For decades, real estate has remained notoriously gated and protective of its data, with a few major brokerages and data providers dominating the market by maintaining exclusive rights to their information. That has finally started to change in recent years. As our industry begins to embrace technology and data analytics, we’re learning that it is still being held back by something that, on its surface, may sound quite trivial: typographical errors.
The root of the problem would be familiar to anyone who has ever sent or received a letter — there has simply never been a single, uniform way to distinguish properties and their respective records.
A building addressed “123 4th Street” might be identified this way in some systems, but recorded as “123 Fourth Street” in others. People scouring for this same property might use either of the two conventions above, or search for “123 4th St.,” complicating things even further. This is, quite frankly, a machine-learning nightmare. While we as individuals may be able to understand that “Second Avenue” and “2nd Ave.” are the same properties, computers can’t successfully recognize objects in that same pattern without the right algorithms in place.
Such disparity often leads to a multitude of machine-learning redundancies and errors for end users, especially relative to an industry like real estate, where already massive stores of data are in a constant state of evolution and expansion.
Without the benefit of a complete and accurate database, every corner of the real estate market — whether it be assessments, due diligence fact gathering or wider market predictions — are forced to rely on an inherently unreliable set of facts and figures. Real estate has long been known as a business based largely on relationships and intuition. That would not have to be the case, however, if the industry could simply move closer to standardization.
The good news is that, in spite of its sheer size, both the U.S. and global real estate markets are made up of a finite number of data objects in the form of the tens of millions of buildings, homes and units across the country. Even better, much of that data is publicly available — albeit via a widely varied and disparate network of sources. Today, perhaps the industry’s greatest challenge is its need for a single platform that can gather, fuse and resolve all of those sources, along with innumerable private and proprietary stores of information, which can then be leveraged by all manner of real estate companies and professionals.
Thankfully, modern technology does possess the capability to put an end to this long-standing problem. More and more, respected enterprises are partnering with those of us who provide real estate data and our companies, which have collected, verified, stored and shared a variety of public, private and proprietary real estate records. As more and more of this information is gathered, artificial intelligence and machine learning can resolve the simple typographical discrepancies that have long plagued the industry and weigh the accuracy of each record against its counterparts. With these algorithms at their disposal, data providers could offer a new level of standardization to equip companies and brokerage giants with better data organization, ultimately creating the one thing that has eluded the industry for so long: a single source of truth.
Once real estate is granted that new level of accuracy and precision, it will spark incremental improvements in every area of the industry. Investment will be made simpler and more precise. Valuations will be more clear cut. And rises and dips in the market will be more foreseeable.
It is unlikely that the real estate market will ever approach the pace and liquidity of the equities markets, where algorithms and program trading rule the day. Real estate is slower. Humans will always want to have their say, without handing over control to software, but accurate and complete data will remove much of the uncertainty from this decision making.
While simple inconsistencies in spelling and formatting may seem inconsequential from a distance, the collective weight of this has had a chilling effect on commercial real estate for years. By adopting modern technology capable of resolving these errors, the industry would usher in a new era of accuracy and transparency that holds the power to unlock not just new profits, but a safer and more secure future for every property owner in the country.