’re aware that you need to keep company costs low, and that there are plenty of cheap and even free real estate data sources that you can find, this is one area of your business that you really don’t want to skimp on.
Things to keep in mind when using real estate data from data providers
The data that you have access to needs to be from multiple sources. Data providers have access to aggregators and digital tools which compile the information from online listing service companies, rental sites, transactional marketplaces, and so on, and send you real-time updates gathered from these public sources.
The only good thing about finding the real estate data yourself is the ability to check it personally, while with data providers, you’ll need to make sure that it’s been properly vetted for you. How well the data has been checked will vary depending on the provider, but the threat that you will switch real estate data sources if their data doesn’t check out is enough of an incentive for any provider to make sure that everything is vetted correctly.
The last point that we need to cover is data integration. Simply put, certain systems aren’t compatible with certain data providers. The only way to know for sure is to try out the data provider on your system and if it doesn’t work, simply switch data providers as that’s the only thing that you can do.
Why is market data so important?
As we mentioned before, there are a lot of factors in play when going through real estate data. Market data is a specific section that deals with compiling and analyzing investment trends, buyer intentions and conditions, and industry development, and using that information to find out how to set both your listing prices and commissions.
In order to get the most accurate reading possible as to how the current market value of each property stands, you need to gather a lot of different prices, including the renting price, the paid price, the price per square foot, and so on. Additionally, the amount of time the property has been on the market for and its sales history will also have a large impact on the final listing price.
But aside from the pricing, market data can also help you stay ahead of the curve. The influx of information will allow you to determine not only the current price of a property, but also if it has the potential to be more profitable in the future. The right prediction about a drop off in rents or an increase in prices in certain areas can make the decision to hold off on selling certain properties quite profitable.
How to make your clients feel at ease
Clients want a good price. That’s all there is to it really. Meet their demand and keep your commission low while setting as high of a listing fee as possible in order to keep them happy. If only it were that easy though.
Your commissions and listings will, of course, be set according to the information you gather from your real estate data sources. It’s best to assume that your competitors also have access to the same data, so the prices will inevitably be similar.
Since that’s the case, the only thing left to do is be accurate and be quick. What we mean is that you should get this information to your clients as quickly as possible and give them ample examples and reasons why the prices are what they are.
Even if your client asks for a second opinion from another company, as long as the prices are similar, they will almost certainly go for you if you manage to deliver more accurate data much quicker.
The simplest way to grow your company through the use or real estate data sources is to use them to your clients’ advantage. If your clients are satisfied with the service you managed to provide for them, then they’re very likely to spread the good word. Not only is this form of marketing completely free, but recommendations are the best way for new clients to be introduced to your company.
Another way is to learn how to use the data better. There is certainly a wrong way to use the real estate data you’ve collected and that usually involves trying to spread your company too thin. The better option is to evaluate your strengths, find the area that’s most lucrative and put all of your efforts there. Learn which data you should ignore and which you should focus on and your business should improve quite significantly.
And the last thing you could do is make sure that you use the data when marketing your services. Use your data provider to help you find your demographic and convince them that they need your company to help them with their property.
We hope we’ve established how important it is to have reliable real estate data sources, especially since it can lead to an increase in the number of clients as well as help you to substantially grow your company.
However, keep in mind that a lot of your competitors will have access to this data as well, so if you want to get an advantage over them, you’re going to need to learn how to read the data correctly and how to quickly put it to good use.