REAL ESTATE AND OTHER VIRGIN ANALYTICAL TERRITORY
There are many businesses and industries around the world that are virgin territory for analytics. Yes, many industries have considerable analytical activity underway, and more and more companies are embracing the competitive potential of analytics. But there are far more that haven’t even begun to compete analytically.
Residential real estate is one of those relatively non-analytical domains. I spoke recently with Russ Baris, a real estate analytics maven who headed for many years a very impressive group of IT/quantitative analysts at Pfizer called Business Technology and Information Science. He has a strong quantitative background, and he did great work on analytics for pharma for more than two decades.
Now, however, he’s started a company (called Elumindata) to develop analytical solutions for various industries where they are underleveraged. One is the residential real estate industry. Several of Russ’ family members are in that business, so he knows it well. He also knows there is plenty of opportunity to make it more analytical.
Think about it—you want to sell your house (who doesn’t these days?). You call a Realtor (lawyers—please forgive absence of trademark—at least I capitalized it). Do you know the average days on market for the houses being sold by that realtor? Do you know how frequently sellers re-signed with that realtor after the original contract period ran out? Do you know what percentage of appraised value the realtor tends to get for the houses he or she sells?
No, you don’t. Nobody does, except Russ and a few clients. Those analyses simply aren’t available to consumers. If it’s any consolation, realty office owners and managers don’t have them either. It’s an industry that has run in the past on charm and charisma and connections, but certainly not on correlations.
Russ is trying to fix this problem. He can take Multiple Listing Service (MLS) data for a particular town or region and quickly produce some very interesting reports about which companies and agents are doing well, and which are languishing. If you’re a realtor, you should seek out Russ and implement his solutions. Maybe someday the information will even be available to those who want to sell their houses.
I have also spoken recently with several executives from Zillow, the Seattle-based company that publishes estimates (OK, “Zestimates”) of the value of houses across the U.S. Zillow is a very analytical company, both in terms of the basis for its Zestimates (though mine is too low!) and how it manages itself. I suspect that it will be a major player in the further penetration of analytics into the residential real estate biz.
You’re probably not a realtor, and you may not even own a house. But in your industry—whatever it is—there is likely to be some area of the business that could be much more analytical than it is today. If you’re smart and enterprising, you’ll find some way to transform that operation with the help of data and analytics.